Investing book with most page-for-page wisdom is... - The 5 Minute WrapUp by Equitymaster
Investing in India - 5 Minute WrapUp by Equitymaster
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Investing book with most page-for-page wisdom is... 

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In this issue:
» Is the Government further inflating the real estate bubble?
» NPAs on the rise in China
» Why should Government levy more taxes on Petrol and Diesel?
» Is the investment cycle turning the corner?
» ...and more!


00:00
 
The guys over at farnamstreetblog.com, a blog some of us regularly follow, ran a very interesting survey recently.

Since the blog is all about gaining wisdom, it surveyed people on the book that they believed had the most page-for-page wisdom of all the books they've read in their lifetimes.

And lo and behold, almost 27,000 people responded!

You can of course get the list from here

Some books on the list are indeed absolute gems!

However, the survey did another thing for us. It triggered a thought in us. What if we conduct a similar survey about books on investment only?

Well, we did just that and asked each of our team members to reveal their all-time favourite investment book.

Before we reveal the list to you, we would also like to guess what would be on the list of some of the greatest contemporary value investors in the world.

Although we haven't done a survey on this, we are pretty sure that the book 'The Intelligent Investor' by Benjamin Graham will be a cinch to be in the top 10 if not the highest ranked book.

At least we are making it as one of our recommended reads.

In fact, Warren Buffett, arguably the best investor the world has ever seen, feels that his investing education started and ended with this gem of a book by Benjamin Graham.

Buffett argues that had it not been for Graham's work, he would have gone another 100 years still trying to figure out the stock market. So smitten he is by the book that he calls the book's chapters 8 and 20 as the two most important essays ever written on investing.

And not just him, there are scores of other very successful value investors who speak of the book in equally glowing terms. Therefore If you haven't read the book yet, we believe you should pick up a copy as soon as you can.

Now, to the list that our research team feels are a must-read for investors, both experienced as well as the ones who are just starting out.
  • The Intelligent Investor - Benjamin Graham
  • Security Analysis - Benjamin Graham
  • One Up on Wall Street - Peter Lynch
  • Common Stocks and Uncommon Profits - Philip Fisher
  • The Little Book that Builds Wealth - Pat Dorsey
  • Buffett: The Making of an American Capitalist - Roger Lowenstein
  • Value Investing: From Graham to Buffett and Beyond - Bruce Greenwald
  • 100 to 1 in the stock markets - Thomas Phelps
  • Poor Charlie's Almanac - Peter Kaufman
  • Accounting for Value -Stephen Penman
So there it is. A treasure trove of books whose principles, if closely adhered to, can certainly make an investor grow his wealth enormously over the long term.

What about you? What do you think is the investment book that has the greatest page-for-page wisdom when it comes to sensible long term investing? Let us know your comments or share your views in the Equitymaster Club.

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01:33  Chart of the day
 
What do you think drives economic growth? In its most elemental form, it is driven by two things only. Population growth and productivity growth. Since population can increase only so much, it is the productivity growth that makes all the difference we believe. Today's chart of the day gives an idea on how far we need to improve our productivity if we are to catch up developed countries like US and Japan.

And what do we need to do to increase the same? Well, we certainly need our employees to produce more goods and services while taking up the same time as before. And this will call for skill development of our workforce, more help from technology and of course better managerial skills amongst other things.

This is where the present Government's 'Make in India' comes into play according to us. The mere migration of a sizeable population to manufacturing jobs from agriculture and removal of regulatory hurdles will be enough to take the next big leap.

We really hope all the talk about it really transforms into action.

Which employees are the most productive?


02:16
 
If you can afford to buy a home in urban regions in India, then let us congratulate you. You are the privileged member of a very small elite group. For an average Indian citizen, buying a home in urban India means sacrificing 20 to 30 years of future earnings! In other words, the person would have to spend a bulk of his working years paying up just home loan EMIs.

A recent move by the government is likely to push urban real estate prices even higher. The norms for FDI in the construction sector will increase foreign investments in real estate. Simple economics will tell you that wherever money goes, the asset prices go up. The move is certainly a positive for the construction sector. It may aid the real estate companies that are reeling under the burden of excess debt. And it may even provide the much-needed boost to the sector. But home buyers waiting for prices to come lower may be disappointed.

02:46
 
Now that global oil prices have eased off and diesel in India has been de-regulated, should petrol and diesel prices also come down? Not really, according to an interesting article in First post. The author of the article has infact suggested that the taxes on petrol and diesel be raised going forward. The idea being that pump prices do not fall too low.

Inflation in India has been showing signs of cooling off and given the benign crude prices, shouldn't the Indian consumer benefit? The main idea here is that oil prices as such are volatile. India still imports a substantial chunk of the oil that it consumes. So lower oil prices will fuel the demand for more imported oil.

This is not in the interests of the country in the longer term if it has to become energy sufficient. Moreover, now that US has become self sufficient due to the success of shale gas production, it will no longer take much interest on how the Middle East prices oil. So geopolitical tensions in that region will impact the Asian region including India higher.

Further, while the government has deregulated diesel now, the real test for it will arise when prices rise. Ultimately, the goal of the government should be towards cutting back subsidies. So oil prices should not be lowered to a point where it begins to affect government finances. We are not sure if raising taxes on fuel will solve the problem. But we do know that fuel subsidies need to be cut down substantially so that funds can be generated for more productive purposes.

03:35
 
As China struggles to recover from over capacity in industry and real estate, the quality of loans in banking sector may act as a dampener. China's banking sector has a notorious track record of being shielded by the government from NPA woes. The biggest banks in China are amongst those with the largest balance sheets globally. However, the coercion by the government to lend to realty and infra projects has led to compromise on quality of lending. The result being that bad loans have once again piled up in their books.

As per Wall Street Journal, NPAs on the books of China's biggest banks have increased 22% in 2014 alone. As per official figures, NPAs averaged at 1.1% at the end of September 2014, up from 1.03% at the end of 2013. However, the actual numbers are suspected to be much higher. In fact these numbers may not look very threatening when compared to the NPA problem in our own PSU banks. But the fact is that for growing economies like India and China, not acknowledging the NPA problem in banking can be a suicidal move. The RBI should at least tighten the noose on PSU banks hoping to go easy on the NPA problem.

04:13
 
For growth to revive, investment cycle needs to pick momentum. And order inflow figures is a perfect way to gauge as to when the investment cycle will revive. If the September quarter ending figures are anything to go by, it seems the capex cycle is already on the cusp of revival. During the quarter, companies received fresh orders worth Rs 670 bn, up 45% on a QoQ basis.

This has been the highest inflow since the last 4 quarters. But the question is whether this inflow is due to selective off take or really a signal of market wide tendering? Well, while the current inflow is indeed noteworthy, what matters most is momentum. If such kind of tendering continues for the next 2-3 quarters in a row, one can conclude that the investment cycle is back on track. Till then it will be too early to conclude that the tide has really turned.

04:41
 
Meanwhile, benchmark indices continued with their buoyancy today what with the Sensex trading higher by a strong 400 points at the time of writing. Stocks from the energy and banking space leading the charge. Global markets also trading strong today with both Asia as well as Europe witnessing strong buying activity.

04:52  Today's investing mantra
"If you follow the behavioral and business principles that Graham advocates-and if you pay special attention to the invaluable advice in Chapters 8 and 20-you will not get a poor result from your investments. " - Warren Buffett
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6 Responses to "Investing book with most page-for-page wisdom is..."

DR ANIL GUPTA M.D.

Nov 13, 2014

1 The little book of common sense investing . by JOHN C. BOGLE 2007 2 A RANDOM WALK DOWN WALL STREET BY BURTON G. MALKIEL 2010 3.JOHN BOGLE ON INVESTING THE FIRST 50 YEARS. 4.THE FOUR PILLARS OF INVESTING by William Bernstein 2010 5.THE COFFEE HOUSE INVESTOR by BILL SCHULTHEIS. 6.THE INFORMED INVESTOR by FRANK ARMSTRONG III. 7.THE LAZY PERSONS GUIDE TO INVESTING by PAUL B. FARRELL .

Like 

P. A. Kishore

Nov 4, 2014

The only book, which has impressed me most, among thousands of investment books (excluding on fndamental & technical analysis), is "STOCKS TO RICHES" By Parag Parikh.

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Roshni

Oct 31, 2014

There is no Indian writer in the list. Nobody good enough? Please recommend at least one or two as it would be easy to understand in the Indian context and history.

Like 

Vikram Agrawal

Oct 31, 2014

Hey, great list. Just wanted to suggest some more:
1. The Four Pillars of Investing by William Bernstien
2. The Richest Man in Babylon by George Samuel Clason

Happy Reading

Like 

Abhay

Oct 31, 2014

"The Little book of valuation" by Aswath Damodaran is a gem of a book to recall all the valuation concepts in a small package.

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Tukaram Shetty

Oct 31, 2014

Even though Benjamin Graham's Intelligence Investor stand tall with glory, but for naive investor, the book by Peter Lunch, One up on the wall street like a romantic novel, one will never like to stop reading ones start reading. It is by far the best book for a beginner to understand what exactly one has to follow to become successful investor.

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