The 5 stock-picking legends you must study up on to become a smarter investor
- Phil Town recommends studying up on the strategies of stock market legends if you want to become a competent investor.
- The best-selling author and self-made millionaire has followed the investing principles, and writing, of stock-picking icons like Warren Buffett and Ray Dalio.
- Town has written several investing best-sellers himself, including “Rule #1."
Online books are having a moment. They are the highest-ranked category in year-over-year e-commerce growth, surging 295%. Phil Town, an author whose investing books have been best sellers, is also a big reader of iconic investors who have displayed a penchant for writing.
Here are the five market giants Town recommends for reading material if you want to become a better investor.
Ray Dalio is the billionaire founder of the world's biggest hedge fund, Bridgewater Associates. In 2017 Dalio published "Principles: Life and Work," a book Mark Cuban has described as "A bible to the greatest skill an entrepreneur can have, the ability to learn in any situation."
With the onset of the Covid-19 pandemic, Dalio has been releasing articles on his LinkedIn page and created a weekly newsletter, "Principled Perspectives." Dalio provides insights into where the economy is headed, based on research and data generated from Bridgewater.
"He's the guy I would look to and say, 'How are we going to come out of this?'" says Town.
Warren Buffett is among the most successful investors of all time, and every year his company, Berkshire Hathaway, holds its annual shareholder meeting in the spring. It's known as Woodstock for capitalists, and since 1977, Buffett has released a letter to shareholders available online in which he candidly discusses investments, mistakes he had made, and broader views on the good and the bad about the stock market and Wall Street.
Charlie Munger, vice chairman of Berkshire Hathaway and Warren Buffett's longtime partner, is full of wisdom. While Munger will not be speaking at this year's annual meeting for the first time in ages, you can still gain insights from his book, "Poor Charlie's Almanack."
Town jokes that while this is his bathroom book, Munger's outspokenness offers advice to every aspect of life. In his book, Munger offers advice for getting through the day, particularly suited to the difficult situation the world is in now.
"Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts."
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Mohnish Pabrai and Guy Spier
In 2007 two businessmen spent over $650,000 on a lunch date. Investors Mohnish Pabrai, founder of Pabrai Investment Funds, and Guy Spier, who now runs an investment fund based in Zurich, bid on the chance to dine with the Oracle of Omaha at an annual charity auction the Berkshire Hathaway CEO has hosted since 2000 at the Smith & Wollensky steakhouse. It apparently was a bargain: Last year's winner paid over $4 million for the honor of sharing a lunch with Buffett.
That same year, Pabrai published "The Dhandho Investor," a book that lays out his framework of value investing.
Pabrai's book tells the story of how the Patel family from India came to own over 40% of motels in America, expanding on principles of value investing. Value investing can be defined in more than one way, including an investment strategy for picking stocks that investors believe are trading at less than their intrinsic value, and stocks that are underperforming and therefore considered "cheap."
After lunch with Buffett, Spier wrote his own book, "The Education of a Value Investor." Spier's memoir is candid and takes readers from the darkest corners of Wall Street to a practical guide on what it takes to become a successful investor.
Both Pabrai and Spier continue to post musings on personal blogs.
CNBC's Warren Buffett Archive is another great resource for everything Buffett. With 130 hours of searchable video and 2,800 pages of transcripts, readers and viewers can get a full Buffett education.
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