The markets in 2023 will likely be as unpredictable as what we saw last year. Accordingly, for those looking to prepare for volatility on the horizon, arming oneself with the appropriate tools is always a great place to start. Those looking for the best way to prepare to invest in 2023 and beyond may want to arm themselves with knowledge by reading the best books on investing.
That’s also one of the common themes that runs through the best books on investing. The authors of the books listed below (and the characters described) are often self-taught. The 3 best books on investing to read in 2023 will remain invaluable well beyond next year.
These are the three top books I suggest are worth a look right now:
- The Intelligent Investor
- One Up On Wall Street
- The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
The Intelligent Investor
Most readers will recognize The Intelligent Investor as the book Warren Buffett recommends to value investors. It was written by Buffett’s mentor, Benjamin Graham, in 1949. It also remains one of the most acclaimed investing books to this day, teaching investors how to construct a portfolio while minimizing risk.
The book hinges on a series of investing principles about price and value, risk and volatility, psychological preparation, the impossibility of prediction, and margins of safety when investing.
The most famous principle is that price and value are two separate things. Warren Buffett consistently parrots this notion over and over. The point is that in order to understand value investing, one needs to understand valuation principles. That way, an investor has a price that anchors their decisions.
Another important takeaway from the book relates to volatility and risk and the distinction between the two. The basic point Graham makes is that in periods of volatility like what we’re seeing now, shareholders rarely have to sell their shares. To concern yourself with short-term volatility, when long-term risk doesn’t really exist, is a classic mistake to avoid.
One Up On Wall Street
One Up On Wall Street is a book by Peter Lynch. Lynch is famous for having run the Magellan Fund between 1977 and 1990 at Fidelity Investments (NYSE:FNF). During that period, he averaged 29.2% annual returns, securing his place among the legendary investment names.
The book takes readers through Peter Lynch’s personal thoughts on how to approach investing beginning with his own early investments. Lynch’s first investment was in an airfreight company. He saved money by caddying at a golf course, and after listening to many conversations on the course, decided that stock market investing simply made sense. That airfreight company did well after the U.S. went to war and Lynch was hooked.
One Up On Wall Street also confronts his own fears about investing. Namely, that so-called professionals are often anything but. He teaches readers how to develop their own analytical toolkits which rely heavily on common sense. For example, if you can see evidence of a strong market with your own eyes, it might make sense to add more exposure.
Lynch really tries to hammer home the idea that earnings are paramount. Investors must understand a firm’s earnings and what factors are likely to continue to make that firm’s earnings likely to grow or not. Lynch is a strong proponent of the idea that investors remain abreast of a company’s narrative at all times. If you don’t, you don’t really understand your investment.
The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
The Outsiders is a summary of eight successful CEOs and the unconventional wisdom they convey in leading their respective firms higher. It isn’t so much a pure investing book as it is an introduction to multiple investing factors that each of the CEOs employed at their companies.
The book includes the story of Warren Buffett and how he led Berkshire Hathaway (NYSE:BRK.B) to annual returns that averaged 20.7% between 1965 and 2011. It introduces similar stories including that of Bill Anders at General Dynamics (NYSE:GD), who posted annual returns of 23.3% between 1991 and 2008.
The book focuses on the role of CEOs as it relates to leadership. Leadership, the book asserts, is less about charismatic leadership and more about the measured deployment of resources. That ability to invest cash flow rather than the ability to manage people is a central theme of the book.
The book also challenges Wall Street’s reliance on reported earnings as the end-all-be-all, instead focusing on cash flow and its importance in the CEOs’ ability to invest as he or she sees fit.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.