I have been a student of the stock market since my father and great uncle Andy sat me down in 1974 and started teaching me the beauty of investing in Exxon. This was during the oil embargo and my father’s restaurant “The Highland Diner” was situated right next to a gas station. I saw first hand the theory of supply and demand in action as cars where lined up 15-20 deep to fill up. In that year I bought my first shares of Exxon with $100 and eventually opened a dividend reinvestment plan with the company.
Working in that restaurant I also saw that every table had a Heinz ketchup bottle on it and my job at the ripe old age of ten was to manage the bottles and make sure that their were no “empties” on the tables. I saw with my own eyes the power of the trademark and invested in Heinz as well.
For the next ten years I invested most of my pay in those two companies and then went eventually big into Coca-Cola in 1984. I did this after going to college in Europe and seeing how addicted everyone was to their products.
Getting a Real Education by Reading
About every three months I would get quarterly reports from Exxon and Heinz and I would sit for hours trying to understand them. This was way before the age of personal computers and if you wanted to use a computer you needed punch cards and to work in a room the size of a cafeteria . The Internet was at least 15 years away and asking your Dad was as close as you could get to Googling an answer. In those days if you wanted to understand what “Book Value” meant in an annual report you had to go to the library and research it.
Many of you probably feel sorry for me for having to labor so and not having the technology available that everyone takes for granted today. But you should not do so, because I was forced to read in order to find out what price earnings ratio’s and return on equity meant.
While in the library I stumbled across 100’s of books on investing and read everyone I could get my hands on. By the time I was 20 years of age I knew about Benjamin Graham, Warren Buffett and Philip Fisher and was a big fan of Malcolm Forbes Sr.. I would do spreadsheets by hand and can you believe it on paper! It was not until 1990 that I converted to my first PC so I had a good 15 years of reading books in order to learn my trade.
What was I reading? Well the following list is what I consider essential reading for anyone who wants a strong foundation in investing. I will not detail each book, but just list them and provide links to Amazon so you can read the details on each one, (If they are still in print). By reading these books you will learn to not just be an observer of the markets but to become a true participant. You will never again have anyone pull the wool over your eyes and sell you some ponzi scheme or tell you that you can be a successful investor by just doing his system 15 minutes a week. Successful Investing requires hard work and a keen understanding of the terminology that is used. Without it you are flying blindfolded and will make many mistakes. The worst thing one can do in this business is to learn by trial and error. The following books contain the vast experiences of money masters and will save you thousands of dollars in mistakes. The following are the best investments you will ever make.
The Daily Regiment
First I would subscribe to the following:
– The Wall Street Journal = To learn in depth stuff on companies in real time.
– Investors Business Daily = A quick visual way to examine 100’s of companies a day.
– The Economist = The master information source for international investing.
– Forbes = A great source for in depth information on management of companies.
The Weekly Regiment
– The Library Periodical Reading Room = Despite what everyone thinks one can find 100’s of articles on companies that are not on Google, which may shed some light on a company that you are ready to invest in. You can spend a few hours at the public library and read past articles of the Wall Street Journal or trade magazines to give you a fuller picture on a company.
– Value Line Investment Survey = Most public libraries have this guide available or you can subscribe if you have the money. It is the best data source for information on over 7300 companies that you will find anywhere.
== THE READING LIST ==
Books by John Train:
– The Money Masters
– The New Money Masters
– Money Masters of our Time
– Preserving Capital and Making it Grow
– The Craft of Investing
– The Midas Touch
– Famous Financial Fiascos
Books by Benjamin Graham
– The Intelligent Investor
– Security Analysis -1934 edition
– The Interpretation of Financial Statements
– Benjamin Graham : Memoirs of the Dean of Wall Street
Books by or about Warren Buffett
– The Essays of Warren Buffett
– The Warren Buffett Way by Robert G Hagstrom
– Buffett: The Making of an American Capitalist by Roger Lowenstein
– Buffettology by Mary Buffett and David Clark
– The Warren Buffett Portfolio by Robert G. Hagstrom
Books by Philip Carret
– The Art of Speculation
– A Money Mind at Ninety
– Common Sense from an Uncommon Man
Book by Philip Fisher
– Common Stocks and Uncommon Profits
Books by George Soros
– The Alchemy of Finance
– George Soros on Globalization
– Soros on Soros: Staying Ahead of the Curve
Books by Jim Rogers
– Buying Commodities
– Hot Commodities
– Investment Biker
– Adventure Capitalist
Books by Peter Lynch
– One Up On Wall Street
– Beating the Street
– Learn to Earn
– The Wealth of Nations by Adam Smith
– Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay
– Margin of Safety (Out of Print) by Seth Klarman
The above is a great list to build a strong foundation as an investor. In those books you will find theories that have worked and not some “You TOO can be a great investor” books like the majority of the writings you see today.
To master the art of investing requires knowledge which must be gained on ones own. Understanding the terminology of the stock market is just as important; so spend some time and master the art so you don’t follow the crowd. Most of Wall Street acts in unison, those (like the authors above) have made their fortunes by acting independently of the lemming mentality that is found on Wall Street. Do your own homework and concentrate the limited time that you have to devote to investing by concentrating on what has worked in the past. Those above have not reinvented the wheel but have mastered the art of investing and the methods of their predecessors. They have then taken those ideas and have spent their lives trying to improve on them or make them relevant to the time they live in.
Civilization advances by passing the torch to the next generation, so grab that torch and master these writings and then innovate. That’s what makes life worth living in my book.