Stock Picking Books for Beginners

“By far the best book on investing ever written.” (Warren Buffett )
“If you read just one book on investing during your lifetime, make it this one” (Fortune )
“The wider Mr. Graham’s gospel spreads, the more fairly the market will deal with its public.” (Barron’s )

The 6 principles of “Guru Investing” (what I personally called investing philosophy):
1. Combining strategies to minimize risk and maximize returns
2. Stick to the numbers or the market will stick it to you
3. Stay disciplined over the long haul
4. Diversify, but you can’t beat the market by owning it
5. Size and style – focused systems only limit investment possibilities
6. You don’t have to hold stocks for the long term to be a long term investor

“When you have read Benjamin Graham analysing current ratios and balance sheets until you have decided that stock picking can be done by computer then (and only then) is it time to read Phillip Fisher. Phillip Fisher searches for “growth stocks”, companies with superlative management (superior sales force, superior research and development, clear focus on the business) and he holds their stocks FOREVER. You can read this book and find not a single substantive mention of balance sheets, solvency, current ratios or any of the other things that most seasoned stock pickers rely on. Instead you find tips for analysing the scuttlebutt that you hear about a company and for testing whether management cuts the mustard.

1).Learn how the equity market works.
2).Learn how to evaluate stocks, How you judge a stock depends on whether you are a value or growth investor.
3).Learn how the master investors invest. Warren Buffet, Peter Lynch, Gary Pilgrim, William O’Neil, and Phillip Fisher.(I have read all the books he recommends and he is exactly right on these being the masters)
4).He discusses the studies of James O’Shaughnessy from the book “What works on Wall Street” This guy studied what stocks really did the best between 1951 and 1996, this book is a must have. Low P/E ratios and low price to sales ratios have performed the best.
5).He discusses how to double the return of the Dow by investing in the Ultra Dow UDPIX from ProFunds. They use margin to double the return of the Dow in whatever direction it goes. He also discusses many other Dow strategies.
6).Write down why you are investing in a stock so you know when to get out.
7).Choose a discount broker and stop wasting money on full service.
8).Research only 20 stocks at a time, use his stocks to watch work sheet to analyze the stocks value.
9).He explains the limit and market order, and the stop loss and stop order and when and why to use both.
10).He shows when to sell your stocks to lock in gains.

Do yourself a favor: Buy this book. Read it twice. It is not outdated…it is timeless. Yea, I know, you already know it all. My advice is to lose the ego and take a refresher course on common sense investing. When you finish, put it on your bookshelf. Do not give it to your kids or neighbors; buy them their own copies. This is a great book!

If you’re a serious investor with at least the discipline and patience than you demand of your own children, following this book’s counsel should help you to make more money with greater safety. It’s more accessible than The Intelligent Investor and a must read both for the novice and for the experienced investor who would like to pick up some distinctions that will improve his or her performance.

What Greenblatt has accomplished in just over 100 pages is:
1) An understandable explanation of what one useful way to identify a quality business is (ROIC)
2) An easy way to identify how to buy such a company at a good price
3) How to manage a real portfolio with this strategy
4) How to remove emotion and poor judgment from the investor’s actions
5) A short introduction to the statistical historical performance of this strategy, mentioning the typical pitfalls of data mining and backtesting and how he avoided them

he first half of the book deals with the psychology of both the market and the trader. I didn’t fully appreciate this portion of Dr. Elder’s book until I began trading. This is the biggest obsticle of the trader. His insight has really helped me to understand the movements of the market and myself as a trader.

The second half of ‘Trading for a Living’ deals with technical analysis and money management. This has proved invaluable to me. There is so much accurate information I’ve read the book eight times, that’s how jam packed it is with useable information. Also, every word matters–no fluff at all–unlike most of the books on trading I’ve read. And, don’t overlook his money management chapter. This is where amatuers fail. His simple money management system will help to elivate you to a professional trader. If you want to make money, this is the book.

What makes this book so good? It tells you how to build a real trading system. In the process, it exposes the prejudices and assumptions that cause people to lose money. For example: most people think that successful trading is a matter of picking the right stocks. Believe it or not, this belief sets you up to fail. Before reading this book you would probably rank as most important: (1) knowing when to get into the market; followed by (2) knowing when to get out of the market; (3) knowing how many shares or contracts to buy/sell; (4) understanding the psychological factors involved. The book makes a strong case that this ranking is exactly backwards! In other words, when it comes to trading it reverses your entire worldview. (It certainly reversed mine.) Some of these ideas are common, but Tharp tells you *what* and *how* to do. Not on the level of “here’s a great trading system,” but on the level of “here’s how you *make* a trading system”, oh and by the way, here’s why you *need* to make your own system.” That’s a huge, huge difference, and other books on the subject are shallow by comparison.

I highly recommend it to anyone who is involved in the markets. Simply stated, this is THE book for anyone who wants to learn about trading or investing — It is simply a must read.