Value investing books that I loved:
Updated: Apr 7, 2020
I have gotten a little obsessive with investing and investors in the past year or two. I'm officially a fan girl of Warren Buffett and Charlie Munger. Some of this has come from the investment reading I've been doing. I'd love to hear about more books to read on this subject. Here Are my current favorites (but the list grows constantly).
1) Danielle and Phil Town's book Invested is a great introduction to the investment world. It seems just about everyone is afraid of "adulting" these days (me included) and what is more adult-y than investing in the stock market? Phil Town, a very successful hedge fund manager, taught his extremely reluctant daughter, Danielle, that it's not something to shy away from. Danielle talks about her emotional hang ups with regard to money as she learned what to do in the market. If you are going to be successful with investing you must get pretty familiar with your own emotional state. Fortunes are lost by fear or greed -- not bad math skills. This book teaches you to take your relationship with money out of the emotional space and into the cold hard facts of the company. Yes, there is math involved, and reading and research. She goes through all of this as well in a lovely way. She and Phil explain it in layman's terms defining any relevant financial institution jargon as they go.
2) Once you've read that grab either or both of Phil Town's other two books Rule #1 and Payback Time. They are good follow ups to Invested. They get into the real details you need to value a high quality company and without overpaying for the shares. Yes, you will be checking out annual reports -- but they tell you where to find them (the company's website) and what to look for once you've found them.
"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down." -- Warren Buffett
3) The Education of a Value Investor by Guy Spier is the next favorite on the list. He recounts his early career on Wall Street. At that stage of his life he wasn't as much of a value investor as he was your typical modern portfolio theory graduate on the path toward being something of a shark. He learned what he could live with and what he could not. This included his ethics, his nerve, and his ego. As I read through the accounts of these investors it consistently hits me that self awareness is completely relevant. If you are not intimately acquainted with your emotional state you will lose money. You have to know your strengths and weaknesses. I have also noticed that these value investors are very concerned with how their chosen companies behave in the world. Guy Spier and the Towns definitely know that their money is supporting their principles. It is the most impactful way to "vote with your money." This requires research. You must know and like the product and service, how the company behaves in the world and which values they uphold. Guy Spier's book made me excited about the prospect of putting my money in something that I value.
4) The Dhando Investor by Mohnish Pabrai is the next favorite. This book goes through the importance of keeping the risk low. His idea is that, "Heads, I win, Tails, I don't lose much." This means that you have to get a low cost asset with room to grow that is simple enough not to have a surprise fail. The possible failures are mostly calculable. If some unforeseen failing occurs you won't lose too much. Pabrai seems to be flush with patience -- an extremely high value asset for investors. It is a simple straightforward, honest method.
All of the writers of these books emphasize simplicity and clear understanding of the company you are researching. If it is too complex or way out of your wheelhouse, move on. They also seem to have a keen sense that their money is supporting companies and industries so these should be things that ally with their personal values. That is my favorite part of the whole thing. Value investing is also values investing. (I'm feeling pretty clever with that one!)
**Side note/disclaimer: If you click on the links in this blog I will get a wee commission for the books. I only promote the stuff I truly like and have found value and real use in my own life.**