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Suggested Readings on Investing

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HaloNoble6

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My recommendations would really depend upon what level of education you're seeking to acquire and what your goal in investing is.

However, for a general level of education, I can recommend Investing for Dummies. It's a comprehensive book which covers a lot and is great for someone just entering the investing world - it covers stocks, bonds, REITs, Index funds, ETF's (I think), Mutual funds, etc... and gives good advice.

(However, he takes a shot at Ayn Rand in the version I have by saying that her formulation of capitalism as suitable to a selfish individual is incorrect and that capitalism's wealth can be shared with everyone - yuck).

Other books for stock-picking that I've read or plan on reading:

Value Investing for Dummies - Sandler

The Warren Buffet Way - Hagstrom

The Intelligent Investor - Grahm

Security Analysis - Grahm

Random Walk Down Wall Street - Malkiel

But, some of these books may not be applicable to you if you don't plan on being a stock-picker.

In addition, read the WSJ. (I just got my free 3 week subscription!).

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felipe,

Out of that group, I think the Malkiel book would be best as a first read, because it addresses big questions first, and will provide lots of cautions that are useful to a novice investor - things that prevent you from losing lots of money or wasting money. My main caveat on Malkiel is that he promotes the Capital Asset Pricing Model, which is flawed in my opinion. However, lots of beginning investors would be better off if they behaved as if it were true, focusing on diversification and risk management. Malkiel can also help you decide what kind of investor you should be.

After you decide what kind of investor you plan to be, then you can better decide what else to read. If you plan to mostly invest in mutual funds, then you may want to read books that relate to that. If you plan to make short term trades or invest long term, then different books are called for.

I work in equity research and hold the CFA (Chartered Financial Analysis) charter, but the things I read and like the best are probably of little use to most non-pro investors. For those looking to analyse stocks, I think one needs to understand the entire business environment, understanding business management, theory of competitive advantage, marketing, accounting, economics, corporate finance, and valuation theory, as well as portfolio and capital market theory. That's pretty much the whole course for the CFA program. see www.cfainstitute.org They have a small section for individual investors.

I think some investors waste their time by spending too much time on investments. It's important, but sometimes its better to spend a few hours per year with a passive investing strategy, adjusted over time, and invest your time and resources not on stocks or bonds, but the best investments for you, like your own business or profession, or your real estate, or a hobby you may enjoy more (though investing can be an interesting and rewarding hobby too).

Good luck!

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