Complete list of best books on stock market for beginners in 2019. These books are the classics covering the different investing styles including value investing and growth investing.
If you are a beginner in the stock market, it can look like an absolute maze. Stock market can be brutal if you are not prepared for it.
It’s always makes sense to invest in yourself first before investing in stock market. This advice comes from the world’s most successful investor
“The best investment you can make is in your own abilities. Anything you can do to develop your own abilities or business is likely to be more productive.”- Warren Buffett
And the world’s most successful investor Warren Buffet lives by this trait spending 80% of time reading and investing in his knowledge.
Fortunately, there are numerous investors who have shared their knowledge on the stock market, literally showing the path on what it takes to be successful.
While there are plenty of books on this subject, here are few selected ones to learn about investing in stocks. If your are an absolute beginner with no financial background, you can check these books first to learn the basics of stock market investing.
Here are the Best Investing Books for Beginners 2019
#1. One Up On Wall Street
One of the classics on investing, Peter Lynch, the author of the book has one of the best track records in the industry delivering average 29.2% returns over a 13 year period (1977 to 1990) as manager of Fidelity Investment Fund.
In this book, he shares some great insights on how an average person has an edge over the Fund Manager. Rather than relying on tips or recommendations from brokers on stocks he doesn’t have a clue about, an average investor will do far better, if he invests in stocks he has knowledge of and is exposed to in his daily life.
This emphasizes the point which Buffet often mentions i.e. Stick to your circle of competence
The book is filled with insights on how to spot multi-baggers. Peter Lynch goes into details of classifying stocks into six different categories based on their growth potential and gives a full checklist on things you should check before investing in a stock. He also talks about the futility of predicting stock market and merits of having a long term view.
The book is full of examples from Lynch’s amazing career in Fidelilty where he gives personal stories on what he bought and what he missed.
What I liked about the book: Reading the book is a breeze. The style in which Peter Lynch carries the book is amazing. You can literally feel like he is having a conversation with you and sense his enthusiasm talking about 10-20 baggers. The book gives you really good ideas of investing in stocks whose products you buy and like. This book stands the test of time and is definitely one of the best stock market books for a beginner investor.
Some cons: Well, it is difficult to find a con. So will have to do nitpicking here, the book doesn’t give much idea on how to value a stock reading its financials. However, if you have not read this book, I will definitely recommend this book to start with in your investing journey.
Quote from the book: If you stay half-alert, you can pick the spectacular performers right from your place of business or out of neighborhood shopping mall, and long before Wall Street discovers them.
#2. Common Stocks and Uncommon Profits
This book written by the legendary investor Philip Fisher was first published in the year 1958. Philip Fisher ran an investment counseling business in 1931 and holds considerable respect among people in the value investing circle.
Having a personal recommendation from Warren Buffet on the cover: “I am an eager reader of whatever Phil has to say and I recommend him to you”, this book is a favorite with many investors.
This books talks about selecting stocks focusing on the quality of the business and growth potential. It answers basic questions like:
- What to buy by analyzing the company using the ‘scuttlebutt’ approach giving a 15 point checklist. This basically involves getting first-hand knowledge about the company by talking with its various stakeholders like its vendors, customer, business partners, distributors etc.
- When and When not to Sell– Talking about some key factors you need to consider before taking a sell decision.
- Don’ts for the investors- Fisher tries to address some of the common mistakes investors make which you need to avoid
It talks about the importance of buying a great company which has the power to grow your money rather than obsessing about the price or valuation. Philip Fisher lays stresses on the quality of the business over the quantitative aspects of price etc.
What Warren Buffet often says is “When you are buying a stock, you are buying a piece of business.”
What I liked about the book: The book zooms-in on the point: Your investment will do well only when the company does well. if you read the book you will know that it talks more about picking the right business and company rather than picking the right stock. An investor needs to focus on the quality of the business and what kind of edge a company has over its competitors. It does a good job of laying out detailed principles on how to evaluate a company from this perspective.
Some cons: While the book offers really sound advice, I found it some-what a dry read. Also, a small retail investor may find it difficult to execute some of the points in this book. Never the less, this book is a gem to learn the topic of growth investing and has some timeless advice.
Quote from the book: “There are relatively small number of truly outstanding companies. Their shares can’t be bought at attractive prices. Therefore when favorable prices exist, full advantage must be taken of such opportunities.“
#3. The Dhandho Investor
Mohnish Pabrai, the author of the book, is an Indian-American investor. Mohnish Pabrai and Swiss Investor Guy Spier made headlines when they spent USD650,000 to have lunch with guess who, Warren Buffett.
In this book, Mohnish Pabrai shares his style of investing using the Dhando Investor analogy. The word ‘Dhandho’, which comes from Sanskrit, means “endeavors that create wealth.”
“Heads, I win; tails, I don’t lose much” – the ‘Dhandho Investor’ lives by this principle.
Monish Pabrai describes the type of business that fits the Dhando Investor Framework. The business which is simple and subject to a slow rate of change.
This book lays out a value investing framework for individual investors.
It talks about scenarios where good quality stocks may be available at attractive prices when it goes through difficult times. This is the time to seize the opportunity of “low risk, high return”.
Warren Buffet talks about this principle in his quote:
“Whether we’re talking about socks or stocks, I like buying quality merchandise, when it is marked down.”
Mohnish talks about the mindset of Marwaris who focus on the high return with low risk. The Dhandho Investor wants to buy a business when it’s on sale at dirt cheap prices.
Pabrai lays out 9 principles of the Dhandho framework of investing which includes some unconventional stuff- invest in beaten down stocks and choose copycats over innovators.
What I liked about the book: The book is an easy read and is very focused on the theme. It gives plenty of interesting examples to substantiate each principle and also provides methods on how to implement Dhandho framework. It is a fast read but packages a lot of wisdom which Pabrai uses in his daily life.
Quote from the book: Investing is just like gambling. It’s all about the odds. Looking out for mispriced betting opportunities and betting heavily when the odds are overwhelmingly in your favor is the ticket to wealth.
#4. The Intelligent investor
Benjamin Graham, the author of this book is considered by many as the father of value investing. Warren Buffett, who studied under him in Columbia Business high school, describes Graham as the second most influential person in his life after his own father and “The Intelligent Investor” as the best book about investing ever written.
This is considered as Bible of sorts for value investors. This book talks about some of the most important concepts of value investing- Margin of Safety, Intrinsic value and the concept of Mr. Market.
It clears your fundamentals on variety of topics like Investment vs Speculation, impact of Inflation on investing, pitfalls on timing the market.
It stresses a lot on the psychology aspect of investing and lists down two main categories of investors – Defensive vs Enterprising.
- The Defensive investor does not spend much time or effort in monitoring the market and seeks to build a conservative, stable portfolio.
- The Enterprising investor who is willing to spend the time an effort to study the market, research and do individual stock selection.
Graham lays down the dos & don’t’s for both types of investors.
In an interview, Mr. Buffett said “If you understand chapters 8 and 20 of The Intelligent Investor (Benjamin Graham, 1949) and chapter 12 of the General Theory (John Maynard Keynes, 1936) you don’t need to read anything else and you can turn off your TV.”
“Chapters 8 and 20 have been the bedrock of my investing activities for more than 60 years,” he says. “I suggest that all investors read those chapters and re-read them every time the market has been especially strong or weak.”
What I liked about the book: The book is filled with golden nuggets on various aspects on stock investing. This is the AUTHORITY book on value investing.
Cons: This book can be a bit of a heavy read. I won’t recommend this to beginners unless you have the reading appetite of Warren Buffet who can gobble up a book like this in a day or two.
Quote from the book:
“An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
“While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster.”
#5. How to Make Money in Stocks
William J. O’Neil, the author of this book, is a stockbroker who was the youngest person to get a seat on the New York Stock Exchange in 1963 at 30 years of age. He is also the founder of the business newspaper Investor’s Business Daily in 1983.
With more than 2 million copies sold, this book blends a unique combination of technical analysis and fundamental analysis to come up with a winning formula for picking successful growth stocks.
It suggest a simple strategy to buy stocks based on the CANSLIM filter. The CANSLIM model is as follows:
- C = Current Quarterly Earnings Per Share: How Much Is Enough?
- A = Annual Earnings Increases: Look for Meaningful Growth.
- N = New Products, New Management, New Highs: Buying at the Right Time.
- S = Supply and Demand: Small Capitalization Plus Volume Demand.
- L = Leader or Laggard: Which Is Your Stock?
- I = Institutional Sponsorship: A Little Goes a Long Way.
- M = Market Direction: How to Determine It?
When picking a stock, you look at growth in earnings, market direction, Supply and demand for the stock.
A significant portion of the book is dedicated towards analyzing charts of more than 100 companies of huge growth stocks. The research here to give an insight of patterns and trends that are common to the lifecycle of all these stocks.
This book serves the interests of investors as well as traders
The book also gives a lot of guidance on when to sell. The author urges that you can never be right all the time in the stock market.
Always cut your losses short. If you stock price falls below your purchase price by 7-8%, you need to make an exit.
What I liked about the book: The book is an easy read and William Neil uses a simple language to convey his concepts. The book gives a unique perspective on investing in growth stocks giving a lot of details based on his study of charts.
Some cons: This book is not for a newbie investor. It gives a lot of charts but does not give a basic fundamentals of technical analysis to have a proper background for reading charts.
While the core ideas are good, an investor does have to do his homework to understand and apply the book.
#6. The Essays of Warren Buffett: Lessons for Corporate America
Warren Buffett’s annual letter to shareholders of Berkshire Hathaway has gems of wisdom coming directly from him.
The author Cunningham has compiled the key excerpts from Warren Buffet’s letters in a structured way breaking it under the various themes and chapters.
Buffett clarity of thought is reflected in his writings and can be invaluable for the reader in his investment decisions. Cunningham has categorized Buffet’s opinions under the following themes:
- Corporate Governance
- Corporate Finance and Investing
- Alternatives to Common Stock
- Common Stock
- Mergers and Acquisitions
- Accounting and Valuation
- Accounting Policy and Tax Matters
What I liked about the book: Buffet’s annual letters to his shareholders have sound advice coming from the Horse’s mouth. The author does a good job of putting together the key takeaway portions from the letters which can be used by the common investor.
Some cons: Hard to mention any cons on this book. The book is a bit pricey, You can say that the letters are freely available on the website of Berkshire Hathaway etc. if you don’t want to spend a buck on reading this book and willing to take as much trouble as the author.
#7. A Random Walk down Wall Street
In this book, Malkiel examines gives a detailed analysis of different investing techniques, including technical analysis and fundamental analysis, exposing the demerits of both techniques.
It suggests that an average person should play the stock market using passive strategies like index investing.
To back this argument, Malkiel presents a lot of historical data and analysis. This is definitely not a book your broker or market expert will recommend.
This point is emphasized by Warren Buffet too, who is himself, a proponent of index investing.
By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals- Warren Buffett
He gives behind the scene picture of Wall Street and history of the market including the various bubbles. He talks about the various anomalies in the market that exist in the short term tending to even out in the long run. Active investment and trying to beat the market is really not that beneficial in the long haul.
In the words of Malkiel, a blindfolded chimpanzee throwing darts at the Wall Street Journal could select a portfolio that would do as well as the experts. The advice is not literal. The emphasis is on the point to buy a broad-based index fund that buys and hold all the major stocks in the market and charge very low fees.
What I liked about the book: The book uses a scientific, fact based approach to impress upon concept of index investing. It contains plenty of useful information to help a new investor understand the complexities of the market and how avoiding the noise can actually work in your favour.
Some cons: The book seems to be aimed more at US-centric audience. I found the book to be more theoretical. Also, it tends to project that it is impossible to beat the market in the long haul.
However, you will find plenty of investors who have managed to do so using value investing.
Nevertheless, for majority of investors, Malkiel’s thoughts make a lot of sense.
A book written by Mary Buffet, former daughter-in-law of Warren Buffett tries to provides an inside view on Warren Buffet’s thought process while investing.
This book explains in simple terms Warren Buffet’s approach to investing tagged Buffetology.
It dives deep into the fundamental questions of what stocks to buy and at what price giving examples from Warren Buffet’s life. Mary also gives a lot of practical tips on how to implement the approach.
Predictability of earnings, consumer monopolies and impact of price on the returns are some of the key themes running through the book.
It also gives a good idea of kinds of business models that can be good investments.
What I liked about the book: The book explains some of the key concepts used by Warren Buffett in a very easy to understand way. It is a simple read for a beginner investor and provides a good introduction to stock market investing.
Some cons: While the book does provide valuable information in very crisp manner, it is not an in-depth guide on investing and doesn’t cover the breadth of Buffet’s analysis. The book is centered on the Buffet’s approach in growth investing.
Mary Buffet has written multiple books on Warren Buffet including New Buffetology and Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage
If you are an absolute beginner looking to get started in the stock market, you can consider these books:
#1. Warren Buffett’s 3 Favorite Books: A guide to The Intelligent Investor, Security Analysis, and The Wealth of Nations (Warren Buffett’s 3 Favorite Books Book 1)
If you are an absolute newbie investor with no financial background, this is one of the books that you should go for. It gives a very simplified and easy to understand version of investing fundamentals using wisdom from the three authority books on this topic: The Wealth of Nations by Adam Smith, Security Analysis and The Intelligent Investor by Benjamin Graham.
The best part about the book is the way in which the concepts are explained, using a story telling format. It is definitely one of the most simple reads to understand the basic concepts of stock market investing for beginners.
This is a must read book for beginner investors 2018 with no financial background to understand the key concepts.
#2. The Five Rules for Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market
This book provides an in-depth guide on how to make money in stocks. The book is broadly divided into two sections.
The first section deals with various fundamental techniques for analyzing a stock to identify a good investment, evaluate a company and stock valuation including ratio analysis i.e. PE ratio, PEG etc. This includes a 10 minute test to quickly filter out stocks.
The second half talks about qualities of moat investment and analysis of variety of industries from stock investment perspective.
Themes in this book:
1) Do your homework.
2) Find economic moats.
3) Have a margin of safety.
4) Hold for the long haul.
5) Know when to sell
3. Stock Investing For Dummies
The title says a lot about the contents. This book is a good investment primer covering a lot of basics to familiarize yourself to help you get started on investing in the stock market as a beginner.
You can also read Peter Lynch’s Learn to Earn: A Beginner’s Guide to the Basics of Investing and Business.
Another good book if you want to read and understand financial statements is Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports .
You should not be overwhelmed and make a start considering your knowledge and interest. All the above books have a lot to offer, but you should pick one that appeals to you.
If I were to suggest for a beginner investor, I would suggest you to go ahead with “One Up on Wall Street” and “Five Rules For Successful Stock Investing”. These books are an easy start but have a lot of value to offer. You can then move on to the classics like “Intelligent Investor” and other Warren Buffet Books.
If you have already read the classics and all beginner books on stock market investing, you can have a look at these books which are a broader read written by World’s Best Investors.
#Principles by Ray Dalio (Published in 2017)
#Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger
#The Most Important Thing: Uncommon Sense for The Thoughtful Investor
Mohnish pabrai’s recommended Best Investing Books For Beginners
- 1957-70 Buffet’s Partnerships Letters
- Warrant Buffet’s Berkshire Letters
- Buffet the making of an American Capitalist
- The Snowball Warren Buffet and the Business of Life
- Poor Charlie’s Almanack
- The Dhandho Investor
- Berkshire Hathway Letters to Investors
- How to Get Rich- Felix Dennis
- The origin and evolution of new businesses
Some Free Resources to learn about stock market investing:
- Warren Buffet’s Partnership Letters (1957 to 1970)- You can google this
- Warren Buffets Letters to Shareholders of Berkshire Hathaway
- Howard Marks Memos
Which is your favourite book? Let me know in the comments……….
Hi, I am CA with a passion for personal finance and investing. I use this blog to share helpful money gyan that I have learned the hard way.