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New Year's resolution: Read these books

Tired of the same old New Year's resolutions? Weight loss takes a lot of work and more willpower than most of us have. My resolution last year was to stop swearing and well... that didn't happen.

So if you're looking for a good new resolution for 2007, I got one for you. Morningstar.com made a list of some of the top investment books of all time for their last-minute gift ideas, and reading them all would make just about anyone a good investor. I'm embarrassed to admit that I've read almost every book on their list, and they are all good reads, and full of wisdom.

Some of my favorites from their list:

  • Michael Lewis's Moneyball: Oakland A's general Manager Billy Bean has made such an impact with his reliance on computers for analyzing players and his penchant for finding value where others see nothing that he was a speaker at T. Rowe Price's annual investment symposium. The Financial Times did a write-up on it, and it's easy to see how applicable his philosophy for baseball is to investing.
  • Pat Dorsey's The Five Rules for Successful Stock Investing: This provides awesome information on how to do bottom-up analysis in stocks in a great variety of industries, including banking, health care, energy, and utilities. I don't know of any other book where you can get this level of detail in a readable manner on so many different industries. It also has an excellent introduction to fundamental analysis (good explanations of concepts like the moat, margin of safety, and various valuation metrics).
  • Why Smart People Make Big Money Mistakes: This is the classic introduction to the field of behavioral finance written by one of its pioneers. What do the last three digits of your phone number have to with when Genghis Khan was born? Find out in this book.

To this list, I would add a couple:

  • David Liss's The Coffee Trader is a work of fiction, but a fascinating story about financial markets and commodities speculation in 17th century Amsterdam. Trust me, it's more exciting than it sounds.
  • Phil Town's Rule #1 Investing: The Simple Strategy for Investing in Only 15 Minutes a Week. It's a lot more interesting than the gimmicky title would suggest. It's a great introduction to investing in GARP stocks, and uses a simple formula which you may or may not want to apply to your own stock picking. This book would be a great gift for a young investor.

Read the rest of Morningstar's list and pick up as many as you can. Almost all of them should be available from your library. Have a great New Year.

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Last updated: July 24, 2008: 02:44 AM

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