Dear Liz: I invest in real estate and have a secure pension, but I also have a managed stock account worth about $250,000 and would like to get more involved in investing that.
Can you recommend some good books on how the market works and perhaps a couple of good middle-of-the-road websites? Everything I see is either overly bullish or bearish.
Answer: The principles of sound stock market investing aren’t exactly “click bait” (Web speak for catchy links that generate views and advertising income). So you’d be smart to read a few books that have stood up over time.
Legendary stock picker Warren Buffett says “The Intelligent Investor” by Benjamin Graham is “by far the best book about investing ever written.” Graham is considered the father of value investing, which involves focusing on the underlying performance of companies rather than on speculating in their share prices.
Buffett also says, however, that the vast majority of investors are better off taking a passive approach — one that involves buying and holding low-cost index funds that seek to match the market rather than beat it.
To understand why, you should read “A Random Walk Down Wall Street” by Burton G. Malkiel, which discusses how the active approach to investing typically fails and drives up costs that doom a portfolio to underperform.
Although both books have been updated recently, they were first published in 1949 and 1973, respectively. A must-read book published this century is Jason Zweig’s “Your Money and Your Brain,” which uses discoveries in neuroscience, behavioral finance and psychology to explore how we mess up investing and finance and how we can do better.
If you’re looking for a website with solid investing advice, explore Kiplinger, a personal finance publisher in business since 1920.
