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The Intelligent Investor (5 Stars)

Though I am not a strict Graham-and-Dodd investor (who is?), I apply the basic principles to most of what I do. This is still a relevant book today because the principles are timeless. If you want the updated version with writing from Jason Zweig, that’s fine. You gain in current relevance, and lose a little in nuance. Graham was a very bright guy. I give Zweig credit for trying, but aside from Buffett or Munger, who would really be adequate to revise The Intelligent Investor? I don’t think I would be adequate to the task….

To buy the book: The Intelligent Investor

The Aggressive Conservative Investor (5 Stars)

It’s a good book. Together with Value Investing, it gives you a full picture of how Marty Whitman thinks about value investing. He is one of the leading value investors of our time, but he has spent more time than most on the underlying theory. For those who want to think more deeply about value investing, Marty Whitman is a highly recommended read. For those wanting still more, read his shareholder letters here.

To buy the book: The Aggressive Conservative Investor

Dear Mr. Buffett (5 Stars)

I heartily recommend this book.  One reading this will understand our current crisis very well, and will gain in his understanding of how our markets work.  That said, the virtues of the book do not come from Mr. Buffett, but from one who intelligently admires his views on derivatives and other matters.

You can buy the book here: Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street

The Only Guide to Alternative Investments You’ll Ever Need (5 Stars)

This is only indirectly a book on asset allocation.  It is not going to give you a set of procedures to tell you how to analyze your personal situation, the relative attractiveness of various classes at present, and the macroeconomic environment, and calculate a reasonable asset allocation for yourself, your DB plan, or endowment.  But it will give you the necessary building blocks to see how each alternative asset class fits into an overall asset allocation.

If you want to, you can buy it here: The Only Guide to Alternative Investments You’ll Ever Need: The Good, the Flawed, the Bad, and the Ugly

Margin of Safety (5 Stars)

All in all, a very good book on value investing.  Why not buy it?  Too expensive.  The book is good, but very basic.

To buy the book: Margin of Safety

Buffett Beyond Value (4 Stars)

It is a good overall book.  If you haven’t read a Buffett book, read this.  If you only understand Buffett to be a value investor, then read this book.

If you want to buy the book, you can buy it here:  Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing

The Only Three Questions That Count (4 Stars)

Who would benefit from the book: Investors with moderate experience in investing who are finding the going harder than they expected.  This book will help them take a step back, and think twice about investment decisions.

If you want to buy the book, you can buy it here: The Only Three Questions That Count: Investing by Knowing What Others Don’t (Fisher Investments Press)

Super Stocks (4 Stars)


Fisher spends a decent amount of time on balance sheets, market share, competitive advantage, and use of cash flow for future investment.  Though I don’t endorse everything in the book, like his price-to-research ratios, there are a lot of good concepts for the average investor to consider, and benefit from.

To buy the book: Super Stocks

The Dick Davis Dividend (4 Stars)

I can recommend this book to investors, particularly those that have not done well with active management. This book won’t teach you what to do, as much as how to think and discipline yourself. Most investors should limit their options in investing because their emotions and abilities aren’t suited to the violence of the markets.

For investors that do well with active management, you don’t need this book, but you might like it for the stories that he tells, or as a gift for relatives who need to follow a more passive style of investment management.

To buy the book: The Dick Davis Dividend

Diary of a Hedge Fund Manager (4 Stars)

Who would benefit from the book:  Those that would like to read the tale of an interesting guy who had a tiger-by-the-tail initial career in investments.

If you want to but the book, you can get it here: Diary of a Hedge Fund Manager: From the Top, to the Bottom, and Back Again.

The Elements of Investing (4 Stars)

This is the perfect book for your dumb brother-in-law (or similar) who has excess cash flow, and always seems to lose money on his investments.  Given the section on saving, it could also be valuable for your spendthrift brother who is constantly complaining about being in debt.

This is a very basic book.  Give it to the clueless; it cetainly won’t hurt them, and it might help them a lot.

If you want to, you can buy it here: The Elements of Investing.

Outperform (4 Stars)

This book would be valuable for people who think that there are some great secret about investing, and think that the big guys have all the advantages.  It’s not true.  The big guys have the advantage of having balance sheets.  Retail investors have the advantage of being flexible.  This book is valuable in my opinion for investment professionals that want to get into the mind of the chief investment officers of endowments.

If you want to, you can buy it here: Outperform: Inside the Investment Strategy of Billion Dollar Endowments.

Market Indicators (4 Stars)

You have to have a quantitative bent, at least to the level of being willing to go out and collect simple data in order to benefit here.  Now, most serious investors do that, so I would say that serious investors can benefit from the “cook’s tour” of market indicators that this book gives, unless they are so serious that they know all of these indicators.  (Like me.)

If you would like to buy the book, you can buy it here: Market Indicators: The Best-Kept Secret to More Effective Trading and Investing.

Why are we so Clueless about the Stock Market? (4 Stars)

There is much that is good here, but nothing deep.  If you want to buy the book, you can buy it here: Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market.

TradeStream Your Way to Profits (3 Stars)

Investors that use the internet would benefit from this book.  It will help them find better sources for data, and aid them in navigating the noise of the internet.

If you want to buy this book: TradeStream Your Way to Profits

7 Commandments of Stock Investing (3 Stars)

The book is intelligently written, and is short enough for an average person to read in 4 hours (188  pages).  He gives plenty of examples to illustrate his points.  I wasn’t usually enthused by the companies that he chose — I prefer to go further off the beaten path, and buy them cheaper.

His basic principles are good principals to follow, but they need to be tempered by a focus on risk control.  It’s one thing to serve up investment ideas as a writer — you can throw out a lot of promising ideas, and do it well.  What is tough is owning the companies, and trading through their troubles.  That’s a dirtier business; one where average investors will be more prone to fear and greed, and may not do so well, just because they can’t stomach the risks.

He also does not make clear how the seven principles work together. Need you follow all seven on every investment?  I think that’s what he is saying.

Away from that, you can’t use his principles on low quality stocks; that would be a recipe for regular large losses.  Buying panic, buying weakness, and concentrating requires a high quality approach to investing.

With that, I recommend the book to those that have enough maturity to know that they will have to bring their own risk control models to the game.  His methods presuppose a degree of ability in interpreting the fundamentals of companies, so I do not recommend this book to beginners; it would be a dangerous way to start out in investing.  Better to start with Ben Graham.

To buy the book: 7 Commandments of Stock Investing

Higher Returns from Safe Investments (2 Stars)

If you don’t understand income investments, this book could be useful to you, and the book is not long.  It is an easy read.  In general I don’t agree with the way the book is designed, but if you have a lot of self-discipline, the book will prove useful to you.

If you want to buy the book, you can buy it here: Higher Returns from Safe Investments: Using Bonds, Stocks, and Options to Generate Lifetime Income

Buying at the Point of Maximum Pessimism (1 Star)

Those wanting to read about the six trends could benefit from the book, but I would hardly call them “value investing.”  That said, the book is long on theory and short on practice.

If you want to, you can buy it here: Buying at the Point of Maximum Pessimism: Six Value Investing Trends from China to Oil to Agriculture.

Disclaimer


David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures.


Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions.


Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.

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