“The more that you read, the more things you will know. The more that you learn, the more places you’ll go.
― Dr. Seuss, I Can Read With My Eyes Shut!
How true is that?
My personal experience says, majority of experts in any field have one common habit – Reading.
From childhood till date, how have you gathered knowledge about anything?
The answer varies. From your own experiences to watching TV, listening to radio, the Internet and … ? Yes, books.
I’ve acquired most of my memorable lessons from reading books.
Here’s the picture of (some) my books on investment.
By looking at the above books you’ll get an idea—of the kind of books I’m going to suggest.
I get emails- from people who are looking for jobs in equity research – asking me about the best books on equity research.
9 Suggested Books /Reading for Equity Research and Stock Market Analysts:
All these books are seminal in nature. They are trendsetters and have guided professional investors in the last few decades to build stunning investment portfolios.
Go and buy these now!
1. The Intelligent Investor (1949) – By Benjamin Graham: The book teaches value investing.
2. Security Analysis (1934) – By Benjamin Graham and David L. Dodd: The authors were the intellectual founders of value investing.
3. The Interpretation of Financial Statements (1937) – By Benjamin Graham and Spencer B. Meredith: The book teaches understanding and interpretation of financial statements.
4. The Essays of Warren Buffett: Lessons for Corporate America (1998) – ed. Lawrence A. Cunningham: It is a collection of letters Buffet wrote to the shareholders of Berkshire Hathaway that delivers sound knowledge of business practices.
5. One Up on Wall Street (2000) – By Peter Lynch: The author explains how average investors can be better than professional investors and improve their investment portfolio using what they know about the market.
6. Beating the Street (1994) – By Peter Lynch & John Rothschild: The author guides you on picking mutual funds and stocks for a profitable portfolio.
7. Learn to Earn: A Beginner’s Guide to the Basics of Investing and Business (1996) – By Peter Lynch & John Rothschild: The authors talk about business investment and stock market in great detail.
8. Buffettology (1999) – By Mary Buffett and David Clark: The authors shares Buffet’s, the genius investor, investment philosophy with really valuable inputs.
9. Best Practices for Equity Research Analysts: Essentials for Buy-Side and Sell-Side Analysis (2011) – By James J. Valentine: One of the best guides on becoming a top equity research analyst.
If you want to buy them online, they are easily available on Amazon.
Best Practices for Equity Research Analysts
All the 9 listed books are recommended but I would like to draw your focus to one book in particular, which is the Best Practices for Equity Research Analysts.
This book is one of the best books written so far, specifically for equity research analysts.
According to the author, James Valentine, there are some non-technical skills that every equity research analyst must possess.
The skills are:
- Selecting the optimal universe of stocks
- Time management
- Influencing skills, and
- Managing information flow
Read the preview of the book: Best Practices for Equity Research Analysts.
Are these books enough to become a stock market or equity research analyst?
No! It’s just the starting point.
You can and should research for more books on equity research analysis and start reading them.
Apart from the books mentioned above, you need to read books on behavioral finance too. A new field, behavioral finance is the study of psychological and emotional influences that cause people to invest in irrational or unpredictable ways.
The study combines psychological theories with conventional financial concepts to understand the reason behind people taking irrational decisions in financial investments. The conventional financial theories focus on ‘wealth maximizers’ in a rational way but combining psychological insights into finance gives analysts access to human logic and irrationality governing financial decisions. The purpose is to understand such anomalies.
The Importance of Annual Reports
One more important resource that you must read is to become an equity research analyst is the annual reports of companies. Read every letter written in these reports; don’t miss out on anything.
What’s there for you in an annual report as a stock market or equity research analyst?
The company annual report contains every details of the company you’re interested to research.
The annual report presents a clear picture of the financial situation of the company and other related factors, such as the company’s business model, operational efficiency, competitive scenario, the people who manage the company (i.e. company’s management), company’s future outlook, investor-friendliness of the company and lots of other things.
I read annual reports of the company before investing. For example, read my investment analysis report of Colgate Palmolive here.
Books vs. Internet for Equity Research Analysis Knowledge
I prefer using books to the Internet.
For the simple reason that my attention span is more when I read books (physical not eBooks).
Of course, I read on the Internet too, but that’s for research and analysis purpose, and not for core reading.
My observation is that books are always more in-depth and once you start reading a book, you’re more focused and less distracted.
In short, if you are wondering which books to read as a stock market or equity research analyst, you should start with core investment books and then read books on behavioral finance.
Don’t forget to read annual reports of the company that you’re analyzing. You can read the books in physical format or in electronic format, as per your convenience.
If you want to read online, finance investment books are available for both free download and paid options. Avail both the opportunities.
Did I Forget Anything?
How about starting to read a book in the above list from today? Read only 5 pages, take pleasure in reading and forget everything while reading.
There you have it, a complete list of best equity research books from my own experience.
I spent 5 hours for this post to give you the list. Even so, I’m sure there are a few that were missed. Or maybe there’s one on the list that you disagree with. Either way, leave a comment below!
“Books are the quietest and most constant of friends; they are the most accessible and wisest of counselors, and the most patient of teachers.”
― Charles William Eliot