I want to understand the stock market
Library · Reading path · 5 books
Who it is for
For people who want to analyse individual companies, not just buy the index.
What you will learn
How to look at a business, combine quality and price, value a company and do it with a margin of safety.
Why this order
It goes from practical to demanding: first how to look at a company, then a simple rule, then quality criteria, valuation techniques and, finally, the classic text that ties it all together.
One Up On Wall Street
Peter Lynch. Reading: Moderate. Finance level: Intermediate.
Teaches you to look at companies you know and classify them by growth before checking their accounts.
The Little Book That Beats the Market
Joel Greenblatt. Reading: Easy. Finance level: Intermediate.
A simple rule that combines quality and price: two ideas that recur in the rest of the path.
Common Stocks and Uncommon Profits
Philip A. Fisher. Reading: Moderate. Finance level: Advanced.
Qualitative criteria to judge whether a business and its management are worth it over the long term.
The Little Book of Valuation
Aswath Damodaran. Reading: Moderate. Finance level: Intermediate.
The techniques to estimate what a company is worth: discounted cash flows and multiples.
The Intelligent Investor
Benjamin Graham. Reading: Demanding. Finance level: Advanced.
The reference text: margin of safety and discipline in the face of the market. It reads better after the rest.
If you already know some of it
If you can already read a set of accounts and the basic ratios, start at step 3.