10 best books on investing in small cap stocks

His New York Times bestseller, «Thinking, Fast and Slow,» delves into how your thought processes can affect your success in investing. Achieve Your Financial Goals in In the second edition, published in , Shiller showed that housing prices were wildly above historical norms. Kahneman explains how to identify your own and lock them away so you can make investment decisions without their input, thinking clearly, rationally, and analytically. In the book he discusses the rewards, risks and offers great tips. We may receive commissions from purchases made after visiting links within our content. If the market is efficient, you might reason, who am I to fret when prices keep climbing higher?

What is a small-cap stock?

Finding stocks like those early on makes small-cap investing incredibly enticing, but for every Amazon. Investing in small-cap stocks successfully means understanding the risks associated with them and how to separate good investments from bad investments. Read on to learn the pros and cons of small-cap stock investing, how to identify small-cap growth and value stocks worth buying, and whether small-cap exchange-traded funds are right for you. First, it’s important to understand that it is market participants that determine a company’s value. When investors stock about large-cap, mid-cap, in small-cap companies, they’re referring to the size of a company based upon its market capitalization the «cap» in «small-cap».

Get smart and get rich

As the portfolio manager for a publicly traded mutual fund, I’m often asked to recommend a good investment book. One shareholder even asked me to write one. While I’m not ready to make that type of commitment, I thought about the most worthwhile books I’ve read over the years and put a list together. There will undoubtedly be titles you feel should be on the list. Fortunately, the ones that made it are still in print, and most are available in paperback. They cover a variety of investment topics—some are easy reads, some require more time and concentration. First published in , this investment classic has sold millions of copies and is the bible for many value investors.

You May Like

As the portfolio manager for a publicly traded mutual fund, I’m often asked to recommend a good investment book. One shareholder even asked me to write one. While I’m not ready to make that type of commitment, I thought about the most worthwhile books I’ve read over the years and put a list. There will undoubtedly be titles you feel should be on the list. Fortunately, the ones that made it are still in print, and most are available in paperback.

They cover a variety of investment topics—some are easy reads, some require more time and concentration. First published inthis investment classic has sold millions of copies and is the bible for many value investors.

A quantitative investor at heart, Graham believed that all the qualitative aspects of a company would manifest themselves in the financial statements. By understanding the statements and trends therein, Graham could correctly assess a company’s prospects. The first 10 chapters cover investment basics like investing vs. The last 10 chapters focus on securities analysis for the lay investor and include topics like financial statement analysis, per share earnings and assessing management.

Lots of examples are used, and while some may be a bit dated, the key points are driven home. Warren Buffett calls it one of the best investment books ever written.

It’s easy to see why. Well known for his commonsense approach to investing, Lynch believes you don’t have to be a professional securities analyst to do well in the marketplace. The key is to focus on what you know. Instead of investing in the latest Wall Street fad, look around you.

Is there a new restaurant chain that’s doing well? Is there a company building a new plant or warehouse in your area? Being alert for tipoffs like these can lead to «ten-baggers,» stocks that appreciate 10 times. Once you’ve found an idea, Lynch shows you how to research it. Know what you own—you should be able to explain a company’s prospects to a year-old in less than two minutes.

Also, be patient: The big moves in a stock normally come in years three to. An excellent read. Fisher’s qualitative focus nicely complements nicely Graham’s quantitative focus. You really need. Fisher is one of the original growth-stock investors, and his thesis for accumulating great stock market wealth is to invest in a small portfolio of companies that can grow sales and earnings over many years.

If the investment is carefully chosen, you might hold it indefinitely, earning multiples on your investment. Fisher provides the answer by listing 15 qualities a company should have to be considered a superior investment. For example: How big is the addressable market, and does the company have the products and infrastructure to capture a reasonable market share?

How much does a company spend on research and development as a means of creating new demand once the current product line matures? Fisher is well known for his «scuttlebutt» approach to answering these questions. This involves speaking with employees or better yet, ex-employeescustomers, vendors and competitors to obtain inside knowledge of a company’s prospects. He teaches us the right questions to ask. Fisher also provides a list of «10 don’ts for investors,» which includes such nuggets as «Don’t buy promotional companies» and «Don’t follow the crowd.

Those interested in learning about how to assess companies and industries, and the factors affecting the profitability of each, should read this book.

A Harvard Business School professor, Porter identifies two key sources of competitive advantage as cost leadership economies of scale, proprietary technology. His book provides a solid foundation for understanding why some companies create value and do well while others destroy it and fare poorly. It’s chock-full of real-life examples that relate theory to real-life situations. Since initial publication inPorter’s book has been used by managers and business students worldwide to help understand the forces behind competition and profitability.

Over 10 years old, this book is still the best biography on Buffett, one of the all-time great investors. Wall Street Journal reporter Roger Lowenstein provides a richly detailed portrayal of the legendary investor in a lively and amusing style that keeps the pages turning.

Lowenstein diligently traces the master’s life from early Omaha, Neb. The man that emerges is smart, ethical, hands-on and has a sense of humor—all qualities Buffett 10 best books on investing in small cap stocks for in his own managers. This is the best type of biography. Lowenstein had no access to Buffett in writing it but overcame that hurdle with exhaustive research, including interviews with many Buffett friends, family members and business associates.

Lowenstein then distilled this into a thoughtful, well-written and thorough portrayal of a remarkable man. This is not a «how to become a better investor like Warren Buffett» book, and readers looking for that will be disappointed. However, the book offers glimpses into Buffett’s methods e. Goodman Vintage, First published inSmith’s classic is another that has withstood the test of time.

It’s set in the late s, and Smith portrays an era that’s darn close to today’s marketplace—markets at all-time highs, gunslinger portfolio managers and a cavalier attitude toward risk. It’s fast, funny and very entertaining. Smith covers such topics as mass psychology, fundamental analysis, technical analysis, equity valuations, mutual funds and. In Smith’s game, money is how you keep score, and if you’re making money, you’re winning the game.

History is a great teacher, and Smith’s book provides many lessons that can be applied by each new generation of investors. Smith’s follow-up books, Super Money and Paper Moneyare also very good and spent many months on the best-seller lists.

For pure entertainment, this book is hard to beat. It was first published in as a novel. Hugely entertaining, this is an insider’s view of the stock market in the wild, unregulated days of the late s and early s. Livermore was a speculator who made and lost several fortunes. He never considered himself an investor and didn’t mind being long or short, so long as he was right. Correctly assessing that he would never catch the top or bottom, he would wait for a trend to develop and then jump in.

In today’s market he’d be called a momentum investor. What keeps this book so popular after 84 years? Livermore’s advice on exploiting fear, greed and the herd mentality are just as relevant today as they were.

Among this list you’ll find growth investors, value investors short-sellers, commodity experts and international players.

You’ll gain solid insights and knowledge from the experience of each and learn what makes them tick. If you wish to learn more, most have been written about in other works—some included on this list. Train also provides a nice summary of common practices among the group, which is very useful. Crescenzi, a frequent media commentator, has written a fixed-income bible that merits a place on any serious investor’s bookshelf.

He really understands the bond market and in plain language provides illuminating explanations of different types of bonds and how they perform in different types of markets. Crescenzi demystifies yield curves and other indicators that can be used to predict the direction of the economy. Economic reports are examined, including how they can influence bond prices and profit opportunities.

Important topics like risks, credit ratings, liquidity and pricing are also covered. The book makes liberal use of charts, tables and diagrams and provides investors with the tools they need to participate in today’s bond markets. Very well organized, the book correctly conveys that bonds can be every bit as exciting as stocks these days. John E. Deysher, CFA, is president and portfolio manager of the Pinnacle Value Fund, a diversified, SEC-registered mutual fund specializing in the securities of small- and micro-cap companies.

E-mail him at deysher pinnaclevaluefund. Share to facebook Share to twitter Share to linkedin As the portfolio manager for a publicly traded mutual fund, I’m often asked to recommend a good investment book.

So here they are, organized by topic. Stock Strategies and Analysis The Intelligent Investorby Benjamin Graham Collins, First published inthis investment classic has sold millions of copies and is the bible for many value investors. Special Offer: Which Fidelity funds should you own now? Leveraged company? Click here for a day free trial of Fidelity Investor with complete mutual fund model portfolios.

Download a free special report: Forbes gurus’ «12 Recession Beaters for Common Stocks and Uncommon Profitsby Philip Fisher Wiley, Which banks are excellent values and which will disappoint investors with dividend cuts? Click here for Investment Quality Trends’ blue chip buy list, free with a day trial. But how does one find such gems? Recession dead ahead? Click here for a day free trial of InvesTech Research with five investments to help beat the bear. Competitive Strategyby Michael Porter Free Press, Those interested in learning about how to assess companies and industries, and the factors affecting the profitability of each, should read this book.

The Validea Hot List bases its picks on the strategies of the world’s best investors of all time. Aeropostale is in the portfolio. Click here for the complete list of current buys. Goodman Vintage, First published inSmith’s classic is another that has withstood the test of time. Special Offer: Profit from the continued plunge in the housing market with A. Gary Shilling.

Here’s what you should know if you want to buy and sell small-cap companies.

Now, I should admit here that this recommendation is a little devious, because these two books disagree on a pretty fundamental point. If the market is efficient, you might reason, who am I to fret when prices keep climbing higher? Planning with a margin of safety will mean skall things at different times in your life. In the book he discusses the rewards, risks and offers great tips. But in the decade after —a fairly long run for most people—stocks lost 1. Daniel Kahneman knows a thing or two about thinking. They litter the ground at our feet and we sttocks have to stop walking so fast, pause in our everyday lives, and bend down to inspect the clutter so we can pluck out the most viable options. Stocms jump around from quarter to quarter, of course, but if you bwst them over a decade, you can smooth out the market cycles. This No. However, there are several things you should know before investing in this risky market. Taken together, their insights can help you craft a smarter, safer financial plan. Lynch believes that solid investment opportunities are. John C. Here are just five great books for amateur penny stock traders. We may receive commissions from purchases made after visiting links within our content.