Stock investment might seem like a difficult subject but it really is not. Just like anything else you learn, all you have to do is take an interest in it, practice it and build a strong foundation of the topic. This skill comes in handy no matter how old you are. But it is best to get familiar with, starting 'now'.
'Anyone who is not investing now, is missing a tremendous opportunity.' - Carlos Slim
Most people believe that savings are the key to success - to achieve any dream possible. But on the contrary it is investing that can help you grow your wealth and turn these dreams into a reality. You do not need to start off with lakhs of rupees. You can start small if you do not feel confident about where you are headed and how to go about investing. But this small step will take you a long way. Words like SIPs, Mutual Funds, etc might scare you today. But we recommend you don’t miss out on this slice of life and slice of wealth in your lifetime.
Treat it as a second income source if you will, as in today's day and age who doesn't need a backup plan?
“If you risk nothing, you risk everything”- says Geena Davis.
If you want to become an expert at stock investments you will need to do the following:
-Have a mentor who you can fall back on.
-Take up a stock market learning course.
-Start analyzing the market.
-Open a demat & trading account.
-Find your motivation to trade.
-Talk to like-minded people.
-Keep reading books on the subject of investing.
Here are some must have stock trading books that help you understand the world of investments and eventually help you come closer to your investment goals. Listing them down in order of simplicity in understanding.
#1 The Little Book That Beats The Market
If you haven't started trading yet, this is the best book to begin with.
Here's why:
It was written by Joel Greenblatt - the Manager of Gotham Funds. A hedge fund with $5.6 billion in assets. It only has 112 pages. But don’t let the size of this book fool you. This book reveals one of the biggest stock strategies called ‘The Magic Formula’. This formula looks at two aspects - price to earning ratio and return on assets. Joel Greenblatt discusses why these two factors are so important in a very simple and humoristic manner.
Quote from the book:
“Choosing individual stocks without any idea of what you're looking for is like running through a dynamite factory with a burning match. You may live, but you're still an idiot.”
#2 One Up On Wall Street
Here's why:
Written by Peter Lynch - who is a legendary investor from Fidelity Investments. At one point in his life, he managed to average a 29.2% annual return for a company he was with. He also grew this fund from $18 million to $14 billion. This was the period between 1977 - 1990. No wonder this book has sold more than 1 million copies! The book talks about using what you already know in the stock market.
Quote from the book:
“In general, if you polled all the doctors, I'd bet only a small percentage would turn out to be invested in medical stocks, and more would be invested in oil; and if you polled the shoe-store owners, more would be invested in aerospace than in shoes, while the aerospace engineers are more likely to dabble in shoe stocks. Why is it that stock certificates, like grasses, are always greener in somebody else’s pasture I’m not sure.”
#3 The University Of Berkshire Hathaway
After you have read 'The Little Book That Beats The Market' and 'One Up On Wall Street' this is the book to get to next.
Here's why:
Hathaway is one of Warren Buffet's firm. The book has been written by Warren Buffet and Charlie Munger - two smart and witty individuals who have been preaching about investing for 30 years. Imagine glancing through those 30 years through a single book. It was first published in 2017. Sometimes the book is really blunt which is what a learner needs anyway.
Quote from the book:
"If investors only had to study the past, the richest people would be librarians."
#4 Common Stocks And Uncommon Profits
Written by Philip Fisher, this book is quite short but with a lot of difficult learnings to apply in real life. It is definitely worth the read.
Here's why:
Originally written in 1958, this book inspired Warren Buffet himself. According to Charlie Munger, there’s plenty of good advice in this one which 98% of the world doesn’t follow. Philip Fisher was a man of his words. He practiced what he preached. The author advises that one must talk to people - employees, suppliers and others to understand more about the company. And when you do the same with four other competitors, you would know which one is going to do best.
Quote from the book:
“I have already made up my mind, don't confuse me with facts.”
#5 Security Analysis (2nd Edition)
Written by Benjamin Graham, this 851 pager book is a masterpiece.
Here's why:
You will learn everything from the psychology of investing to the different types of securities to stock market movements in 52 Chapters. The highlights of this book include the importance of studying both qualitative and quantitative data, the significance of current asset values in listed market companies and discrepancies around the price and value of stocks.
Quote from the book:
“Abnormally good or abnormally bad conditions do not last forever.”
If you would like to know more about trading check out or blog on History of Trading
Hope you enjoy reading these books and more importantly apply what you have learned in the real world. If you haven't opened an account with Sharepa Best Discount Broker in India yet, you can do so right now without any difficulties and start with a small amount till you become an expert.
Happy Trading!
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