Why read books on investing?

First thing an aspiring investor must realise is that investing business is tough. Let me give evidence.

Total value of world's assets, which includes those other than shares of businesses... like Gold, real estate, works of finest of art etc, is very large, which measures how large the opportunity there was for investors to amass wealth.

Also, investing business offers two advantegous features over and above other businesses. First, that it allows to jump ship at the junction of successive cycles to ride the best performing assets. An investor riding the best performing assets (one of which is entrepreneur's business) of successive cycles would fare better compared to an entrepreneur stuck with the same business (interpreted as an asset) through successive (business) cycles.

Second, that investing business has near infinite operating leverage, i.e, it demands near zero incremental skill and rate of labour to invest incremental sums of money. It demands nearly just as much skill and labour to invest $1B as it takes to invest $1M. At $1B the investor would buy, say, thousand units of, say, Gold instead of one unit at $1M, but to arrive at the decision of buying Gold would take the same skill and labour irrespective of quantity bought. This feature makes investing business naturally & limitlessly scalable.

Of-course the advantegous features discussed above don't hold true "precisely" like laws of exact science, but they do hold true to the extent of being practically "workable". We have seen Buffett invest and ride a wide variety of best performing assets to fare better comapred to entrepreneurs etc, and, adjusted for his philanthropic contributions, at the time of writing this, he would be the richest in the world by a wide margin. We have also seen him take Berkshire Hathaway from a market cap of less than $20M (in 1965) to $1.2T (in 2025; 55,000 times bigger) while keeping the same rules of investing in his mind (same skill) and the same set of small number of employees (same rate of labour).

Now, theoretically, such large opportunity complemented with such consistent advantages for investing business would have crowded the world's richest list with enterprising investors. And yet, practically, if you look through the thousands of billionaires of world in the forbes list, you see investors sparsely. This sparsity must arise from the toughness of being able to ride the best performing assets of successive cycles, i.e, the conduct of investing business must be tough.

Being tough, investing can't be done without specific knowledge and skills. Reading books on investing develops specific knowledge. Practise would develop skills. Because "everything" (a broad word, but accurate) influences value of assets, investing sort of requires understanding "everything", and so an exhaustive set of books would be endless. Nonetheless, the following may, or not, make a reasonable start for a beginner.

Accounting & Business Studies for Class 11th & 12th (NCERT) of Commerce Stream

Accounting is the language of business. I believe it is impossible to conduct any investing without understanding financial accounting and basic strucutre & legal laws around the formation of businesses. For understanding basics, I liked NCERT books, but pick whatever works for you. For understanding beyond basics, pick learning material as per your best judgement.

Financial Shenanigans by Howard Schilit

As said before, accounting is the "language" of business. Through accounting, it is possible to communicate absolute garbage and non-sense with adequate proof and data in a very convincing and enticing manner to make someone believe in it for some interest of the fraudster. An investor, therefore, must be able to apply tests to distinguish between a garbage and a good prospect. Sometimes prospects lie on a sepctrum, somewhere between garbage and good, and the investor must be able to gauge where the prospect rests on that sepctrum. Although, in practise, the prospects & situations are always so unique that no single set of tests works universally, and one gradually learns to sense mostly through experience by doing, Financial Shenanigans by Howard Schilit does help the uninitiated.

Indian Economy by Ramesh Singh

Businesses operate in the context of an economy and are greatly influenced by developments outside of itself. In the event of occurrance of an outside development, to understand how influences percolate through the economy towards the businesses and to gauge the extent of effect on the businesses, an investor must understand the structure and the relations among various elements of the economy. Although the economy is unending and continuously evolving dynamically, Indian Economy by Ramesh Singh, written originally for UPSC preparation, does give an understanding of broad structure and framework of our country's economy. Specific investments may require understanding a part of economy in much greater detail, and for that, use learning material as per your best judgement.

The Psychology of Money by Morgan Housel

An investor may make various kinds of human errors in judgement because of inherent psychological biases. Escaping being human is impossible, but an investor can understand the characteristics of biases to avoid, or atleast minimise, human misjudgement. The Psychology of Money by Morgan Housel can serve as an excellent first & easy-read book to set the suitable mental state and expectations for starting investing journey. For learning beyond this first book, use learning material as per your best judgement.

The Making of an American Capitalist by Roger Lowenstein

Investing is a sport -- it's a race for mind against other investors. As people advance towards excellence in a game, the skills of the game becomes a part of their character. Also, people gain character traits through interaction with other skillful people. Reading into successful investor's personality, thus, becomes a sort of practise session for gaining insights and skills. The Making of an American Capitalist by Roger Lowenstein, Warren Buffett's biography, helps identify & understand the character traits optimal for investing business. It goes into Buffett's thought processes, business decisions, planning & execution and mistakes. It paints an accurate picture of what Warren Buffett, a good investor, is, and a reader may derive a direction as guidance for personal excellence to strive to advance in.

The Intelligent Investor by Benjamin Graham

The Intelligent Investor is a technical book. Graham's basic ideas around value investing, margin of safety and nature of market fluctuations are timeless to investing, and introduce a systematic approach through providing an angle of attack to the conduct of investing, even though the quantitative methods as suggested in the book to identify value or maintain margin of safety don't apply as well anymore. This must be the first technical book for an aspiring investor.

Common Stocks And Uncommon Profits by Phillip A. Fisher

Common Stocks And Uncommon Profits is also a technical book, and in my personal opinion it is hands down the best investing book ever written. It is concise, and contains the maximum information on how to conduct the process of investing. It is a must read for an investor at any stage -- aspiring, amateur or professional.