“In my whole life, I have known no wise people who didn’t read all the time – none … ZERO.” Charlie Munger
When Kelvin was much younger, he recalled winning a set of encyclopedias as part of Singapore’s iconic Bookworm club. It gave him an understanding of The Milky Way and exposure to several scientific terms beyond the then-school syllabus.
Later on, his interest died down and he avoided books at all costs…. not until he encountered this book called Your Erroneous Zones. This was the book that made a significant impact in his life.
Since then, he understood the positive impact and compounding power of knowledge in one's life. From his army days till today, he has invested a lot of money pursuing high-quality investment books.
In fact, there were many books out there. Which are the good ones and which are the bad ones? He relied on peer and Amazon reviews. If you wish to find out about the books that we like, we have categorised them into sections for your perusal below.
Economics
How an Economy Grows and Why It Crashes by Peter D. Schiff and Andrew J. Schiff
This book would serve an excellent economics introductory for beginners. We thoroughly enjoyed how the authors were able to simplify complex concepts through characters from a fishing village. It has good humour as well. Enjoyed it in a reading.
Business Model and Strategy
Hidden Champions of the Twenty-First Century: The Success Strategies of Unknown World Market Leaders by Hermann Simon.
We enjoy the rich content produced by the highly respected Hermann Simon with regard to how businesses are able to command an extremely high market share in the markets that they serve even when they are small and young.
Herman was able to link culture to outperformance and it transformed the way we looked at businesses. We wished business schools cover content like this.
Confessions of the Pricing Man: How Price Affects Everything by Hermann Simon.
A lot of investors do not understand the importance of pricing power and its ability to allow a company to produce supernormal profits. This book is practical, fun to read, mindblowing and sharp on many fronts. This is another solid gem from Hermann Simon that must not be missed.
Business Models: Investing in companies and sectors with strong competitive advantage by David Watson.
Every business has a business model. But not all business models are made equal. A business with recurring income should always be valued higher because earnings are smooth and it provides certainty.
For someone with limited time, this book can equip you with the knowledge to decide whether a company is worth investing in - intuitively based on its business model. A book worth reading.
Portfolio Management
The Art of Execution by Lee Freeman-Shor.
This book is simple and leaves a profound impact. Investors tend to neglect the fact that execution is a key ingredient for a profitable investment.
The art of execution goes into sizing up your bets, reducing your bets, or getting totally out of it. Every dollar invested has an opportunity cost to it, are you maximising it?
The Winning Investment Habits of Warren Buffett & George Soros by Mark Tier.
Chapter 7 entitled “You Call That a Position?” will leave a deep impact on many investors' portfolio bets and size. George Soros famously told that line to Stanley Druckenmiller.
This highly recommended book will teach you how to size up your bets and feel confident about them.
Value Investing
The Five Rules for Successful Stock Investing by Pat Dorsey.
In this book, Pat shares what are the unique challenges each industry faces and how can an investor spot the hallmarks of a well-managed company in its respective industry. A reader will thrive on his wealth of knowledge.
One Up On Wall Street: How To Use What You Already Know To Make Money In The Market by Peter Lynch.
This is usually the first investment book many investors read. It demonstrates convincingly that any ordinary investor is able to find ample opportunities - they are all around you.
This is also one of the key reasons we would ask ourselves if a company is listed if we enjoyed their products or services. It also provides an excellent introduction to 6 types of companies which Peter coins.
Beating the Street by Peter Lynch.
Another classic, must-read for any new investor. “What skills do we have that allow us to beat professional fund managers?". This is what most retail investors would ask themselves.
This book will instil confidence in you that you can make good returns even as a retail investor. It will give certainty to new investors that they have ample opportunities if they operate within their circle of competence.
This author was able to articulate Buffett’s philosophy using very simple language which is beneficial to new investors.
100 Baggers: Stocks That Return 100-to-1 and How To Find Them
When we invest in a company, are we satisfied with just merely 10 – 20% returns? Yes, we may. But isn’t a 100-bagger more exciting? This book examines the traits of companies which have 100x.
In shareholders’ communications, this book will make it clear to you how a CEO could use his annual report statements or commentaries to inform or deceive the general public about the fundamentals of the company he is running.
Some CEOs tend to take the shortcut by hiring public relations firms to do up their communications. This book pierces through the smoke and equips you with the skills to read between the lines.
This book gives an excellent introduction to Warren Buffett, Charlie Munger, Ben Graham, Peter Lynch and John Neff. An investor can benefit from his summarised yet high-quality content on the different value investing strategised utilised by the mentioned investors.
We particularly enjoyed the chapters of William O’Neil and Larry Hite. This book dives into the psychology and decision-making process which is as important as temperament. Jack did an amazing job to weave those stories into a book.
We thoroughly enjoyed this book. You will learn how to apply the Price-to-Sales ratio in order to identify stocks that are out of favour.
It happens when a company experiences a setback or a “glitch” where its margins are squeezed or it is experiencing temporary setbacks. One of the greatest rewards is to invest in turnarounds and this book gives a good indication of how you can spot one.
Mark touched on the concept of “second-level thinking” and it will transform the way you look at my companies.
If an investor is thinking on the same level as the masses, then where is your competitive edge? How are you able to think on the second level? What can you know that others don’t know? Or what do others know that you don’t? Read more to find out.
This book is highly acclaimed and it is worth a lot more than the price you pay for it. This goes into the entirety of Charlie Munger’s philosophy. It goes deep into ‘lollapalooza’ where one’s knowledge in various fields of expertise meshes together to create a wonderful effect.
This book touches on the concepts of "scuttlebutt" and a 15-point filtering system. This book will train you to have an inquisitive mind and how you can question a company's management.
This is highly recommended because the leadership of a company can make or break a company. Many investors tend to neglect this aspect that is more unquantifiable.
This is a good book that every new investor should endeavour to read.
After reading this, your criteria for stocks will become clearer. Investing is a process, and the process will produce the fruits of capital gains. Focus on the process.