The Motley Fool

For the bookshelf of the FTSE 100 investor – Part II

As we get ready to wrap another investing week, I’d like to discuss three books that both new and seasoned investors may consider reading this weekend. Obviously, reading any of these books will not make you a millionaire in a month, but they will likely help you equip yourself with time-tested principles and market wisdom.

Common stocks needn’t mean mediocre investments

Philip Fisher wrote his classic investing text Common Stocks and Uncommon Profits more than six decades ago. Many would regard him as the guru of qualitative analysis of stocks.

He believes that qualitative factors are crucial in determining the growth potential of a company’s earnings over the long term. Thus he emphasises what to look for in a growth stock.  

If you would like to find great companies that you never plan to sell, then you may want to read this book. He encourages investors to look at a company’s core business, operations, management, and any other information that might not be reflected in financial statements. 

Legendary investor Warren Buffett has said he is 85% Benjamin Graham and 15% Philip Fisher. Many of the concepts in the book are still as relevant today as they were when Fisher first penned them.

Five steps

If you are looking for a step-by-step guide on how to organise your investment approach, you may want to read The Five Rules For Successful Stock Investing by Pat Dorsey. He ran equity research at Morningstar before leaving to start his own asset management company in recent years.

The author introduces five rules that may help in successful stock investing, namely

  • Do your homework,
  • Find economic moats,
  • Have a margin of safety,
  • Hold for the long haul, and
  • Know when to sell.

On finishing the book, readers will likely have a better appreciation for the inner workings of a company and its management as well as how to identify and evaluate good businesses. You will come across a decent amount of industry and company analysis as well as financial statements, management, and valuation.

The core message for the investors is discipline, research and caution. I regard my copy of the book as one of my best investments.

Learn from two of the best

When it comes to investing success, there are several names that immediately come to mind. Mark Tier’s book Winning Investment Habits of Warren Buffett and George Soros brings together two investors with completely different approaches to being successful in the markets. Yet both are regarded as among the best money managers.

Warren Buffet is better known for his long-term and value investing approach. On the other hand, George Soros may be better know for his fund’s more opportunistic and short-term approach, especially to currencies, commodities and stocks and derivative products.  

In other words, the two are at opposite ends of the investor-trader spectrum. Yet I believe that Mr Tier has done a skilful job of finding common ground in the investment practices (as well as mental habits) of Mr Buffett and Mr Soros. 

Those readers who would like to learn more about the two legendary investors may want to read The Warren Buffett Way by Robert Hagstrom or The Alchemy of Finance: Reading the Mind of the Market by George Soros himself.

And of course, don’t forget to read The Motley Fool regularly!

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn't easy. But you can get ahead of the herd by reading the Motley Fool's FREE guide, “10 Steps To Making A Million In The Market”.

The Motley Fool's experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide.

Simply click here for your free copy.