What is value investing?
Value investing is the investment tactic where stocks that have been undervalued in the market are chosen by investors. You can be successful in value investing regardless of your financial income and educational background. Since you’re buying discounted stocks, you don’t need a significant amount of capital to start using this strategy. All you need is hard work, time, and the right skills. In order to learn these skills, read the following top books on value investing.
Why do you need to read books on value investing?
Value investing is a philosophy, not a simple rule which can be summed up in a single sentence. It will be worthwhile to study several books by the greats, such as Benjamin Graham and books which analyse Warren Buffett's approach to investing. This will allow you to get into the head of these successful investors and make decisions using the same mindset.
1. The intelligent investor by Benjamin Graham:
The book centres around Benjamin Graham’s well-known value investing strategy or the practice of buying stocks for prices less than their value—in other words, stocks that are currently undervalued by the market. "The Intelligent Investor" shows readers how to make money in the stock market without taking massive risks while tackling the emotional aspect of investing.
2. Learn to Earn: A Beginner's Guide to the Basics of Investing by Peter Lynch:
Mutual-fund superstar Peter Lynch and author John Rothchild have come out with this amazing book on the stock market. It explains the basic principles of investing and gives an insight into the economy, market and capitalization. In Learn to Earn, Peter Lynch explains in a style accessible to anyone who is high-school age or older how to read a stock table in the daily newspaper, how to understand a company annual report, and why everyone should pay attention to the stock market.
3. The Warren Buffet way by Robert G. Hagstrom:
The Warren Buffett Way outlines his career and presents examples of how his investment techniques and methods evolved and the important individuals in that process. It also details the key investment decisions that produced his unmatched record of performance. He demonstrates how Buffett arranges his stocks in a focus portfolio and reveals why this is as responsible for his incredible returns as the individual stocks he picks.
4. The little book of value investing by Christopher H. Browne:
The Little Book of Value Investing offers investors (professional and amateur alike) the necessary tools to follow a value-investment model that consistently beats the market. If you’re serious about improving your investment results, reading the book is a great way to start on your value investing journey. It would also be the perfect book to recommend to a friend or spouse curious about value investing but having little practical experience.
5. The little book that beats the market by Joel Greenblatt:
In this book, the author -Joel Greenblatt explains the concept of value investing and his approach to picking winning stocks. He also shares his strategy of ‘Magic Formula’ (that consists of two financial ratios- Return on capital and Earnings Yield) which helped him to pick fundamentally strong companies year after year. Overall, it’s a nice read and an excellent place to start reading if you have never invested in stocks before.
