10 Best Value Investing Books You Need To Read
To be a successful value investor means a commitment to keep on learning. This can be from other successful investors, or it can be from relatively unknown investors who bring fresh new ideas and insights to the subject. Most great investors I know maintain a healthy reading habit (over and beyond annual reports). Below are some selected value investing books that in my opinion add tremendously to a value investors’ arsenal, be it in form of theory or practical techniques, developing critical thinking, bringing new ideas and insights or in many cases merely providing a contrarian point of view that can be instrumental in balancing one’s perspective and outlook on the major emerging economic trends.
Value Investing Books
The following books are the ones I have personally read and can whole heartedly recommend. Please be advised that a purchase from this list will benefit VSG in form of a small commission. If you are an experienced investor, you may jump straight to the value investing section. If you are just starting out in the world of investing and feel that value investing resonates with your philosophy, you should read the books in the beginner section first.
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For beginning investors
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Successful value investing requires letting go of the “common wisdom” in the stock market that does not really work for an enterprising investor. Value investors are by nature contrarian investors who look for deeper reasons behind everything, and not be satisfied with the status quo. This book discusses 5 of the common myths about investing that we grew up with, and why we need to forget these myths if we are to be successful with value investing |
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So let me clarify this first. Despite the name of the book, this is NOT the only investment guide you will ever need. Tobias does a great job of helping you lay out the foundations of setting up an investment portfolio. For most, this would include the pre-work that you should do – for example, handling your debt, saving up for emergencies, buying insurance, you get the idea. For someone who is just entering the work force, or for people who suddenly find themselves responsible their finances but have little prior experience, this is a great guide to orient yourself towards the financial landscape. The author is funny and will instill in you the “financial common-sense”. As far as the investment advice goes, it is traditional, which while it will not lead you in the wrong direction, it will also not make you a great investor. |
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A great introduction to the fundamentals of business and investing. If you hesitate to read the financial statements of a company, this book explains the main ideas in a simple way. The author is also a value investor so the underlying theme of the book is indeed paying less than the business is worth. This can be a great primer to other more advanced value investing works listed further below. |
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Peter Lynch was the legendary manager of Fidelity Magellan Fund and always emphasized investments based on common sense. His admonition to invest in “what you know best” continues to fall on deaf ears today, as so many investors still chase the “hot investments” in companies they have no understanding of. |
Before you become a value investor
It is said of value investing that either you get it or you don’t. Much of value investing has to come from within and in many ways it has to be an extension of your life philosophy. I would say that in order to become a good value investor, you need to survey the wider field of investing and eventually come to a conclusion that the value investing philosophy makes the most sense.
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Commonly referred to as the Father of Growth Investing, Philip Fisher nevertheless is an excellent teacher to learn from. Warren Buffett believes himself to be 85% Graham and 15% Fisher. Fisher believes that whenever you find an excellent company with solid future earnings growth prospects, you should be willing to pay up. Most value investors will disagree, arguing that future earnings are essentially unreliable. Fisher does lay out methods and techniques to minimize your mistakes in estimation. |
 
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Malkiel will have you believe in the Efficient Market Hypothesis. After reading this book, you may wish to confine yourself to index funds. This would be a shame, as the Efficient Market Hypothesis, while elegant, is just a construct to help academics explain how the stock market works to a reasonable approximation. In other words, how most of the market works. As a value investing follower, you know that the exceptional profits are not made in the “most of the market” but on the fringes which is where value investors tread. So why read this book?
Simple. You need to understand the counterparty you are trading with to make money. |
 
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The markets are not always rational and have been subjected to mass hysteria that creates bubbles and busts frequently throughout the history. What causes the seemingly rational people act so irrationally? Charles Mackay wrote this book in 1841, but the story keeps on repeating. Investors are like lemmings and when greed and crowd behavior takes over, they do stupid things. I will tell you this – you do not have to be a great investor. If all you do is to avoid these mistakes in your investment career, you will end up with significantly better returns than the average. |
Value Investing
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This is the classic edition of the value investing bible by Ben Graham. You should have a copy. Read it and refer to it again and again. |
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Seth Klarman‘s long out of print work deservedly commands the high price. Another must have book and if you buy it after you have seen the price, I say Thank You! You might want to search libraries first though, although it is common to find that most libraries that had this book now report it as have gone missing. |
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A much more modern take on value investing that extends the analysis to valuations based on future earnings (that classic value investors avoid). Prof. Greenwald teaches at Columbia and is much sought after among the asset manager community. The book gets very detailed and technical so it is best to spend some time reading and re-reading it to let it all sink in, but this will be a time well spent. |
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Can anything be better than learning from real experience? These case studies span almost 5 years of investing here at Value Stock Guide. Detailed and rich with analysis, this is a must have for any value investor |
Stay abreast with my reading as I add to this list of recommendations over time. Also visit my author page on Amazon.
