Read My Lips: My favorite books on investing

As any Amazon.com lover knows, there are a ton of books out there covering every subject known to man. Same goes for investing books. I mean, I am amazed at the number of books on investing exist, not even counting the ones that speak about personal finance more generally.

Despite the number of pickings, you definitely shouldn’t cast them all aside – investing greats learned everything they know from the best books written on the topic. So which ones are worthwhile?

The most famous, and arguably the best, book ever written on investing is The Intelligent Investor by Benjamin Graham. Graham was Warren Buffett’s (arguably the greatest investor that ever lived) teacher at Columbia University and investing guru. Graham strongly believed in buying stocks that are undervalued, or selling for less than their assets are worth. The Intelligent Investor breaks down this philosophy in excruciating detail. It’s actually the layman’s version of Graham’s investing textbook, Security Analysis. That said, I’ll admit that it is a bit dry; in fact, one of my best professors in college gave me the book during my senior year (2006) and I’m only just now (2013) getting past chapter 1. Yes, it is dense and academic, but if you’re super serious about investing, it’s a must-read.

The next most famous, in my opinion, is A Random Walk Down Wall Street by Burton Malkiel, a gem that was first published in the 1970s. I’d recommend this to ordinary investors because it covers an exhaustive range of information, but is so well-written and easy to digest. I gobbled it up like a novel. Malkiel purports that there is no point in trying to select individual stocks in order to “beat” the market because, ultimately, the market is going to outperform any manager. That being said, he advises investors to stick to index-based mutual funds. I found his argument very convincing and changed the way I thought about my (well, my husband’s, for right now) 401K allocation.

One that I encountered recently and found very helpful was the Motley Fool’s Million Dollar Portfolio by David and Tom Gardner. The Motley Fool is an excellent website, exploding with investing information, and is very well respected in the industry. Tom and David, the brothers who founded the site, explain portfolio building and management in clear, entertaining terms in MDP. It’s definitely not as long as the Intelligent Investor or A Random Walk, so if you want the juicy bits in a short amount of time, go for it! The tone is friendly and approachable, but it doesn’t just stick to giving basic information. The best part is the corresponding website, which keeps the book current -- definitely a plus among books that recommend specific stocks in this crazy, volatile world. (Unfortunately, the website is not accepting new members, but will soon, hopefully.)

Last, for the risk-averse among us, I’d recommend Zvi Bodie’s Worry-Free Investing. The book is smaller than it looks since the print is humongous and it has lots of graphics to make complex points perfectly clear. It lays out the simplest investment portfolio recommendations I’ve ever encountered in a book, but still covers next-step-up topics like derivatives and Treasury Inflation-Protected Securities. Great for investors who are really only interested in saving for retirement.

Since sometimes you’ll probably want to invest in a single stock, it’s good to know how to read financial statements. While my blogposts (here, here, and here) gave some information, you should become more familiar. For a brief, but in-depth overview of accounting concepts, try Financial Intelligence by Karen Berman. It says it’s for managers who do not work in financial services, but it is simple enough for someone with no business experience to understand.

As you all know, we recently weathered the worst financial crisis since the Great Depression. While there’s plenty of theories out there about who to blame for it, there are some clear sequences of events that led up to it. A great recounting and explanation can be found in Roger Lowenstein’s The End of Wall Street. Lowenstein’s writing style is unintimidating, but can be a little Wall Street-bashing, if you don’t mind that. If you do, I think you’d love Michael Lewis’s Liar’s Poker, the tell-all that reads like a novel and is supposed to be a cautionary tale, but only excites undergrads around the world about joining the ranks of the Street.

Well, those are my picks. What are some investing reads you all have found helpful or even entertaining?