Why The Humble Book is A Valuable Tool for Your Portfolio

Investment books can be seen from one of two different lenses. Let me know in the comments below as to which camp you belong to (or indeed if you feel you have a different perspective entirely).

One group believe that investment books are the purest and simplest way to gain new information about investment strategies and principles]

The other group believes that investment books promote nothing new, and are merely a way of generating cash from new investors by providing information already available elsewhere.

I belong in the first camp - I believe that investing books have a lot to offer new and old investors. This piece will set out my thoughts and also explain what impact they’ve had on my own investing fortunes.

My first investing book

My first investing book was an old title called ‘How to Read the Financial Pages’ by Michael Brett. It was a revised edition published after the financial crisis. I suppose the logic for the re-write was that the financial crisis shook the system so dramatically that a casual reader might otherwise assume that the book would be completely out of date if it was originally written a few years prior.

So, what was ‘How to Read the Financial Pages’ about? And what are ‘the financial pages’ exactly?

The title referred to financial journalism in general, including books. Think the Financial Times or the Wall St Journal. The objective of the book was to explain to a complete novice how the stock market (and bond market) worked.

True to the title of the book, the text devoted significant time in working towards definitions such as ‘bull and bear’ or ‘IPO’ and ‘Mutual fund’. By the time I had finished reading the book, I felt much more familiar with the content of the Financial Times.

I had actually been reading the FT on occasions since the age of 17, however because I was not comfortable with the technical or finance aspects, I could only really get enjoyment out of the pieces on individual companies.

After reading my first investing book, I was able to now peruse the ‘Markets’ section of the newspaper with equal glee. Nerdy, yes. But this set the scene for a future educational path which would lead me into the finance industry.

Nothing new under the sun

Now I should address the challenge that investment books contain nothing new.

I partially agree and disagree with this statement at the same time.

Yes, it’s true that an investment book aimed at a complete novice, will not be sharing ideas and concepts on the cutting edge of the investing world - but why would it? You’d no more expect a ‘beginners guide to chemistry’ to be explaining doctorate level experiments to the reader by chapter 3.

So I feel it’s an unfair criticism if we’re talking about books aimed at beginners. If you look at the imprints of large publishing houses, you’ll see that plenty of investing books are published which are aimed at a more experienced audience. Particularly the auto-biographical content comes to mind, which is often written by an ex-professional, and aimed at others in the same industry.

These often come with the added (and welcome) elements of humour and drama, which you won’t find in the ‘dummies guide to the stock market’ for example!

In Summary

In summary, investment books are nothing more than a series of interesting facts arranged for the benefit of the users. If you are looking for a beginners guide - seek out large and comprehensive guides that will hold your hand through every topic imaginable. If you’re looking for new takes on existing theories or brand new thinking entirely, be on the look-out for titles available in smaller print runs from specialist imprints.