Did you know that more than 99.99% of beginner investors lose money in the stock market at the end of one year of their investment journey?
And this is not because Stock Market is a scary place where people always lose money. This is because people step into the Stock Market on the wrong foot.
The majority of retail investors come into the Stock Market without any prior knowledge of investing or the fundamentals. And then expect to somehow earn money from the market and retire early from their jobs.
People tend to believe that the Stock Market is some magical place where people turn into millionaires overnight. So let us break it down for you, that is not true by any means.
Stock market is a place for systematic wealth creation over time that requires proper research and a thorough knowledge of the fundamentals of the stock market.
And like any other topic in the world, you can easily learn about the stock market by reading good books on stock market and consuming the right material. In fact, there is no conventional course that offers a specialization in the stock market. Everyone reads books and learns through experience in the market.
Unless you are willing to be a chartered accountant.
So here we are the 10 best books on the stock market that every beginner should read to enter the stock market on the right foot.
1. Rich Dad, Poor Dad by Robert Kiyosaki
This book does not teach you anything about the stock market but it teaches you something even more important than that. Something integral to be aware of, to begin your journey in the stock market.
Rich Dad, Poor Dad teaches you the psychology of money. This book draws parallels between how rich people look at money vs how poor people look at money.
Robert as a kid compares the learnings from his rich dad to those that he got from his poor dad. His poor dad believed that money is something that you earn by doing a high-income job. On the other hand, his rich dad taught him that money is something you earn from assets, so one must buy assets from money and learn to earn a passive income.
This book is Robert Kiyosaki’s attempt to break the stereotypical views of people on money and in the process, it tries to make readers money-minded and smart financially.
This is easily the most entertaining and unique books on stock market that you must add to your bookshelf.
2. Learn to Earn by Peter Lynch
Peter managed the Magellan Funds for Fidelity Investments limited between 1977 and 1990. He averaged a return of 29.2% p.a, which was twice the return of S&P 500 at the time. Magellan was the best performing fund in the world under Peter’s command.
Through this book, Peter communicates his principles and strategies of investing to other young investors so that they can make the right decisions from the onset, but in the process, if they make some mistakes, Peter urges them to accept those mistakes and learn from them.
This book contains 5 key lessons that every investor should learn to avoid making mistakes in the market. The 5 lessons include The power of Money, Don’t try to time the market, Learning to Fail, Stock prices do not matter, and starting.
Peter also explains the magic of compounding to the readers through fascinating examples and advises them to start their investment journey as early as possible.
He also advises that new investors should prefer mutual funds over stocks. Because this will help them prevent huge losses that might crush their spirit as a beginner.
Overall, this book is easily one of the best Books on Stock Market that you can read and enjoy as an investor.
3. The Dhando Investor by Mohnish Pabrai
Mohnish Pabrai is an Indian-American businessman and a respected investor and asset manager, who manages assets worth $600 million. Through this book, Mohnish tries to explain the Dhando framework that the Patel Businessman used, to establish successful businesses in America in the 1990s.
‘Dhanda’ means business in Gujrati (an Indian language) but ‘Dhando’ is not so commonly heard.
What does ‘Dhando’ mean?
Mohnish Pabrai explains that ‘Dhando’ is a word in the Gujarati businessman lingo that represents a way of doing business that has a highly profitable upside and almost a non-existent downside.
Through Dhando Investor, Mohnish explains that high-return investments do not necessarily have to be high-risk investments. Some opportunities have a good rate of return opposite to very low risks that can be identified using ‘The Dhando Framework.
This is one of the best books on stock market that you can read to understand how to make low-risk, high-return investments.
4. The Essays of Warren Buffet by Warren Buffet
Every year, Warren Buffet writes an annual letter for the shareholders of Berkshire Hathway explaining his views and opinions on the market. The letter is a goldmine for every investor as it takes you into the mind of the greatest investor alive. It also gives you insights into how great investors like Warren buffet think and invest their money.
This book is a collection of the best parts of all the annual letters systematically arranged all in one place. To make it easier for readers to access all the valuable tips and information.
The most beautiful part about these Annual letters is that even though Warren Buffett is a veteran investor, he uses very simple language to explain the financial concepts, that are easy for everyone to understand, be it a beginner or an advanced investor.
Warren Buffett has been writing these annual letters for almost 50 years now so we suggest that you read this book because there is a lot to gain from this book about stock market and nothing to lose.
5. Dead Companies Walking by Scott Fearson
As a beginner, you might not be aware of the concept called short selling.
Short selling is the opposite of buying a share. The basic idea behind short selling is that we sell a share at a higher price and then buy the share back at a lower price, where the price difference is the profit.
But the real question is how do we sell the shares that we do not own?
The answer is simple.
We borrow the shares from the broker and sell them in the market. And when the price is right, we buy the shares back and return the shares to the broker.
This book is the story of how a veteran investor and hedge fund manager Scott Fearson based in texas identified companies that are going to bankruptcy in the future and shorts them to make money.
Although, short selling is not something everyone would approve of as it involves making money out of someone else’s failure. But the genius idea behind the book cannot be overlooked despite the moral barriers.
The book is an awesome read and explains some of the lesser-known concepts of the stock market that you should be aware of as an investor.
6. Value Investing and Behavioural Finance by Parag Parekh
Parag Parekh was one of the most respected investors in India and was also the founder of Parag Parekh Financial Services Limited.
He also attended the annual shareholder’s meeting of Berkshire Hathway every year and was an ace investor. Unfortunately, he died in a car accident in the U.S while he was traveling to attend the annual shareholder’s meet of Berkshire Hathway in 2015.
Mr.Parekh explained through his book that we often make mistakes as an investor, but we do not understand the psychology of these mistakes and therefore, repeat the same mistakes.
So, as an investor one must know the psychology behind investing decisions to develop a deep understanding of ourselves as an investor.
And “Value Investing and Behavioural Finance” is Mr. Parekh’s attempt to explain the psychological aspects of investing based on his experience as an investor. This book explains concepts like realization trap, loss aversion, average price theory, false consensus effect, halo effect, etc in detail.
As an investor, everyone should read this book to understand how our past financial decisions subconsciously affect our present decisions as an investor and how we can fix them and become better as an investor.
7. The Intelligent Investor by Benjamin Graham
Benjamin Gramham was the mentor of Warren Buffet and he taught Warren Buffet everything about value investing. Warren Buffet recommends this book to every investor to get a nuanced idea about value investing.
“The Intelligent Investor” is also known as the holy bible of investing. The only reason why this book is placed at the later end of the list is that the language of the book is a little complex and might not favor you as a beginner. So it is a better idea to read some other books from the list to garner Knowledge.
This book features various chapters explaining the difference between an aggressive and a defensive investor. It also explains a third type of investor known as an enterprising investor that lies between an aggressive investor and a defensive investor.
Some other interesting concepts explained in this book include the margin of safety, and how the markets are a mere reflection of the feelings of its participants.
This book is without a doubt one of the best books on stock market you can read as an investor.
8. Thinking Fast and Slow by Daniel Kahneman
Thinking Fast and Slow introduces us to the two different systems of thinking that exist inside us. One is intuition that helps us think fast and make lightning-fast decisions and the other one is slow thinking that allows us to weigh in all the factors before we make our decisions.
Daniel Kahneman uses behavioral economics to effectively explain, how we should make decisions in different scenarios. And avoid making any decisions in haste.
This book teaches us that making difficult decisions requires mental rigor. Therefore, when we are tired or preoccupied, we tend to cut corners in decision-making. And this leads to wrong decisions.
Therefore, we should always look at all the factors and analyze the situation efficiently before making any decisions. And having this skill as an investor can boost your chances of success and guide you in the right direction.
9. The Little Book on Common Sense Investing by John Bogle
John Bogle was the genius mind behind the invention of index funds. The low-risk and common-sense way of investing money in the market without having to manage it.
Through this book, he basically explains how actively managed funds are not a good idea and the past performances do not always guarantee future performance. He also tells us how you can never go wrong by just picking a cheap index fund and minting interest over time.
He propagates the idea of common-sense investing to his readers instead of over-complicating investments.
One of the best quotes from the book “Don’t look for the needle in the haystack, just buy the haystack!” very precisely explains his thought process of simplifying investments for everyone and giving them the freedom they need to make their own financial decisions.
10. You can be a Stock Market Genius by Joel Greenblatt
Joel Greenblatt is an alumnus of Wharton School of the University of Pennsylvania and an avid investor and fund manager. He is a value investor just like Warren Buffet and loves to pick undervalued stocks from the market.
Through this book, Joel introduces readers to the strategy of putting all your eggs in one basket and then looking for the basket instead of the conventional idea of keeping your investments diversified.
He also underscores some areas that are rarely explored by investors in their pursuit of success through investments and explains how you can identify these opportunities and capitalize on them.
One of the best pieces of advice from the book is, to look down while choosing your investments instead of quantifying the probable upside. You can invest easily if the possibility of loss is minimized.
Although this book introduces some out-of-the-box ideas to the readers, we recommend you this book with an open heart because it’s never a bad idea to take the road less traveled.
These are the Top 10 Books on Stock Market You Should Read as a Beginner. We hope these books provide you the knowledge and expertise you desire, before making your first investment.
Enjoy watching movies as well?
Here’s a list of the Best Stock Market Movies of all time for Every Investor.
We wish you the best of luck and happy investing!