Investing Beginner Books
The Little Book of Common Investing
Author: John Bogle
The main objective of the little book of common investing is to demonstrate the superior results achieved by index investing over the years.
This book illustrates the power of compounding but it also shows that excessive fees can diminish this compounding effect.
To illustrate these facts, John Bogle makes the comparison of various performances over 25 years, from 1980 to 2005.
Over the years, the index S&P 500 has an annualized performance of 12.3 %.
Meanwhile, active US managed funds returned an annualized of 10 %.
Finally, the author shows that an individual investor has reported an annualized performance of only 7.3 % over the same period.
These performances show not only that active investing is not a good choice but they also underline the poor performance of the individual investor.
For Mr Bogle, this poor performance is due to investor’s behavior, investing in wrong sectors at wrong moments. For example, during the dotcom bubble a lot of funds have been invested in technology stocks.
Additionally, Bogle explains that if you want to achieve good results, you should invest in broad index fund using dollar-averaging investing.
This book is really an easy read and can be covered in only few hours. As a critic, you can say that it book contains some repetitions and could have been shorter. That being said, the little book of common investing is worth reading.
Buy The Little Book of Common Investing by John Bogle
May 01, 2012
Bond Investing for Dummies
Author: Russell Wild
The author Russell Wild is a seasoned investment advisor and author of Exchange traded fund for dummies. He assumes that you know nearly to nothing about investing.
The best thing about this book is that it not only explains the how bonds work but it also describes how to implement bonds in an investing strategy.
Russell Wild explains various the various concepts related to bond investing like yield but without showing complicated formulas.
»Various types of bonds are explained: Government bonds, corporate bonds, agency bonds, municipality bonds and exotic offerings like church bonds.
»The different risks when investing in bonds are also developed.
»This book shows you how to add bond to your investment portfolio.
»Finally, a list of various bond funds is presented in one of the last chapters.
Bond investing for dummies is an easy read. It provides solid foundation for anybody interested in bond investing. As a negative point, this book can sometime appear repetitive.
That being said it is an excellent read for beginner and intermediate investors interested in bond investing.
Feb 19, 2012
The Little Book That Beats The Market
Author: Joel Greenblatt
The author, Joel Greenblatt is the founder and a managing partner of Gotham Capital, a very successful hedge fund.
Mr Greenblatt proposes a magic formula for investing in stocks. This formula is based on two measures: earning yield and return on capital.
»Where earning yield is defined as EBIT divided by enterprise value (Market Value of Equity Including preferred + Net interest bearing debt)
»Return on capital is defined as EBIT divided by net fixed asset and net working capital.
To put in place this strategy, the author advises to use a broker with an annual or monthly flat trading fee. Regarding taxes, Greenblatt indicates to sell losers 3 days before 1 year to maximize deductions and selling winners 3 days after 1 year to minimize capital gains taxes.
About the efficacy of this formula, it is true that the back tested performance seems amazing. But we all know that back tested performance reflect past data and the future can be quite different. Furthermore, the formula has bias toward industries requiring low capital investments (ie software industry).
Anyway this book has the merit to propose a ready to use formula based on simple numbers. The author insist on the fact that most professional manager cannot put in place this strategy because the magic formula can produce negative result on the short term. Professional fund manager are always under pressure by clients to produce positive results each year.
If you have liked the Greenblatt's ideas, you can further go to Magic investing formula’s website where you can use the magic formula for free.
Don’t forget to read the appendix; contrary to regular books this is the most important part, with a good introduction to the intrinsic value of a company.
To conclude this book is a very easy read and can be readed in two hours.
Feb 10, 2012
The Bogleheads’ Guide to Investing
Authors: Taylor Larimor, Mel Lindauer and Michael LeBoeuf
Disciples of John Bogle have written this book. Mr Bogle is the founder of Vanguard group and considered as the father of index investing.
Topics and advices covered are:
» Invest in something you can understand.
» Investing in index funds is most efficient and cheapest way to invest in financial markets.
» The authors underline the importance of a good asset allocation and a diversified portfolio.
» Help you to determine if you need an advisor and how to select an advisor.
» Review the major psychological bias when investing.
» Why investing medias should be turned off.
» Chapters on taxes and saving for college are obviously directed to an American audience.
This book goes beyond regular investing topics by explaining:
» What to do when you receive a money windfall, being well insured or how to ensure your assets are enough to cover your retirement.
This book is an easy read and very well written. Furthermore it is fun to read. The various authors are very talented and experienced investors.
Because of quality of subjects covered, this book is definitely a must read.
Feb 04, 2012
Index Investing For Dummies
Author: Russell Wild
The author doesn’t believe in active investing, he supports more index investing, believes in investment diversification and thinks that investing for the long run in a small cap index for example is preferable.
This book is very easy to read and provides exactly what you are looking for when buying it: a useful guide on how to perform index investing.
The first part of the book arguments why index investing is superior to active investing: performance is usually better especially after fees.
If you want to put in place an index investing strategy, you usually have two investment vehicles: Mutual funds and exchange traded funds. The author covers this two investment types by comparing them along the way.
You will find a short online broker review that will help you to find the right one when doing index investing. The author exposes various ETFs and Mutual funds, showing their advantages versus disadvantages.
A large part is dedicated to the allocation of various index instruments when creating an investment portfolio.
This book also contains a short interview of the father of index investing: John Bogle.As always with the dummies series, the book concludes with ten do and don’t.
This is an excellent book if you want to create your own investment portfolio. Index investing is maybe the cheapest and the most efficient way to invest for common people.
Jan 27, 2012
Stock Investing For Dummies
Author: Paul Mladjenovic
Stock investing for dummies covers all the basics concepts when investing in stocks: Decoding financial statements, choosing a broker, analyzing industries or understanding trading orders.
This book will help you to understand how stock markets work, how they are influenced by politics and economics. This book provides excellent resources for stock investing: investing websites, investment resources, books and magazines are provided.
Risk is part of investing: interest rate risk, market risk, inflation risk among other risks is explained. Furthermore, this book is a good introduction on how market cycles work. The author seems pretty knowledgeable about macroeconomics and economic cycles.
This book gives practical examples on how to invest for common people: Investor with less than $10‚000, investors with $10‚000 and $50‚000 and investors with more than $50‚000 to invest. These advices are helpful to know on how many stocks you should invest according to your fortune.
As always with the dummies series, this book is directed to an American audience. That being said, the information strictly directed to U.S people is minimal.
This book is an easy read and well written it will help you to find relevant information before investing in stocks. Unfortunately, if you are looking on how to pick up individual stocks, you should refer to other books like value investing for dummies for example.
Click here if you want to know more about Value Investing books.
Jan 19, 2012
Value Investing For Dummies
Author: Peter J. Sander and Janet Haley
This book is well written and easy to understand. Furthermore it provides various resources like web links and checklists for analyzing stocks.
The book is principally divided in 3 parts:
The first part describes what value investing is. It gives you an interesting retrospective regarding markets and market performance.
The second part is dedicated to basic tools you need when analyzing financial statements: Balance sheet, income statement and statement of cash flows. Even if this part is based on numbers, it is an easy read and it will help you to understand the major drivers in financial statements.
The last part introduces which elements to look before investing. If you don’t know where to start before investing in a stock, you will be pleased with the checklist provided in this book. This part also helps you to decide when the price of an investment is right. For example, the price earning ratio and PEG are well explained.
My only critique is that book contains some typo errors. On the overall, this book is a good introduction to value investing, it gives you a correct overview of critical aspects like intrinsic value and strategic value.
If you want to know more about value investing you can refer to authors like Benjamin Graham (the father of value investing), Warren Buffett (not really an author but he is considered as a guru for value investors), Peter Lynch or JOE Greenblatt.
Click here if you want to know more about Value Investing books.
Jan 03, 2012
Investing in an Uncertain Economy For Dummies
That’s being said, it is an excellent book covering many issues related to financial planning.Various authors have contributed to this book. Nearly all of them are certified financial planner.
If you are planning to see a financial planner, this book will help you to prepare this meeting. It will also help you to understand various topics related to financial planning like planning for retirement, investing, dealing with your investments during retirements.
Please note that chapters on taxes, investment plans or medical care programs are directed to an American audience.
Part I is about starting with a solid foundation before investing, putting in order your finance before committing any money to investments.
Part II reviews all investment spectrums. From savings, certificate of deposits to commodities, options and short selling.
Part III explains how to reduce risk with your investment by diversifying and create an appropriate allocation.
Part IV describes various investment strategies (depending on your profile) are explained.
The last two chapters are dedicated to investing for and during your retirement.
This book is written in plain English and it is a really an easy read.This book is a good introduction to various concept related to investments. Plus it will provide you with solid information about portfolio construction under various scenarios.
Dec 20, 2011
Investing for Dummies
Author: Eric Tyson
Note: This book is about investing, not trading or speculating.Even if you are not a beginner at investing you will found this book informative.
The book is written in plain English, so even the most novices to investing can understand this easily.The author has illustrated his book by a lot of examples, facts and graphic representations.
Please note that this book is directed to an American audience, for example the taxes subject can be useless if you are living outside the U.S.
3 topics are covered:
»Stocks, bonds and mutual funds investments.
»Real estate investing
»Small business investing
Even if real estate and small businesses are part of the investment world, the author overemphasis a bit on these two subjects. It is difficult for most people to invest in real estate or small businesses because it generally requires a consequent lump sum commitment.
Additionally, I don’t agree with the author about avoiding picking your own stocks. I was expecting more on portfolio allocation, stocks and bond selections. Instead, the author proposes only a brief introduction on how to pick up mutual funds.
Furthermore the exchange traded funds part should have been longer as they represent the mutual fund future (ETFs are cheaper and and more efficient).Other investment vehicles should have been exposed (even if they are generally for destined for seasoned investors), the author hardly speaks about REITS, nothing on options, futures, forward contracts or commodities.
The title of this book should have been "personal finance, real estate and small businesses".
That being said, this book remains a good introduction to investments, especially for its conservative approach regarding investments. To conclude, it is a good introductory book about investments before moving onto more complicated financial books.
Dec 10, 2011