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| Benjamin Graham, who penned the timeless classic The Intelligent Investor. |
By Jim Middlemiss
National Post
“FP Weekend” Section
Saturday, December 10, 2005
There's no shortage of investing tomes on the bookshelves touting ways to get rich. The trick is to separate the winning strategies from fodder for the refuse bin.
We talked to a cross-section of financial-service professionals for their top picks. After all, these pros are entrusted to invest millions of dollars on behalf of skittish clients. Interestingly, their choices reflect a conservative approach to increasing wealth and a long-term view of investing.
Adrian Mastracci, investment counsel at Vancouver’s
‘fee-only’ KCM Wealth Management, says, “My top pick is Winning the Loser's Game by Charles Ellis, because it has simple, proven investment strategies that can be easily incorporated into an investment plan.”
A few names that kept coming up were investing guru Jeremy Siegel, academic and market commentator Benjamin Graham (considered the grandfather of value investing) and Warren Buffett.
Here are the top three picks from each expert -- a good place to start when you're shopping for the investor on your list.
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GRANT RASMUSSEN
President and chief executive of UBS Bank (Canada), Toronto
Mr. Rasmussen is a big fan of Mr. Buffett, so his first suggestion isn't a book, but rather the annual shareholders' letter Mr. Buffett produces for his company, Berkshire Hathaway Inc. "Why I like this more than anything else is that it's very current, very entertaining," Mr. Rasmussen says, adding that it's written in a simple and easy-to- follow fashion, and includes both buys and sells.
He also recommends Stocks for the Long Run by Jeremy J. Siegel. The theme here is investing for the long run, using a well-diversified stock portfolio that manages investing risk and outperforms bonds over time.
Mr. Rasmussen calls Mr. Siegel a "very brilliant individual." The book makes the case for investors expanding the "time horizon beyond two, three or four years to about 10- or 20-year time frames." Do that, he says, and this book shows investors will be successful.
He also likes The Warren Buffett Way by Robert Hagstrom, which "simplifies Buffett," who Mr. Rasmussen says is the "greatest investor ever" and the person who "has created more investment wealth than any other person."
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GEORGE MORGAN
Value investor and portfolio manager of Templeton Growth Fund, Nassau, Bahamas
The one good reference book that investors need on their desk, says Mr. Morgan, is Investment Valuation -- Tools and Techniques for Determining the Value of any Asset by Aswath Damodaran. While it'll run you about $124, it provides "great one-stop shopping to recall aspects of valuation techniques that one may have forgotten or has yet to learn and experiment with," he says.
His other picks are books on modern history: Empire: The Rise and Demise of the British World Order and the Lessons for Global Power by Niall Ferguson and The Dust of Empire: The Race for Mastery in the Asian Heartland by Karl Meyer. "Both represent an illuminating view of modern history that is global in scope, and they deliver a powerful message about the repeatability of human behaviour."
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ALISON KEENE
Senior vice-president and managing director at BMO Nesbitt Burns, Calgary
Ms. Keene recommends The Intelligent Investor by Benjamin Graham. "This is a very respected guide to investing, outlining the philosophy of value investing," she says. "The book is a great foundation for investment principles."
She also likes a book close to home -- The New Reality of Wall Street by Don Coxe, BMO's U.S. portfolio strategist. It's aimed at investors who lost money in the technology boom and counsels them on what to do next, she says. Using data and historical comparisons, the book examines the "triple waterfall," an investing term Ms. Keene says is used "to describe a catastrophic market collapse, which always occurs in three cascades. From the stock market crash of 1929 to the gold and oil crashes of the late 1970s to the tech crash of 2000, the signs are the same."
Ms. Keene's third pick, Twilight in the Desert by Matthew R. Simmons, discusses the world oil market. The author's theory is that Saudi Arabia's oil production will soon max out and there will be a "catastrophic oil shortage."
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CALVIN MACINNIS
Managing partner at online brokerage Qtrade Investor Inc., Vancouver
For new investors, says Mr. MacInnis, One Up On Wall Street by Peter Lynch and John Rothchild is a great introduction on how the stock market works. It's an easy read, and his suggestions are simple to implement, Mr. MacInnis says. Lynch "sees stocks as simple and straightforward," he adds. The secret is buying quality companies that investors understand and believe in, and holding on to them as they rise.
Mr. MacInnis also suggests The Essays of Warren Buffett: Lessons for Corporate America by Warren Buffett and Lawrence A. Cunningham. "His view is valued-based and is also quite simple," he says of Buffett. The book stresses that when building a portfolio, investors need to "develop an intellectual framework based on strong fundamentals and stick to them when making buy or sell decisions, no matter what," he says.
The Intelligent Investor also made Mr. MacInnis's list. It "covers portfolio policy, the basics of fundamental analysis and stock selection, as well as an overview on risk and margin of safety."
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ADRIAN MASTRACCI
Investment counsellor at KCM Wealth Management, Vancouver
Mr. Mastracci's top pick is Winning the Loser's Game by Charles Ellis, because it has "simple, proven investment strategies that can be easily incorporated into an investment plan."
He's also a fan of The Four Pillars of Investing by William Bernstein, which "covers the theory, history, psychology and business of investing." Each chapter has a short summary for easy review.
And The Intelligent Investor pops up again. "It's a classic refresher of how value investing can play an important part in the investment game plan," he says.
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WILLIAM FIALA
Director of research at Edward Jones
The Essays of Warren Buffett and The Millionaire Next Door by Thomas J. Stanley and William Danko top Mr. Fiala's list. The latter compiles stories about successful investors. Mr. Fiala notes that the authors built their wealth "through years of disciplined saving and living below their means. You don't have to become a rock star or a professional athlete to become a millionaire."
Mr. Fiala's third pick is Jeremy Siegel's The Future for Investors, which sets out strategies for the best way to invest.
- If triumphant investing still eludes you after reading these classics, you probably need to look elsewhere. A couple of books to consider: How to Rob Banks and Influence People by Vic Dark, a former gangster, and Phil Hellmuth's Texas Hold'em.
WORDS FOR THE MONEY-WISE:
Financial professionals generally admire books that call for sound investment strategies with long-term time horizons for returns.
- Stocks for the Long Run, by Jeremy Siegel; McGraw-Hill Companies (2002); $47.95
- The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New by Jeremy Siegel; Crown Publishing; $39.95
- The Warren Buffett Way Second Edition by Robert G. Hagstrom; Wiley (2005); 272pp; $35.99
- Investment Valuation. Tools and Techniques for Determining the Value of any Asset by Aswath Damodaran; John Wiley & Sons Canada; $123.99
- The Intelligent Investor: The Classic Text on Value by Benjamin Graham; Harper Business (2005); 288pp; $39.95
- The New Reality of Wall Street by Don Coxe; McGraw-Hill; 276pp; $26.95
- Twilight in the Desert, by Matthew R. Simmons; Wiley; 416pp; $31.99
- One Up On Wall Street by Peter Lynch and John Rothchild; Simon & Schuster; 320pp; $21
- The Essays of Warren Buffett: Lessons for Corporate America by Warren Buffett and Lawrence A. Cunningham; Cunningham Group (2001); US$25
- Winning the Loser's Game by Charles Ellis; McGraw-Hill U.S.; $39.95
- The Four Pillars of Investing by William Bernstein; McGraw-Hill U.S.; $42.95
- The Millionaire Next Door by Thomas J. Stanley and William Danko (1998); 272pp; $22.50
- Empire: The Rise and Demise of the British World Order and the Lessons for Global Power by Niall Ferguson; Zondervan Publishing House; $49.95
- The Dust of Empire: The Race for Mastery in the Asian Heartland by Karl E. Meyer; $37.50
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