The Beginner’s Guide to Investing Books (Part 1)

Rich Dad Poor Dad” (1997) by Robert Kiyosaki

“Rich Dad, Poor Dad” is a story about Robert Kiyosaki and his two dads, and how growing up with them shaped his financial views. The “rich dad” is Kiyosaki’s biological father, a highly educated college professor. The “poor dad” is Kiyosaki’s best friend’s father, a wealthy entrepreneur who owns dozens of businesses. Both dads offer conflicting advice on money.

Key Takeaways

  1. The rich buy assets, not liabilities
  2. Financial literacy can only be learned through experience
  3. Learn to sell
  4. Fear and self-doubt are your greatest barriers to success
  5. Always think in terms of opportunities

The Essays of Warren Buffett: Lessons for Corporate America” (1997) by Warren Buffett

In The Essays of Warren Buffett: Lessons for Corporate America, author Lawrence A. Cunningham compiles the key learnings from Berkshire Hathaway’s annual letters from 1979 through 2006. What makes the book so impactful is that Cunningham keeps the integrity of Buffett’s words from the letter, but reorders them by theme to make them much easier to learn from. Ordering the book in this way also makes it easier to see how Buffett’s key themes have developed over time.

Key Takeaways

  1. Three main components of intelligent investing is “Mr. Market,” margin of safety, and circle of competence.
  2. Buffett defines good businesses as businesses that “can employ large amount of incremental capital at very high rates of return.”
  3. 5 factors when accessing an investment risk is long-term economic characteristics, evaluation of management on whether they have the ability to realize the full potential of the business and counted on to channel the reward from the business to shareholder rather than to oneself and the purchase price of the business
  4. 3 primary causes for poor investment is high investment fees, portfolio decisions made on tips/fads rather than basic principles, start and stop approach to the market marked by untimely exits and entries

Beating the Street” (1993) by Peter Lynch

Peter Lynch ran the Fidelity Magellan Fund for 13 years, during which time Magellan was the number one ranked general equity fund in America. Lynch sums up his points in Beating the Street with a number of humorous “Peter’s Principles”.

Key Takeaways

  1. When the operas outnumber the football games three to zero, you know there is something wrong with your life.
  2. Gentlemen who prefer bonds don’t know what they are missing.
  3. Never invest in any idea you can’t illustrate with a crayon.
  4. You can’t see the future through a rear-view mirror.
  5. There’s no point paying Yo-Yo Ma to play a radio.
  6. As long as you’re picking a fund, you might as well pick a good one.
  7. The extravagance of any corporate office is directly proportional to management’s reluctance to reward shareholders.
  8. When yields on long-term government bonds exceed the dividend yield of the S&P 500 by 6 percent or more, sell your stocks and buy bonds.
  9. Not all common stocks are equally common.
  10. Never look back when you’re driving on the autobahn.
  11. The best stock to buy may be the one you already own.
  12. A sure cure for taking a stock for granted is a big drop in the price.
  13. Never bet on comeback while they’re playing “Taps”.
  14. If you like the store, chances are you’ll love the stock.
  15. When insiders are buying, it’s a good sign – unless they happen to be New England bankers.
  16. In business, competition is never as healthy as total domination.
  17. All else being equal, invest in the company with the fewest color photographs in the annual report.
  18. When even the analysts are bored, it’s time to start buying.
  19. Unless you’re a short seller or a poet looking for a wealthy spouse, it never pays to be pessimistic.
  20. Corporations, like people, change their names for one of two reasons: either they’ve gotten married, or they’ve been involved in some fiasco that they hope the public will forget.
  21. Whatever the Queen is selling, buy it.

The Intelligent Investor” (1949) by Benjamin Graham

The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham’s philosophy of “value investing” — which shields investors from substantial error and teaches them to develop long-term strategies — has made The Intelligent Investor the stock market bible ever since its original publication in 1949.

Key Takeaways

  1. 2 types of investors: defensive and Enterprising
  2. Set up a plan for how to invest and when to invest and sticking to it consistently
  3. When analyzing stocks, take your emotions out of it
  4. Investors need to be focused on finding value, not merely buying into hype found in the media
  5. Safe and steady returns instead of big gambles

Think and Grow Rich” (1937) by Napoleon Hill

In the original Think and Grow Rich, published in 1937, Hill draws on stories of Andrew Carnegie, Thomas Edison, Henry Ford, and other millionaires of his generation to illustrate his principles.

Key Takeaways

  1. You can control your thoughts and use it to your advantage
  2. A burning desire will spur you into action
  3. Persistence is key
  4. Feed your mind properly
  5. Make your own decisions

I understand reading might not be for everyone. I’m not a big reader myself and I find it very difficult to absorb information from a book. That’s why I do all my reading through audio-books. This isn’t affiliate link, but I truly enjoy using Audible. It’s $14.95 CAD a month that pays for a book of your choice.