James’ Top Finance Books

by James & Miel on May 17, 2006 · 0 comments

It’s a no-brainer that some degree of education is necessary to get ahead these days, so I’m including a list of my favorite books on personal finance.

1) The Intelligent Investor – Graham.

The author of The Intelligent Investor was Benjamin Graham. Benjamin Graham is famous for being the mentor to billionaire Warren Buffet of Berkshire Hathaway fame. Not a lot of people realize it, but Graham was an uncommonly intelligent man. He was born in 1894 and is reputed to have earned a half-million dollar salary in finance by the age 25, which was a lot of money in 1919! Graham introduced the notions of ‘intrinsic value’, and buying at a discount to that value to the discipline of securities investing. He’s had a tremendous impact on my own personal investing philosophy. I can’t recommend his book enough.

2) A Random Walk Down Wall Street – Burton Malkiel.

Malkiel’s book is mostly memorable because it demolishes a lot of the junky philosophies which can be found in the investing arena. He argues that markets are basically efficient which means that a given securities’ price reflect all available knowledge about that security. The implication of this is that it is impossible to realize long term value through structural inefficiencies in markets. Not everyone believes this, but you should check it out if you haven’t already done so.

3) The Millionaire Next Door – Thomas J. Stanley and William D. Danko.

Bloggers love this book. It’s very easy to read and has some interesting insight. The authors are a couple of marketing professors from New York. They drew a sample of millionaires based on census data, and then mailed them a survey to ask about their financial status and personal habits. They found, based on their survey and their later interviews that millionaires were more likely to be frugal, hardworking, small business owners. Most of them owned stock and other investments, but their primary driver of wealth was equity in their business.

I’m recommending this book because it’s a good read, but, if you read the fine print in the back, only 2 out of 10 people answered their survey, so it’s really impossible to tell how accurate their picture of America’s millionaires is. My feeling is that their data tends to over represent business owners and under represent people who’ve achieve wealth through other means, like stock market investing.

4) The Millionaire Mind – Thomas J. Stanley.

Stanley dumped his coauthor on this one. I’m not 100 percent sure why. Also, I think the book suffers a bit in this regard because Stanley’s insight isn’t as fresh in this round. But, it is worth going down to your local library and picking up a copy of this book. There are two arguments I think it’s working through in this one: 1) that married persons are more economically productive than single persons, and 2) that people with low scholastic achievement can still achieve wealth through perseverance and hard work. Its an empowering message because it suggest that even if one isn’t that smart or that great of a decision maker, one can still get ahead.

5) Eight Steps to Seven Figures – Charles B. Carlson.

This is a good, good book. Charles Carlson is big proponent of dividend reinvestment programs. What he is basically saying is that the way to become a millionaire is set a goal, and invest regularly, for a long, long time in quality stocks while using tax advantaged accounts. Bob Carlson is an investment advisor so his focus is primary on stock as a means to wealth. It’s an informative read, and his strategy is a good one for people who don’t have a lot of time, but want to build wealth anyways.

That’s all for now folks. I hope this has been helpful!

-James Hendrickson



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