Books for beginners
Buffett: The Making of an American Capitalist by Roger Lowenstein
This book is a gentle introduction to the world of value investing and probably the best biography so far on the man dubbed the 'Oracle of Omaha'.
Lowenstein gives a nice insight into Buffett's development and some fascinating corporate episodes, including the Salomon bond trading scandal and the merger of Capital Cities and ABC. One chapter recounts how, as part of his research into American Express, Buffett sat behind the counter of his local steakhouse one night observing how many patrons were using their Amex cards. This is the kind of grass roots research that can make a difference.
One up on Wall Street by Peter Lynch
For anyone interested in buying shares, this book is compulsory reading. Peter Lynch managed the Fidelity Magellan fund from the late 70s with stunning results. His approach is straightforward. A bit like Laurie Lawrence's approach to teaching swimming - anyone can do it as long as you invest in things you know about.
Lynch emphasises the power of grassroots fundamental research. That means checking out retail stocks by spending time in their stores, talking to customers, employees, suppliers and anyone else that will give you a better understanding of the company.
If all this sounds a bit familiar, that's good. The message from all these successful value investors is the same. And over the course of this series we'll be discussing more of it.
The Numbers Game by Trevor Sykes.
For those that don't immediately recognise that name he is, among other things, the man behind the Pierpont column in Friday's Australian Financial Review.
Sykes has a lot of experience and a great deal of knowledge about Australian shares. The book is a great introduction to basic financial analysis and is written in a very easy to read manner.
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