Best Books On Investing - My Top 10

 

1. The Intelligent Investor by Benjamin Graham - described by Warren Buffet as ''by far the best book on investing ever written''. It centres on Graham's philosophy of value investing ''which shields investors from substantial error, and teaches them to develop long term strategies.'' First published in 1949 but as valid today as it was then.

 

2. The Zulu Principle by Jim Slater - This is a great book on investment for growth. Its title is based on the premise that anyone can become an expert on a subject if they narrow their field enough (his wife is an authority on Zulus). Slater's methodology revolves around spotting small companies with good growth potential that are priced attractively.  

 3. The Little Book That Still Beats The Market by Joel Greenblatt - Like 'The Intelligent Investor', this book centres on value investing and even uses some of Graham's terminology (Mr Market etc). Mr Greenblatt has effectively tweaked the Graham methodology to create his own 'magic formula' for investing. A good little book that won't take you long to read.

 

4.  Common Stocks And Uncommon Profits by Philip A. Fisher -Fisher was a pioneer growth investor who specialised in innovative companies driven by research and development, his 15 point guide to assessing potential growth companies is still enormously relevant.

5. One Up On Wall Street by Peter Lynch & John Rothchild -  Peter Lynch was one of America's best performing fund managers. He managed the Fidelity Magellan fund from 1977 to 1990 averaging returns of 29% per annum. This book delves into his stock picking methodology and highlights areas where amateur stock pickers can garner advantage over their professional contemporaries.  

6. The Great Investors by Glen Arnold - This book takes a look at nine of the world's greatest investors, some of whom have books of their own in this list. The people covered are Benjamin Graham, Anthony Bolton, John Templeton, Charles Munger, Warren Buffett, George Soros, Peter Lynch, Philip Fisher and John Neff. All fantastic money managers and all and ideal people to study. Soros particularly stands out from the rest of this group, as he is the only one you'll find in this list who is more of a trader than a long term investor. His Quantum fund has been one of the few truly successful hedge funds, delivering an annual rate of return of nearly 35% over the first 26 years of the fund.

7. Stock Picking For Profit by Simon Thompson - Simon writes a regular column for the Investors Chronicle. He specialises in analysing small businesses and has proved an adept stock picker. Many of the concepts/methods he utilises have been mentioned in other books on this list, but this book is probably one of the best for providing real life case studies, demonstrating exactly what you should be looking for when analysing a potential investment.

      

8. Extraordinary Popular Delusions And The Madness Of Crowds by Charles Mackay - Whilst not an investment title per-se, this book documents the limitations of human sensibility, and covers many interesting topics. Of note to investors should be the Dutch 'Tulip Mania', and also the South Sea Bubble. Yet there are many other interesting subjects mentioned, including the incidence of witch mania, alchemy, and the crusades.     





9. The Snowball- Warren Buffett And The Business Of Life by Alice Schroeder - This is the biography of probably the world's best known investor, and while it doesn't dwell too much on his investing methodology, it does give fantastic insight into his psyche and habits. The book shows how his success owes as much to hard work, determination and self-discipline as it does to his method of investing. 

  

 10. Game Over by Stephen Leeb - WARNING, this book has quite a negative outlook for the future, so if you are prone to depression you may want to avoid it. Nevertheless it is extremely interesting, and offers a glimpse at what pitfalls a rising global population could face as our natural resources are depleted. Stephen has made a few good investment calls in the past, being one of the first to jump on the gold bandwagon. Although I don't always agree with his Malthusian view of things, his book is well worth a read.

Happy New Year!! - 2013 Review.

Happy new year everyone! Hope you had a good 2013 and many thanks for reading!

Benchmarking

Last year was a great one for dabbling in stocks, and I'm quite pleased with how things have gone.  Jan 3rd 2013 the FTSE 100 was sitting at 6047 and it has risen to 6725 today, which including dividends received would have given you a total return of around 14.6%.

The FTSE All Share (which is the capitalisation weighted aggregate of the FTSE100, FTSE 250 and FTSE Small Cap indices), did slightly better, rising from 3170 to 3598, which including dividends received has given a total return of 16.78% over the year. I think the All Share will prove a more accurate benchmark going forward as it fits my holdings more closely than the FTSE 100 as shown in the table below.

Over the same period my holdings have risen 27.3%, this figure includes all dividends received and expenses paid, no new money has been added to the portfolio. The current breakdown of holdings is as follows:

Company	Market	Amount	% of Holdings	% FTSE 100	% FTSE ALLSHARE
AstraZeneca	FTSE 100	£15,227.01	10.61	10.61	10.61
BAE Systems	FTSE 100	£7,288.37	5.08	5.08	5.08
Berkshire Hathaway (B)	S&P 500	£4,355.55	3.03
British American Tobacco	FTSE 100	£11,102.69	7.73	7.73	7.73
BT	FTSE 100	£5,302.40	3.69	3.69	3.69
Cairn Energy	FTSE 250	£4,050.08	2.82		2.82
F&C Commercial Property Trust	FTSE 250	£5,731.22	3.99		3.99
Fidelity China Special Situations	FTSE 250	£8,352.80	5.82		5.82
GlaxoSmithKline	FTSE 100	£14,987.64	10.44	10.44	10.44
HSBC	FTSE 100	£4,617.90	3.22	3.22	3.22
Imperial Tobacco	FTSE 100	£9,794.26	6.82	6.82	6.82
JP Morgan Russian Securities	FTSE Small Cap	£1,892.15	1.32		1.32
Lloyds Banking Group	FTSE 100	£18,643.05	12.99	12.99	12.99
Molins	FTSE Small Cap	£2,236.85	1.56		1.56
Murray International Investm Trust	FTSE 250	£8,970.88	6.25		6.25
Oakley Capital Investments	AIM	£5,973.60	4.16
Polo Resources	AIM	£1,173.21	0.82
Templeton Emerging Markets	FTSE 250	£3,978.00	2.77		2.77
Terrace Hill	AIM	£2,133.02	1.49
Tesco	FTSE 100	£1,663.45	1.16	1.16	1.16
Cash		£6,086.79	4.24
Total		£143,560.92	100.00	61.74	86.27

Typically the returns from each holding have varied dramatically; Lloyds Banking Group, my biggest holding, gained about 60%. BT also gained 60%, BAE systems up 23%, Fidelity China up 20%, AstraZeneca up 19% plus many of the house builders that I sold earlier in the year made huge gains in the spring. On the down side Tesco have been disappointing (down 5%), as have my natural resource plays which have been stagnant or falling. Also I have been disappointed with the performance of Murray International Trust which has fallen since I purchased, and lost all it's premium to NAV. In hindsight I overpaid for this fund yet I still expect it to perform going forward.

New Holdings

Just before Christmas I sold down some of my holdings in Tesco, AstraZeneca, GlaxoSmithKline, BAT and Imperial to buy Templeton Emerging markets and Oakley Capital Investments.

Templeton Emerging Markets is a popular investment trust run by Dr. Mark Mobius who has a great track record for overseas investing. As I have very limited knowledge of overseas businesses I will be using funds like this, Murray International and Fidelity China to gain exposure to global equities.

My purchase of Oakley Capital was quite speculative. They are a fairly small AIM listed company who recently announced that they will be working in conjunction with Neil Woodford (Invesco Perpetual's star manager) to launch his new solo career in April using their offices and back office functions. It isn't very clear how much this will financially benefit Oakley but Neil is well respected within the industry and will doubtless attract billions in investment funds when he moves. Oakley are trading on par with their NAV so hopefully the potential downside of holding the shares will be limited.

Gold & Bonds

Over the last few years I have been very bearish on long dated bonds and gold, having written a few articles on the subject.

Gold has had a disastrous 2013, its worst in 3 decades in fact, falling almost 30%. Bonds have also had a terrible time, in most cases losing significant amounts.

I'm still bearish on both these asset classes, especially bonds, and think returns are likely to be poor in 2014. Risk averse investors that are heavily exposed to bond markets could be in for a rough year.

Equities

I think global equity markets represent fair value at the moment. I prefer the UK to the US. The All Share is trading on a PE of 14.9 which is more or less it's long term average, and a good bit cheaper than the S&P 500 at 17.38.

The US significantly outperformed the UK in 2013, maybe because the UK market has a higher exposure to mining/natural resource stocks which underperformed in 2013. There are quite a few natural resource stocks that are now looking very cheap on paper; if this remains the case I expect that I will increase my holdings in the sector. My recent purchase of JPMorgan Russian Securities is very much a natural resources play as their market is heavily weighted in miners and oil/gas explorers, which explains why the Russian RTS index is so cheap trading a PE of 5.95.

I also prefer the UK to most of Europe as I believe the risk of economic implosion is lower here, and European valuations are not low enough to warrant the extra risk.

I continue to like China, their market looks very cheap given the growth potential. My Fidelity China fund has massively outperformed the Chinese indexes this year and is still trading at an 8.6% discount to NAV.
Despite Anthony Bolton's impending exit from the helm I think 2014 may prove a bumper year for this fund.

Many investment houses are tipping Japan for 2014, but this is an area I will be keeping away from. The Nikkei has performed admirably in 2013 but it is arguably the dearest developed market in the world, trading on a PE of 23.5. I think that Japan's ultra loose monetary policy is questionable and undoubtedly attracting short term money to their shores. Also they have possibly the worst demographic make up in the world, with increasingly fewer working age people to support their aging society. Their strict immigration policy isn't helping with this.

Oil

It's been a fairly benign year for the black stuff, Brent Crude has risen about 3.54% over the year which has been good for inflation figures and has provided a stable platform on which business could thrive. As previously stated I think that stable energy prices are crucial to long term economic success and hopefully we will see more of the same in 2014.

That's it for now, wishing you all the best in 2014, I hope it's a great year for you all.

Matt.