In this article, instead of focusing on the same economic issues, we thought that we should turn our attention to an interesting email dated 5 March 2002 from a new subscriber, Ng Chee Meng of Kuala Lumpur. We thank him for the email. We welcome other emails and would reply to as many as we possibly can.
He wrote : "I am very new to equity investment and only subscribed to your i CapitalŪ less than 3 months ago after `discovering' this weekly newsletter from the November 2001 issue of Investor Digest." The Investor Digest article can also be found in www.icapital.biz/about/press.html.
He added : "I am very impressed with your investment philosophy - especially the concept of value investing - and therefore would be pleased if you could recommend me books and/or articles on value investing, including those on technical and fundamental analysis."
We thank him (and all the other subscribers too) for his subscription to i CapitalŪ . By subscribing to i CapitalŪ , Mr Ng has probably made his very first value investment. Why ?
Value investing is simply investing in something at a price that is less than its true or intrinsic value. The intrinsic value of i CapitalŪ certainly surpass the normal subscription price of RM720. With the hefty 13th anniversary discount of 30% PLUS the free access to i CapitalŪ Online (it is like having 2 subscriptions for the price of one), subscribing to i CapitalŪ easily becomes the best value investment there is. Not many investors can recognise such bargains, just like their inability to recognise undervalued stocks in the stock market.
By being convinced with value investing, Mr Ng has made the first right step to success. We hope that he would stick to value investing and not stray into other investing or trading styles. To succeed in value investing, he needs plenty of discipline, patience and he has to do plenty of homework - there is no short cut. To assist our subscribers in their journey, we list below some of the books we find useful.
There are 5 editions to this classic. Different people like different editions. The 5th edition is the latest but it contains many modifications by the 3 writers that subsequently continued with the book. Many see this book as the `bible' of value investing but it is a thick book and is full of accounting stuff. Reading it can be very heavy going, unless one is familiar with accounting but it is worth the effort.
Written by the same author, this book is less technical than Security Analysis but is no less useful. If an investor can master these two books, he or she would have already covered a big part of what value investing is all about. The book below touches on Graham's investment philosophy and his life.
There are a number of books on business valuation which often take a more modern approach than Benjamin Graham and look at the other issues of valuation like cost of capital, discounted cash flow, and others as well.
Books on value investing include the following
Books on Warren Buffett include the following. The list is not exhaustive. Unlike the early Eighties when our managing director was starting to research on Warren Buffett and there were very few publications on him, there is now a long list of books on Warren Buffett and his methods.
The above books are not only useful for stock market investors but also for ordinary businessmen and company directors. There is much to learn from them in the way a business or company should be managed. Our managing director knows of a managing director of a successful publicly listed company who swears by Warren Buffett and follows his method in running his company. The above books are also useful to our policymakers and regulators.
Other useful books on other successful investors include
For charting and technical analysis, the classic is the book by Edwards & Magee.
We think we have produced a definitive list of books, although not exhaustive, on value investing. It is certainly a precious list, part of our long-held philosophy in not just catching fishes but also teaching subscribers how to fish. We hope subscribers would take the trouble to read them (our managing director has read all of them and more). Go to the bookshop to hunt for some more. If you find any useful book, we hope you would have the generosity to share it with the rest of us, together with your comments if possible. We would also encourage subscribers to read on financial accounting and economics. These 2 subjects are vital for successful investing. The easier alternative is to just follow Sections C or D in the i CapitalŪ or let Capital Dynamics Asset Management manage your funds.