Every Shareholder Should Read This Now

If the last two years have taught me anything, it's that I'm not nearly as smart as I think I am -- and neither is anyone else.

I suspect my old man has known this for years. After all, he's spent his life with his nose buried in one book after another, trying to learn everything he can about -- well, everything. And, frankly, the past 24 months have left me wishing I'd followed his lead.

See, if I'd been reading everything I could get my hands on back in 2007 -- including the dire predictions of Nouriel "Dr. Doom" Roubini -- maybe I would have been moving into cash instead of gloating about near-triple-digit gains in Freeport-McMoRan (NYSE: FCX  ) and Transocean (NYSE: RIG  ) .

What now?
Well, I for one have decided to take some of Motley Fool co-founder Tom Gardner's advice to heart.

You see, recently, at a companywide meeting, he pointed out that when things are going well, most of us spend our time high-fiving and celebrating -- yet when things go sour, we turn to sulking, worrying, and even panicking.

Meanwhile, when the going gets tough for the toughest, smartest, and most successful people out there, they do something drastically different: They learn from it. And that's what sets them apart.

Follow the leaders
So I asked Tom for a copy of the "Grand Master's" reading list he put together for members of our Motley Fool Hidden Gems community.

This list comprises 25 books -- broken down into categories based on level of investment experience -- that Tom has read and reread over the years, and that have helped to form the foundation of his investment philosophy and strategy.

A few highlights follow.

Elementary School:

  • One Up On Wall Street, by Peter Lynch
  • Buffett: The Making of an American Capitalist, by Roger Lowenstein
  • Value Investing With the Masters, by Kirk Kazanjian

Junior High:

  • The 5 Keys to Value Investing, by J. Dennis Jean-Jacques
  • Common Stocks and Uncommon Profits, by Philip Fisher

High School:

  • John Neff on Investing, by John Neff
  • The Intelligent Investor, by Benjamin Graham

University:

  • Stocks for the Long Run, by Jeremy Siegel
  • Quality of Earnings, by Thornton Oglove
  • You Can Be a Stock Market Genius, by Joel Greenblatt

Grad School:

  • Value Investing: A Balanced Approach, by Martin Whitman
  • The Road to Serfdom, by F.A. Hayek

Here's something else you should read
Love in the Time of Cholera, by Gabriel Garcia Marquez -- and not just because the guy's a Nobel Prize winner, but because he makes some pretty brilliant observations. For instance, "wisdom comes to us when it can no longer do any good."

While that may hold true for matters of the heart, I don't think it necessarily has to hold true for investing -- especially not if we follow the leads of people like Tom Gardner and my father, and dedicate ourselves to soaking up as much wisdom as we can from those who have dedicated themselves to soaking up all of the wisdom they can.

Now I'd like to know what're you're reading -- and why. Furthermore, I'm curious what you think we all should be reading to ensure that investment wisdom comes to us while it can still do us some good. So, I encourage you to use the comment box below to chime in.

And before you buy ...
It's no secret that, here at the Fool, we tend to be staunch perma-bulls whose eyes are fixed on a highly profitable -- yet admittedly distant -- horizon.

But just because your neighbor or golfing buddy made a killing buying Goldman Sachs (NYSE: GS  ) or Amazon.com (Nasdaq: AMZN  ) back when there was blood in the streets doesn't mean you should dive head first into financial or tech stocks.

In fact, I wouldn't even recommend buying steady-as-she-goes dividend-paying stocks like Altria (NYSE: MO  ) , Verizon (NYSE: VZ  ) , or Duke Energy (NYSE: DUK  ) without doing some serious homework first.

But I will insist that you try to read everything you can and learn as much as possible -- so that you won't end up making the same mistake twice.

That's what Tom Gardner is doing
And if you'd like to see what else he recommends that you read -- or if you'd like to follow along as the Motley Fool Hidden Gems team uses $250,000 of the Fool's own money to build a best-of-the-best small-cap portfolio -- you can take a free 30-day trial of Hidden Gems just by clicking here.

There is no risk -- nor any obligation to subscribe.

This article was first published Feb. 6, 2009. It has been updated.

Austin Edwards looks forward to reading the books you recommend. He owns shares of Freeport-McMoRan and Transocean. Amazon.com is a Motley Fool Stock Advisor recommendation. Duke Energy is a Motley Fool Income Investor selection. The Fool's disclosure policy is 15 years into its 100 years of solitude.


Read/Post Comments (3) | Recommend This Article (25)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 01, 2010, at 10:10 AM, spokanimal wrote:

    Austin, you can read all the books you want but there is one common thread that is characteristic of all of the greatest investors of all time.

    That thread is: Contrarianism.

    Heed their greatest quotes and build the "stomach" to do the opposite of how you feel, and you'll do fine.

    Buffett: "be bold when others are fearful and fearful when

    others are bold".

    Rothschild: "buy when there's blood in the street".

    ... and my favorite...

    Templeton: "Bull markets are born on pessimism, grow

    on skepticism, mature on optimism and die

    on euphoria".

    Spokanimal

  • Report this Comment On February 01, 2010, at 11:09 AM, skistik wrote:

    I'm reading "Too Big to Fail". The Wall Street firms are all so inbred that it seems we small investors don't have a chance. They all trade CEO's and other senior managemant around on a regular basis. Then, they all use the same legal firms and outside consultants, and pay exorbitantly for them. Bottom line, insider info trumps just about anything I can do to research a stock.

  • Report this Comment On February 01, 2010, at 8:04 PM, steprightup wrote:

    "The Origin Of Wealth" I feel is a must read as the main idea behind the book may help reshape traditional ideas of economic theories.

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