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3 Top Investing Books For Beginners

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Hello everyone. This is Kenny, lead analyst here at The Fifth Person. At The Fifth Person, we help investors look for great businesses. to invest so that you can safely and consistently grow your wealth over time. Here are three books that I have selected for you if you are just starting out in the stock market and do not know where to look, these are great books that you can start. They are simple and easy to read whether you are a beginner or a seasoned investor, these will definitely help you improve your investment knowledge. So the first book I’d like to recommend is”Why stocks go up and down” by William H. Pike. This is a great book if you have no knowledge about investing and want to learn how to read numbers. Numbers are very important because it tells the story of the business. So what William Pike did was he takes you through the financial statements… the three different statements First, is basically the balance sheet, like how a business raise capital through debt and equity and from there purchase assets to generate income, which flows into the the top line revenue of the income statement and from there, after deducting all the expenses, how the company arrived at the net income. From the net income, it flows to cash flow to determine which part of the net income is cash and non-cash. This will give you a great understanding of the business. At the same time, he will introduce you to the various ratios to measure the profitability of the business. What separate this book from other books is that this book actually takes you through a step-by-step analysis of a company. How to analyze? Where to obtain the annual reports of these companies? ” How to analyze the business using a financial ratios? And at the end of it, shows you multiple ways you can value the business. Once you have a great understanding about businesses, and you would like to learn how to pick winning stocks… then this book is definitely the best for you. There’s no better person to show you how to pick winning stocks other than Peter Lynch, a fund manager of the Magellan fund at Fidelity. Over his 13-year career, he managed to generate an annual compounded return of 29%! In this book, Lynch states that you do not have to pick all those obscure financial stocks or penny stocks in order to make multi-baggered returns Stocks that can give you 2X, 5X or 10X return. In order to pick out these stocks, you have to look around you when you go about your daily lives. For example, if you are a coffee person, Starbucks is a great option to look into. If you use the internet, Google is also a great investment option and last but not least, when you go on a vacation, Disney is also a great company that that has been proven to produce multiple-returns. . Once you got that down, next is this book, which will take you behind the scenes of what it’s like to create value for shareholders. At the end of the day, a business is made out of people right? Managers who are able to create value for you. This book, The Outsiders by William N. Thorndike is a great book for you to learn about capital allocators. So once the business is able to generate money, how the CEO allocate where he invest will determine how much value or how much more valuable the company will be in five or ten years time. One manager that stood out to me was Henry Singleton, who was once the CEO at Teledyne. He was very wise in how he allocates money. Basically, what he did was that he repurchased shares when they were greatly undervalued and he issued shares when the stock price of the company was overvalued to acquire undervalued companies. Just by doing that, he was able to compound the stock by 40 percent over the next 10 years/ This is definitely a great book if you want to learn how to spot great managers of a company. So there you have it, these three books here cover the basic of investing. The first one is to help you to read and analyze financial statements, the second book is to help you pick winning stocks and last, managers that can add value to shareholders, so that you can achieve that multi bagger returns that you are looking for.

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1 thought on “3 Top Investing Books For Beginners”

  1. The Fifth Person says:

    Thanks so much for watching! What other great books about investing have you read? Share in the comments below!

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