If you are a new investor with no idea of how to get by in the stock market, don’t worry, we’ve got you covered. This article will give you the best 10 stock market books before setting foot in the stock market. These stock market books have been tested time and again, then again.
(That’s what makes them the best books on the stock market, duh!)
In no way are these stock market books stated in a particular rank.
You can easily find these books online and in bookstores.
Not to mention that we have an amazing open library with the best books on the Indian stock market for beginners, just saying. Also, if you looking to join a stock market course, you have come to the right place. We also provide stock market courses starting from 1 month to 1 year based on the level of expertise you are looking for.
Okay, shall we begin?
1) Basic High School Books
These are the best books on the Indian Stock Market for beginners.
As silly as it may sound, these books will provide you with the fundamental knowledge of:
- All the types of financial markets.
- All the major securities traded in those markets.
- The basic working of the stock market.
- All the rules and regulations imposed by the apex bodies.
- Properties and forms of financial bodies.
The books included are NCERT books on Macro and Micro Economics and Business Studies.
These are the books that helped me have a clear understanding of financial markets.
Also, these books are available easily online and also have a free to download PDF form on NCERT’s website.
2) The Little Book of Common Sense Investing
Author – John Bogle
John Bogle is the founder of The Vanguard Group, an American registered investment advisor based in Malvern, Pennsylvania with about $6.2 trillion in global assets under management, as of January 31, 2020.
In this book, John focuses primarily on Index funds.
What are Index funds?
An index fund is a portfolio of stocks or bonds designed to imitate the performance of a financial market index.
In other words, these securities will:
- Stay with you for a long time.
- Have low investing costs.
- Have low portfolio turnovers.
- Give you a broader market exposure.
Even when the market is going bonkers, these funds will keep it going for you. This kind of investment is pretty passive and slow. These funds are generally seen with retirees.
Although for these funds to realize a decent return, you must be ready to put in the time and be patient (something that is a real core norm of the stock market). John’s mentality is that of a realistic, less risk – moderate profit kind.
“Trying to beat the market is a loser’s game”
“Trying to beat the stock market is theoretically a zero-sum game”
Zero-sum game till you subtract the investing costs and realize that it is a loser’s game.
This book also covers a variety of topics like:
- The power of compounding returns vs compounding costs.
- Investment costs.
- Taxes and inflation.
- Experts’ opinion on Index fund management. (Warren Buffet, Benjamin Graham, etc)
He writes that “the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost.”
Interestingly enough, his founded company Vanguard manages Index funds for its clients. He believed that the best way to make money from the market is to invest in securities that give you a fair amount of stock market returns. This book will help our new investors gain a new perspective on stock markets, and maybe make a few retirement plans of their own. Maybe?
Definitely the best book for the stock market in its own sense. The book is easily available online on sites like Amazon, Flipkart, etc. This is what it looks like:
Also Read: STOCK MARKET TERMINOLOGY FOR BEGINNERS
3) How To Make Money In Stocks
Author – William O’Neil
William O’Neil said – “This basic principle of supply and demand also applies to the stock market, where it is more important than the opinions of all the analysts on Wall Street, no matter what schools they attended, what degrees they earned, or how high their IQs”.
William is an American stockbroker and a businessman. He founded his brokerage firm William O’Neil & Co. Inc in 1963. He also published the business newspaper Investor’s Business Daily in 1984.
Obviously, after reading the first paragraph, you must be thinking, “This William guy sure sounds like a real practical fellow”. Well, you got it right.
This book focuses rather on guiding you through the happenings of the stock market than focusing on the details about the stock market. Don’t get it twisted, it will help you in making a smart decision in the market, but by actively looking out for you, rather than providing remedies.
The book includes –
- Graphs and statistics
- News and events
- Research tools
- Reduction of losses and mistakes to a minimum
- Analyzing data
William is considered by many as the stock market wizard. This book truly provides the basic push one requires to step into the world of the stock market. This is one of the finer books on the stock market from an active approach.
Again, the book is easily available on major platforms like Amazon and such. This is what it looks like
Let us get on with it.
4) A Random Walk Down Wall Street
Author – Burton Malkiel
Burton Malkiel is an American economist, known for writing the classic book, “A Random Walk Down Wall Street”.
He does not own any fancy company as our previous authors did, but he does have fancy education, not to mention his knowledge of the stock market is just amazing. (How else would he write a book that is considered a stock market classic?) According to Malkiel, investing in a stock market is similar to going for a random walk in the night.
One cannot say what will be the outcome of any step for certain.
He, just like Mr. Bogle, believes that one can beat the average investor in a market by investing in securities like Index funds. But also, he provides a mixture of various securities that one can invest in according to their age.
P.S. This book focuses primarily on Wall Street, do not get it twisted. All the events and conclusions have been drawn from the same.
In this book, he covers a variety of strong and controversial topics, which are considered provocative. To understand the book, one has to be familiar with the two types of investors in a stock market: The Fundamentalists and the Technical.
Of course, I would love to briefly describe these two!
The Fundamentalists are the people who believe in the
I know right, sounds like something fancy. (That is not the case though) This theory suggests that “Intrinsic value of any asset decides the true value of that asset”. So instead of focusing on the general demand of the market, this theory suggests focusing on the intrinsic value of the asset. Why intrinsic value? Let me explain with an example.
Suppose there is a stock – “A”. In the market, the value of that stock is 30$.
- Scenario 1 –
- A fundamentalist determines that the intrinsic value of A is 50$.
- What happens then?
- The investor will be advised to buy stock A because the true value of the share is 50$, which means that the market value of A will increase to 50$.
- Instant profit!
- Scenario 2 –
- The same fundamentalist says that the intrinsic value of A is 20$.
- In this case, the investor will be advised to sell the stock to avert the loss.
The Technical people are the people that believe in the
Not in a Disney kind of way. The believers of this theory suggest that – “Intrinsic value of asset sucks, we want that which is popping”. So naturally, this theory suggests that you determine which investment is the most prone to future demand.
Still confused? Again, example time.
Remember our stock A from example 1’s scenario one? The news of its intrinsic value being greater than the market value came in the hands of a technical guy. He determined that this will lead to an increase in its market value. So, as a good advisor, he suggests his clients buy lots of stock A.
What are the repercussions of this?
A lot of demand for a stock leads to a dangerous growth spiral, which at first will increase and increase with more and more demand, creating a bubble, and when it falls (which it will), you will have no idea what hit you. But if you keep a close look at this bubble, you might end up making a lot of money.
I feel like I am doing Mr. Malkiel’s injustice by providing all this information, so I will save the rest for you to find out after reading the book.
The book covers:
- Fundamental and Technical techniques of analysis.
- Methods of determining intrinsic values and their various factors.
- Psychologies of human beings that affect the stock market.
- How one can beat the stock market.
- Various Efficient Market Hypotheses.
Again, one of the best books on the stock market, and definitely one of the best stock market books for beginners. The book is easily available on various sites.
Coming up next!
5) Reminiscences of a Stock Operator
Author – Edwin Lefevre (On the life of Jesse Livermore)
To those who don’t know Jesse Livermore, he is widely regarded as one of the most influential investors of all time. He is considered a pioneer of day trading. In this semi-biography, the author Edwin Lefevre tells us about the events that Livermore went through in his pursuit of success and wealth.
Pay mind – This book was written almost a century ago, but to this date remains relevant to all kinds of situations in a stock market.
Allow me to throw some light on the life of Jesse Livermore.
- He started trading at the age of 14 in unregulated gambling shops.
- He was the first one to notice patterns in the stocks he used to trade in the gambling shops.
- Evidently, he was banned from those gambling shops due to his excessive earnings.
- He had a quantitative approach to determining the pattern of these shares.
(Similar to a technical approach, not quite similar though)
- He then tried his luck at the real deal – The Wall Street.
- He could not foresee the other factors at the market and thus ended up losing all his money due to excessive waiting time and investing costs.
- Then he went back to gambling shops – where waiting time and investing costs were low and made money again. (Under a fake alias of course)
- This time when he went back to try his luck in WS, he met a fellow broker who taught him the power of patience.
- He then understood and devised many methodologies on how to go about the stock market.
I have said enough for this article, it’s your turn now to go and read this book.
In this book the author covers:
- Jesse’s lifetime through his pre-and post-stock market eras.
- Jesse’s methodologies on how to beat the market.
- Jesse’s time through the 1907 crisis and great depression.
I am afraid that is all I can unveil for you guys right now. But I will say this, his methodologies (written 100 years ago no less) are still so relevant that many great investors of our generation, like Minervini, have made a fortune off them.
This book is easily one of the best books on the stock market. (EVER!) Also, one of the best stock market books for beginners. (EVER!)
It is easily available online.
6) Buffett: The Making of an American Capitalist
Author – Roger Lowenstein (On the life of Warren Buffet)
Now do I even need to talk about Warren Buffett? (Actually, yes) Warren Buffet is an American investor and a real big-time entrepreneur. He is the CEO of Berkshire Hathaway. Also, he is currently amongst the top 10 richest people alive.
Roger Lowenstein is an American financial journalist and writer. He spent three years with Warren Buffett’s friends, colleagues, and family members before writing this book. (Sheesh, the hard work, the dedication!) He covers the most important parts of Buffett’s lifetime, be it his early life, or his smart investments.
Let me divulge some of them:
- Warren was always suited for the game that is trading. Why?
- He as a child always displayed an understanding of the most important things one requires in the stock market.
- Minimizing the risk factor. (He used to walk with his knees bent to minimize the damage if he fell)
- The power of compounding. (He started to trade pinball machines for local barbershops. He used to buy one, make a profit, buy more pinball machines, make even more profit. Genius)
- Warren Buffett was mentored by none other than Benjamin Graham himself. When he studied at the Columbia University (at 19 y/o), Graham was his lecturer, and one of the three role models that Buffett had.
- Graham taught Warren things like value investing, patience, and many other things that Warren was earlier blind towards.
- Buffett mastered the art of timing the market, but not while speculating the force of the market, but by other methods that I cannot disclose here. (Why did Roger spend three years for all that research huh?)
- Warren religiously followed these methodologies and ended up being one of the richest people to live.
- Okay, maybe I can tell you one method – Intrinsic value. (Sound familiar?)
(Yes, the same in which fundamentalists believe)
This book contains a gold mine of knowledge.
- Warren Buffett’s real-life events, wherein he made money even when everyone was losing it.
- All of his methodologies. (BTW, in no way am I saying that those will work for you, but they have a pretty good chance of working)
- Useful insights on various situations from none other than the man himself.
- His time spent with the father of value investing – Benjamin Graham.
Presently, this is the best book for the stock market due to its current generation viewpoints. It provides a practical view of the market. Easily available, as usual.
I am excited about the next one.
7) The Intelligent Investor
Author – Benjamin Graham
Can you see the excitement on my face?
Benjamin Graham, widely regarded as the father of value investing, one of the greatest investors of all times, mentor to people like Warren Buffett and Irving Kahn. (I know you have no idea about the latter, google him!)
- He was born Benjamin Grossbaum, to Jewish parents.
- He graduated from Columbian University, then went on to form the
- Graham-Newman partnership in Wall Street.
- His investing philosophies primarily focused on value investing, just like he taught Warren Buffett.
- Graham had mastered the art of studying micro-movements of the market, which enabled him to operate even more efficiently as a value investor.
- As most of the investors are, Graham was a fundamentalist.
According to Graham,
There are two types of people in a market – Defensive (or Passive) and Enterprising (or active). Defensive investors invest in what we know as passive funds. (Remember Index funds?) Defensive investors try and maintain a balance between various securities.
E.g.: 50% equity stocks and 50% debentures. Should 50% stocks increase to 60%, resulting in a 60-40 ratio, they sell 10% stocks and purchase additional debentures. This way, a 50-50 ratio is maintained for what is an anticipated steady return. These investors hold onto their investments for a long amount of time.
Enterprising investors are the ones willing to take more risks and have a thirst for higher rewards. 4 things required for such investors:
- Patience. (As I said, this is a real constant)
- Discipline. (Regular monitoring and investing)
- Eagerness to learn. (Learn, then remove the “L”)
- Lots of time. (Give your investments time to come to fruition)
Although same, the guidelines that these investors follow are much looser than the defensive investors follow.
E.g.: Dividends need not be consistent for a long time, maybe consistency for 5-10 years is enough for active investors. Diversification is limited to say 5-10 companies, rather than 10+ companies.
Various strategies are employed by both these investors:
- The good old – Diversify your portfolio.
- Invest in big-time organizations with conservative finance, consistent dividends, and a steady growth rate.
- Organizations with cheap assets and cheap earnings are definitely the way to go.
- The other given strategy is patience. (This is a real constant)
Benjamin Graham insisted to always have a margin of safety for investors. It minimizes the risk of being wrong. (Much like when Buffett walked with his knees bent to avoid excessive injuries) According to him, PRICE ≠ VALUE (Intrinsic value thingy, I hope you remember).
Also, he suggests that risk is not always associated with the reward. It is our own psychology when we tie higher risk to higher return, which is certainly not necessary at all. There have been events where investors have made tons of money with a little factor of risk. Any sane person would choose little risk – good return over high risk – high return.
This book includes:
- Real-life events of the stock market during Graham’s era.
- Explanations with those real-life happenings.
- Graham’s methodologies and understandings of how to glide through the stock market.
- Different aspects that affect those methods.
I do not normally say this for any book, but this is a book that has made geniuses like Buffett and Kahn (Googled him, didn’t you?), so I’ll just say it anyway.
BUY THIS BOOK, STUDY THIS BOOK, AND YOU’LL ALWAYS KNOW WHAT TO DO NEXT IN THE STOCK MARKET!
The best book for the stock market, the finest stock market book for beginners, call it whatever you want. It is easily available in any major book store, and of course our very own online sites.
All good things must come to an end, but that doesn’t mean they cannot be followed by other good things! Now the next book is a collection of various stock market wizards and their most important journeys, because, what better way to learn than to read about successful people’s journeys.
8) Market Wizards
Author – Jack Schwager
Schwager is a famous American trader and author. In this book, he interviews some of the most influential traders from the 1970s/80s. His interviews became very famous within the stock market community. He has published 4 more books on similar premises where he interviews big-time hedge-fund managers and so on. (Those are the best stock market books for beginners) He interviews people like Tom Baldwin, Richard Dennis, Paul Jones, and many others. (I know you’ll google all of them, no judgments here)
This book contains:
- His interrogations with famous traders.
- The real-life experiences of these investors.
- Their perspective on various events and scenarios of the market.
- An expert’s opinion on how to deal with various situations.
I would recommend this book to those who learn faster by reading about other people’s life journeys. One of the best stock market books for beginners. This book is available on Amazon and Flipkart. Some visual aid:
Coming next is a book that beats the market, literally.
9) The Little Book that Beats the Market
Author – Joel Greenblatt
Joel Greenblatt is an American investor and a hedge fund manager. He operates Gotham Funds with his partner. He is also a professor at the Columbia University (What is up with all these successful traders going to the same college?).
“Choosing individual stocks without having any idea of what you’re looking for is like running through a dynamite factory with a burning match. You may live, but you’re still an idiot.”
In this book, Greenblatt tells us his magic formula to beat the market in 7 simple steps, and it is the same fact that makes it one of the best books on the stock market. (I know what those are, and I won’t tell)
A few takeaways that I had:
- Market volatility has nothing to do with the actual performance of the company. It’s just the market being…well, markety.
- Determining future predictions on past performances in the stock market is similar to betting a 100,000$ on a coin flip.
- Analyzing P/E and ROA is always beneficial for an investor.
What are P/E and ROA, you ask?
P/E is the price-to-earnings ratio. It is used to determine the price one has to pay to earn one dollar on a business. E.g. – If the profit of a business is 10000$ and the price of the same business is 50000$. The P/E ratio of the business will be 5. Conclusion – For every dollar the business makes, it pays back 5 dollars.
ROA is the return on assets ratio. It is used to determine the profit a company is generating on an asset. E.g. – The same business has a plant of 25000$, the profit remaining the same. The ROA will be 25%. Conclusion – The business is 25% profitable with the plant.
This book covers:
- The awaited magic formula
- The 7 steps to better investing
- Exposure to new experiences that might help you have an upper hand over the “pros”
One of the best books on the stock market for people with steady jobs and who want to invest side by side to make a good amount of money. Easily available online. Looks pretty good.
The next book is regarded as a stock market classic.
10) One Up on the Wall Street
Author – Peter Lynch (Who by the way, is awesome)
John Rothchild (Totally awesome too)
John Rothchild is a freelance writer who has co-authored dozens of books on finance. He has written the best books on the stock market. Peter Lynch is an American investor. He is a legendary trader known especially for managing the Magellan Fund.
His performance speaks for himself. Under his management, the assets under management of Fidelity Investments increased from a mere $18M to a whopping $14Bn. Can you imagine the brains of this guy? His mutual fund averaged double the returns of the S&P 500 index in the era of 1977-1990, which may not sound great to you, but trust me it’s a pretty big deal.
In this book, he gives the individual investor a new perspective.
- He suggests that the “pros” of a stock market are at a disadvantage as compared to individual investors.
- He also mentions one major advantage that individual investors have over pros.
- An individual investor can be anyone – a farmer, a shop owner, a poon, literally anyone, but will still have a major advantage over the pros.
In this book, Peter Lynch covers:
- The upper hand that individual investors have over pros. (In more detail of course)
- Details of 6 types of investments
- The traits of highly promising companies
- The traits of a company that looks good, but is not
This book is regarded as one of Peter Lynch’s finest works as a writer. An absolute essential, and one of the greatest stock market books for beginners. Again, easily available. Hey look, it’s so cool also.
Apart from these books, there are dozens of other books that might help you make your first investment. These are books that I prefer because of personal experiences.
Also, our 1-Year Diploma Stock Market Course covers the teaching of these books and many more. you can visit the course page for more details.
BTW, I almost forgot to mention, our staff at The Thought Tree has even a bigger knowledge resource on stock markets.
(And from what I know they have amazing books on the Indian stock market for beginners, and of course the best books on the stock market in general)
Also, make sure to check our Stock Market Courses out!