The best book on investing

Managing your earnings and savings as an intelligent investor is a basic duty if you plan to travel as much as possible. Investing well is an art that requires study, practice, and experience, but also one that returns great benefits. And not only purchasing capacity.

But if you think that learning about investments and money management is not for you, remember the say: ““When a person with money meets a person with experience, the person with the experience winds up with the money and the person with the money winds up with the experience”. 

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Become a real investor

The intelligent investor

If I had to choose only one of the 20+ books on investing and money management that I have read over the last five years, The intelligent investor, by Benjamin Graham, would be the one.

The intelligent investor is a classic, and not only because it was first published in 1949. Indeed, it has seen a good several editions printed. It has been at some point prefaced by Warren Buffet and updated with commentaries by Jason Zweig more recently.

According to Buffet: this is the “best book on investment ever written”. Based on the books I read on the matter and the return I got from all them, I would have to agree.

I got to read this book in 2013 for the first time while studying financial trading. Since that time, I try to read it once a year, nowadays going through the already underlined sections. I have underlined the book three times already since the yellow marker disappeared after the second year.

I find the advice contained in this book more perennial and useful than what I have read in many other books which showed to be less serious pieces of work. With other books on investing and money management, I always felt like somebody was trying to sell me something.

Thanks to this book, my stock-picking skills have been sharpened to the point of having only profits when exiting an investment. In the last three years, the investments I have exited met at least a profit of 10%, and up to 25% for funds, and 30% of individual stocks.

This book taught me how to recognize the underlying values of the companies represented by the stocks.A better understanding of market dynamics and timing has completed the equation for me. 

What is inside?

investing

Graham starts differentiating investment from speculation. This is a very important distinction since most of the people end up falling in the second while looking for high returns.

He then goes into explaining how stocks market work, based on a century of the historical data analysis. Once the grounds have been set, the author will separate investors into “defensive” and “enterprising”. He will then tailor his advice to each type of investor.

The people who look for protecting his money while seeking a moderate growth at a low risk will fall into the first category. Those looking for higher returns and willing to accept higher risks (not speculative risks) will fall into the second category.

Explaining how stocks markets function, and how to spot valuable stocks are the backbone of the book. Yet, the book is completed with recommendations about other investment options as well. Graham talks about investment funds, real estate, gold, derivatives, etc. And the section on money management is to be praised as well.

Serious, yet fun to read

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This is a serious book, with a sober cover, a non-boastful title, and without empty promises. The title does not include words like “millionaire” or “rich”, or “effortless”, and that might discourage many. Other books out there invite the reader to speculate with their money while pretending they are investing. Graham makes a clear distinction between both and advises against the first. 

But it is also a fun book to read for those interested in stock markets, investment, and money management.  It has tons of interesting examples and anecdotes.All the technical terms are explained in a footnote with examples and references to other works. 

This book contains advice that has endured decades of markets ups and downs, economic crises, economic booms, and bubbles.

If you want to protect your money (first) and make it grow (second), I recommend you to read The intelligent investor.

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