Better Trades Books: Investing Books

Intelligent Investors

Just because a book was first published in 1949 doesn't mean it is irrelevant. In fact, "The Intelligent Investor" by Benjamin Graham may be more apropos today than it was when it was written 60 years ago. For students who want to learn how to be a better investor, this investing book can be indispensible. Millionaire investor Warren E. Buffett says the book was "By far the best book on investing ever written."

A student at Better Trades University can benefit from using "The Intelligent Investor" in their process of becoming a better trader. It is a classic investing guide and is a must-read for anyone who is interested in buying and selling stock. Graham teaches how to recognize companies that will build value, especially those who may be at a devalued price. A lot of emphasis is placed on fundamental analysis of a company before making a decision to buy.

In this book, Graham encourages the investor to avoid getting burned by participating in "market folly." He encourages investors to concentrate on real life performances of their companies and receive dividends instead of being concerned about the irrational behavior of the market. He effectively uses an allegory of "Mr. Market" throughout the book, a literary technique that can hammer home important information in an interesting, compelling manner.

Graham developed the concept of "value investing," which he designed to help protect investors against the areas of possible error, while teaching at Columbia Business School. He preaches the development of long-term strategies. The strategies that Graham put forth in this book speak to the defensive investor and those who are more aggressive. He outlines the principles of stock selection and stresses the advantages of a simple portfolio policy, information that can help the ready become a better investor.

Graham put forth many concepts that are explained in this book and can be very helpful for students looking to become a better investor. For example, Graham writes that:

• The market is a pendulum that swings between unsustainable optimism and unjustified pessimism. The intelligent investor buys from pessimists and sells to optimists.
• The future value of every investment is a function of its present price. The higher price you pay, the lower your return will be.
• No matter how careful you are, you can never eliminate the risk of being wrong.
• The secret to your financial success is inside you. By developing your discipline and courage, you can refuse to let other people's mood swings govern your financial destiny.

This is an investing book that teaches how investment portfolios should be constructed to meet specific requirements of quality and price. He uses the comparison of pairs of common stock to bring out their elements of strength and weakness.

There are many editions of this book in print today. The fourth edition, published in 1973, contains Graham's original footnotes. These can be source of great information.

One Up On Wall Street

More than a million copies of the Peter Lynch book, "One Up on Wall Street," which speaks to the popularity and veracity of the material contained in the New York Times bestseller. Lynch made his bones as managing director of the enormous Fidelity Magellan Fund and has put together this course on equity investing, designed to help you become a better investor. With this book you can get a head start on the competition.

Lynch says someone who wants to become a better investor needs to ask basic questions about the market, such as:

• How much you trust Corporate America?
• Do you need to invest in stocks, and what you expect to get out of them?
• Are you a long-term or short-term investor?
• How will you react to sudden, unexpected and severe drops in price?

Lynch says an average investor can beat the professional on Wall Street by using information gleaned from everyday life. Throughout this investing book he preaches the importance of common knowledge. He pounds the fact that no one is required to be a Wall Street analyst or insider to find great investment opportunities.

One concept that new investors will find interesting in the book is the notion of a "tenbagger." This is defined as a stock that increases 10 times its value from the time of initial investment. A stock bought at $10 that runs to $100 is a "tenbagger." Lynch writes that a person who buys six stocks, watches five go to zero and one become a "tenbagger" has created a 66 percent rate of return.

Above everything else, Lynch says an investor must do their homework. Once a student identifies companies with potential, it's time to dig in and do the research. A thorough investigation of a stock can reveal strengths and weaknesses; it might even prevent you from investing in a company that is rotten on the inside.

Lynch encourages investors to buy into companies they like. He personally bought Yum Brands, because he enjoyed eating at Taco Bell. He bought Waste Management after observing the amount of refuse produced by an average consumer (many who probably ate lunch at Taco Bell). His mantra: Invest in what you know.

You can become a better investor with this book. It offers important lessons and advice on buying stocks. The material is simple and logical and easy to follow. This trading book belongs on the shelf of every investor, whether they're a newcomer or a veteran. It never gets old. It never gets out of date.