Tuesday, December 21, 2010

Christmas gifts from a friend: Time-tested investment advice books

This week we hosted what has become an annual pre-Christmas dinner with a close friend who this year also had advised me on how to reinvest my 401(k) nest egg. Over a great bottle of wine and a venison dinner, we exchanged early Christmas gifts. As usual we gave each other books. To my delight, his gifts to me were books on investing, a follow-up to the several conversations we had had in past months about money, markets and long-term strategic investing planning. I intend to dive into these books as soon as the holiday madness ends. They are both classics for their readability and common sense.
"One Up on Wall Street," written by respected investment strategist and Fidelity fund manager, Peter Lynch, offers readers a formula for "How to Use What You Already Know to Make Money in the Market." Lynch wrote this book in 1989 but it has proved to be accurate for sorting out "long-shots from the no shots." The second is Burton Malkiel's "A Random Walk Down Wall Street," first written in 1973 and updated several times through 2007.
You may wonder whether it makes sense to read investing advice books that were written before the Great Recession? But what we've experienced in terms of market meltdowns in the past three years, in terms of bank failures, the housing bubble and consumer unease is no surprise to those who study capitalist market behavior and economies as both Lynch and Malkiel have. I look forward to reading these books to further build my confidence in the face of day-to-day economic ups and downs. To bolster my roster of top investment books, I went to the Internet for more research.
Money journalist David Warsh writing at www.cnn.com offers his list that also relies on the classics including Malkiel's "Walk Down Wall Street." Here's what Warsh had to say as a way of introduction to his short list: "After nearly 20 years as Sunday business columnist at The Boston Globe, and another eight as proprietor of Economic Principals -- a site that covers the lives, times and ideas of economists -- I have seen my share of books offering investment advice. The most valuable, it seems to me, are those whose authors came up with a thesis about the markets early and then kept refining and updating their ideas during the incredible expansion of financial markets that has occurred since 1975." Warsh's short list:
- "Your Money and Your Life: A Lifetime Approach to Money Management" by Robert Z. Aliber.
- "Manias, Panics and Crashes: A History of Financial Crises," by Charles P. Kindleberger.
- "The Evolution of Technical Analysis: Financial Prediction from Babylonian Tablets to Bloomberg Terminals." by Andrew W. Lo and Jasmine Hasanhodzic.

No comments:

Post a Comment