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Tuesday, June 17, 2008

Now, become a better investor by reading the ‘scriptures’

If you are a student of the Hindu religion, then the three most important references will probably be the Bhagavad Gita, the Vedas and the Upanishads. But if you are studying Comparative religion, then you may also refer to the Quran, the Bible and the Talmud.

To become a better investor, study the following ‘scriptures’:

  1. One Up on Wall Street by Peter Lynch
  2. The Intelligent Investor by Benjamin Graham
  3. Common Stocks and Uncommon Profits by Philip Fisher
  4. The Five Rules for Successful Stock Investing by Pat Dorsey

Lynch’s book is the easiest read but contains all the guidelines for ‘fundamental analysis’ of companies. Graham’s book is an all-time classic, though a tougher read. Fisher’s book was used for the longest time as a text at Stanford University’s Graduate School of Business.

Dorsey has written a very practical book that uses real-life examples to explain fundamental concepts, and emphasizes the importance of the cash-flow statement to study the financial health of companies.

I think it was Lynch who humorously denigrated ‘technical analysis’ as “a science of wiggles”. Some of the books I found useful in understanding technical concepts are:

  1. Technical Analysis Explained by Martin Pring
  2. Timing the Market by Arnold and Rahfeldt (of Weiss Research)
  3. It’s when you Sell that Counts by Donald Cassidy

The saint Sri Ramakrishna Paramhansa had demonstrated that there are many ways and different religious beliefs that can be followed to attain the common goal of Nirvana. In a future post, I will discuss why both fundamental and technical analysis should be followed to attain the common goal of becoming a better investor.


Eswar Santhosh said...

I am one of the last persons on planet earth to pick a book and read a book from start to finish. But, I find "Intelligent Investor" (currently on Ch. 13) - a very, very interesting book.

Several of Graham's points can be seen in action right now. While "II" may not be an easier read for many, I find it easy because I can associate our own situation with what he describes.

I have "read" Upanishads and trust me they are more difficult to understand or practice than Ben Graham's classic :)

Subhankar said...

I strongly recommend Pat Dorsey's book - it explains fundamental analysis with real-life examples, and has a separate section on different industry sectors.

There are several commentaries on the Upanishads. Swami Ranganathananda of the Ramakrishna Mission used to give very well-attended weekly lectures in Calcutta back in the 1960-70s. These have been collected in book form called "The Message of the Upanishads".

specialist said...

subhankar sir
which book do u recommend for learning technical analysis from a beginners point of view...
i have just started to read one up on wall street....
and i am a beginner in analysis whether tech or fundamental


Subhankar said...

You can read "Using Technical Analysis" by Clifford Pistolese, available from Vision Books in India.

But Pring's book is more comprehensive.

altruist said...

Thank you for your wonderful suggestions on books.

i have started reading intelligent investor by Benjamin book from today and finding it interesting.

With respect to Pring's book there are two books 1. Technical Analysis Explained and 2. Martin Pring s Complete Guide to Technical Analysis (this one with inputs on Indian markets). So which one i should go for being a new to TA.

Subhankar said...

You are welcome.

I haven't read the second book, but it sounds interesting.