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.

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

You see, 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, which is why you'll find us recommending everything from Netflix (Nasdaq: NFLX  ) to Chesapeake Energy (NYSE: CHK  ) .

But just because your neighbor or golfing buddy made a killing buying Las Vegas Sands (NYSE: LVS  ) or MGM Mirage (NYSE: MGM  ) back when there was blood in the streets doesn't mean you should dive headfirst into casino stocks.

In fact, I wouldn't even recommend buying steady-as-she-goes dividend-paying stocks like Kraft (NYSE: KFT  ) , Philip Morris International (NYSE: PM  ) , or Bristol-Myers Squibb (NYSE: BMY  ) 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 Philip Morris International – which is a Motley Fool Global Gains selection. Netflix is a Motley Fool Stock Advisor recommendation. Chesapeake Energy is an Inside Value selection, as well as a Fool holding. The Fool's disclosure policy is 15 years into its 100 years of solitude.


Read/Post Comments (5) | Recommend This Article (21)

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 March 31, 2010, at 4:16 PM, dillon53 wrote:

    Austin, thanks for this article and the recommended reading, of which some I own and have read.

    Please allow me to add a short story on investing basics for ages 1 to 100. A year or so back I was reading the comments on a healthcare stock here at MF. All the comments, even from physicians, pointed toward investing even more in that pharma stock. The medication in question had passed 2 trials already and FDA approval seemed like a done deal. I was so close to investing a few thousand Dollars more in this stock. But then I thought what happens to my finances if I lose it all. And I came up with a question to ask myself. What would have the greater impact or consequence in my life: gaining a lot of money if the FDA approval goes through, or losing a lot of money if it doesn't? Although I am a risk taker, I decided NOT to invest any more in that stock. Then, a few days later, I learned the FDA did not approve that medication. To me, I had saved myself from myself. And to this day, it seems the greatest investment lesson I have learned and it is in no book that I have read.

  • Report this Comment On March 31, 2010, at 4:18 PM, dillon53 wrote:

    Austin, thanks for this article and the recommended reading, of which some I own and have read.

    Please allow me to add a short story on investing basics for ages 1 to 100. A year or so back I was reading the comments on a healthcare stock here at MF. All the comments, even from physicians, pointed toward investing even more in that pharma stock. The medication in question had passed 2 trials already and FDA approval seemed like a done deal. I was so close to investing a few thousand Dollars more in this stock. But then I thought what happens to my finances if I lose it all. And I came up with a question to ask myself. What would have the greater impact or consequence in my life: gaining a lot of money if the FDA approval goes through, or losing a lot of money if it doesn't? Although I am a risk taker, I decided NOT to invest any more in that stock. Then, a few days later, I learned the FDA did not approve that medication. To me, I had saved myself from myself. And to this day, it seems the greatest investment lesson I have learned.

  • Report this Comment On April 01, 2010, at 4:27 PM, perrygriffin wrote:

    Dillon, You have just given us an example of a rule that I have followed for forty years when I worked for Pratt and Whitney Aircraft on a space shuttle engine project. We presented the overwhelmingly best design to NASA, an engine that could have flown in a year, while our competitor completely failed and would have had to start from square one. You guessed it. We lost because Tricky Dick was president and North American Rockwell was situated in California. It took them seven years to develop an engine based on our design.

    I didn't mean to bore you with this story, but the lesson learned "Do not invest anything, not your money or your life on anything that depends on government approval to succeed."

  • Report this Comment On April 04, 2010, at 2:19 PM, dillon53 wrote:

    No, Perry, you did not bore me with YOUR life lesson learned. Again it proves the only one you can depend on, and that with limits only, is oneself.

  • Report this Comment On April 05, 2010, at 9:29 AM, theoxenity wrote:

    I learned the same lesson with my very first investment and I am glad it was with a small amount of money. It was a fda approval and I did not have the experience or the education to make the decision of buying. I am not an income investor but I do want to be rich, however I learned the speculation and hope are expensive.

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