The 10 best investing books
From the most successful investors of all time
I read them so you don’t have to
Here are the 10 most powerful lessons I learned from >100 hours of reading:
//THREAD
From the most successful investors of all time
I read them so you don’t have to
Here are the 10 most powerful lessons I learned from >100 hours of reading:
//THREAD
Some of the Authors:
- Chris Mayer
- Peter Lynch
- Philip Fisher
- Edwin Lefevre
- Warren Buffett
- John Rothchild
- Benjamin Graham
Some of the books:
- 100 Baggers
- Security Analysis
- One Up On Wall Street
- The Intelligent Investor
- The Essays of Warren Buffett
- Chris Mayer
- Peter Lynch
- Philip Fisher
- Edwin Lefevre
- Warren Buffett
- John Rothchild
- Benjamin Graham
Some of the books:
- 100 Baggers
- Security Analysis
- One Up On Wall Street
- The Intelligent Investor
- The Essays of Warren Buffett
1: Process, process, process!
Investors need a sound intellectual framework for making decisions, as well as the ability to prevent their emotions from getting in the way of it
It's something I emphasize a lot to clients, it means...
Investors need a sound intellectual framework for making decisions, as well as the ability to prevent their emotions from getting in the way of it
It's something I emphasize a lot to clients, it means...
You need to find a strategy that works for you, your own goals, your time horizon, and risk appetite
Write all of these things down.
Whenever you're about to buy or sell, refer back to this
If that move isn't aligned with what you wrote, you're likely acting on emotion
Write all of these things down.
Whenever you're about to buy or sell, refer back to this
If that move isn't aligned with what you wrote, you're likely acting on emotion
2: When you buy a stock, plan to hold it forever
If you've done your research properly & the business' fundamentals remain intact, the best time to sell is never
I only sell a stock if the fundamental metrics breakdown or if capital is req'd for a faster-growing opportunity
If you've done your research properly & the business' fundamentals remain intact, the best time to sell is never
I only sell a stock if the fundamental metrics breakdown or if capital is req'd for a faster-growing opportunity
3: A new, small company can 20 x and still go on to 100 x from there
Basically, it’s easier for small companies to become 100-baggers than larger ones
Mayer states: the median revenue for the 365 100-baggers at the start of the study was ~$170M
With a median mkt. cap of ~$500M
Basically, it’s easier for small companies to become 100-baggers than larger ones
Mayer states: the median revenue for the 365 100-baggers at the start of the study was ~$170M
With a median mkt. cap of ~$500M
4: Buy right and hold on
Mayer states: ‘one who buys right must stand still in order to run fast’
He shows the idea using a coffee-can portfolio – buying the best stocks & holding onto them for 10 years
This approach is brilliant...
Mayer states: ‘one who buys right must stand still in order to run fast’
He shows the idea using a coffee-can portfolio – buying the best stocks & holding onto them for 10 years
This approach is brilliant...
Not only does it insulate an investor from market noise
It also protects them from emotions & volatility that could make them trade at the wrong times
Tip: bet big on your best ideas & avoid holding too many stocks. An ideal is 10-20 stocks - sufficient to diversify your risk
It also protects them from emotions & volatility that could make them trade at the wrong times
Tip: bet big on your best ideas & avoid holding too many stocks. An ideal is 10-20 stocks - sufficient to diversify your risk
5: Diversification can be dangerous
The benefits of diversification are exhausted when you own any more than 30 stocks
Mutual funds tend to own hundreds!
And this is partly why they fail to outperform the market
When your conviction is high, buy more of that stock
The benefits of diversification are exhausted when you own any more than 30 stocks
Mutual funds tend to own hundreds!
And this is partly why they fail to outperform the market
When your conviction is high, buy more of that stock
6: Owner-operator companies tend to outperform the wider market over the long-term
A 2012 study showed companies managed by the world’s billionaires outpaced the index by 7%/Yr.
When these guys have sizable ownership, they're likely to be aligned with shareholders’ interests
A 2012 study showed companies managed by the world’s billionaires outpaced the index by 7%/Yr.
When these guys have sizable ownership, they're likely to be aligned with shareholders’ interests
7: Market behavior
The more volatile and bearish the market’s behavior, the greater the opportunity for the disciplined investor
Another point I preach often - short term price volatility is the price we pay for superior returns over the long term
Case in point...
The more volatile and bearish the market’s behavior, the greater the opportunity for the disciplined investor
Another point I preach often - short term price volatility is the price we pay for superior returns over the long term
Case in point...
If you used a time machine to travel back and invest in the 20 best-performing stocks of the last 15 years
Your portfolio would suffer multiple 40% declines
Some stocks would fall as much as 70%
But you would have achieved a 29% annualized return.
Buy high conviction & hold!
Your portfolio would suffer multiple 40% declines
Some stocks would fall as much as 70%
But you would have achieved a 29% annualized return.
Buy high conviction & hold!
8: Low-cost index funds are sensible for most investors
If you can't avoid the following:
- Trying to time the market
- Taking excessive risks
- Trading on emotions
- Venturing outside our circle of competence
Just stick to index funds. You'll see more success with less stress
If you can't avoid the following:
- Trying to time the market
- Taking excessive risks
- Trading on emotions
- Venturing outside our circle of competence
Just stick to index funds. You'll see more success with less stress
9: Look beyond yield
Stocks do well or poorly in the future because the businesses behind them do well or poorly
No other reason
As such, no matter how desperate they might be for income, no intelligent investor would ever buy a stock on the basis of its dividend yield alone..
Stocks do well or poorly in the future because the businesses behind them do well or poorly
No other reason
As such, no matter how desperate they might be for income, no intelligent investor would ever buy a stock on the basis of its dividend yield alone..
10: Sources of undervaluation
There are 2 principal reasons why the wider market will undervalue a stock:
- Currently disappointing results
- And protracted neglect or unpopularity
You should look for...
There are 2 principal reasons why the wider market will undervalue a stock:
- Currently disappointing results
- And protracted neglect or unpopularity
You should look for...
Reasonable stability of earnings over the past decade or more … plus sufficient size and financial strength to meet possible setbacks in the future
Such considerations form a significant part of my own investment process
Such considerations form a significant part of my own investment process
For years, I've studied the traits of the most successful investors of the last century, implementing the learnings into the successful strategy I teach in my community @SavvyInvesting_
If you found this helpful, please:
- Follow @FiSavvy
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If you found this helpful, please:
- Follow @FiSavvy
- Retweet the original tweet
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