The five rules for successful stock investing

This book is also written by Pat Dorsey, Director at Morning Star Inc. This books starts off by giving a detailed explanation of various parameters in stock investing world like price to earnings, return on equity, return on capital, etc.

Very good attempt is made to make a new person in reading the cash flow statements, balance sheets and profit loss statements. This book not only covers how to read the financial parameters but also about subjective things like judging the management quality.

Second half of the book gives detailed analysis of the competitive advantages of various sectors in the United States. For example Airlines was always was a sector with headwinds but consumer brands always enjoyed some kind of competitive advantage.

You do not have to buy this book as you can get free PDF from the internet.

The little book that builds wealth

This book is written by Pat Dorsey, Founder of Morning Star Inc. The book mainly focuses on how companies gain competitive advantages like cost advantage, intangible assets, customer switching costs and network economies. In this book he explains how we can understand these competitive advantages and identify companies which posses those traits.

The following quote from this books sums up what this book is all about:​

​"Unless a company has some kind of economic moat, predicting how much shareholder value it will create in the future is pretty much a crap-shoot, regardless of what the historical track record looks like. Looking at the numbers is a start, but it’s only a start. Thinking carefully about the strength of the company’s competitive advantage, and how it will (or won’t) be able to keep the competition at bay, is a critical next step"

You do not have to buy this book as you can get free PDF from the internet.

One Up on Wall Street

This book is written by famous American Fund Manager named Peter Lynch. During his tenure with a fund called Magellan he averaged 29% compounded average yearly returns for about 13 years.

This book has been sold more than 1 million times all over the world. Peter Lynch thinks that any investor without much knowledge in stock markets can buy quality stocks just by observing their surroundings. You can get stock ideas when you visit a super market, a mall, travelling somewhere, buying some products or by observing what other people are buying.

Of course, you cannot buy a stock just because you noticed some successful product somewhere. Once we identify a successful product or service, we then need to go into financials of the company and see few basic details. Checking these basic details is not a very complicated stuff and can be done easily if one goes through this book.

Though the book has been written by an American author, still the language is very simple to understand and does not carry very complicated technical jargon

value investing [from graham to buffet and beyond]

This book is for an intermediate investor who understands the financial parameters of a business.

It starts off by giving a distinction between trading and value investing. Most of the investing community is busy in evaluating the price to earnings of a stock but this book prefers to calculate the value of a business based on the discounted cash flow model.

A whole lot of time we talk about competitive advantages theoretically without knowing how to practically view it from the financial perspective. Based on the various financial parameters, the author clearly explains if the business has any competitive advantage or not. He says that any business has three values: The reproduction cost of the assets, the franchise value and the growth value. Any business which does not have competitive advantage has only reproduction cost of the business or the book value. The real value of any business is the franchise value and he talks about depending less on growth value of any business for making investing decisions because growth is the most unpredictable kind of value.

Second half of the book is all about famous investors and how they invest based on what they are good at. He covers investors like Warren Buffet, Mario Gabelli, Glenn Greenberg, Robert H. Heilbrunn, Seth Klarman, Michael Price, Walter and Edwin Schloss and Paul D. Sonkin.

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 ​​​​​​​​​​​​Raghu StockAdvis​or​s 

Must Read Investing Books For Any Aspiring Investor