Books to Teach Yourself About Investing
You just have to love a guy who can say it like that. I find it VERY hard to consider any mutual fund other than index funds after learning what Bogle writes of.
Individual Stocks
Once you have read Bogle's book and have a good index fund in your portfolio, you may want to consider adding some individual stocks. Berton Malkiel's "A Random Walk Down Wall Street" is a book to start with. He makes a strong case that a "blindfolded monkey" would have as much luck selecting a stock portfolio as a pro.
A Random Walk Down Wall Street : Including a Life-Cycle Guide to Personal Investing
by Burton Gordon Malkiel
In his updated "life-cycle guide to investing," Malkiel offers age-related investment strategies that consider one's capacity for risk. (A 30-year-old who can depend on wages to offset investment losses has a different risk capacity from a 60-year-old.) In his assessment of rocketing Internet stocks, Malkiel defends his "random" position well, explaining how "the market eventually corrects any irrationality--albeit in its own slow, inexorable fashion. Anomalies can crop up, markets can get irrationally optimistic, and often they attract unwary investors. But eventually, true value is recognized by the market, and this is the main lesson investors must heed." Malkiel concludes " individual investors are better off buying and holding onto index funds than meddling with securities or actively managing mutual funds."
I believe one can profit finding these anomalies, but it is time consuming. This book should be read to see if you want to invest that time or just put your money into an index fund. Personally, I have far outperformed index funds for two decades, but I spend a good deal of time at it plus I may have some luck working with me.
IF you decide to buy stocks on your own, I highly recommend David Dreman's "Contrarian Investment Strategies". Contrarian Investment Strategies: The Next Generation: Beat the Market by Going Against the Crowd
This is one of my favorite investment books! All stock-market investors embrace the motto "Buy low, sell high." Few act accordingly. This book teaches you how. Your job is to execute!
Some great historical charts of returns are presented in the book. It shows that stocks have outperformed ALL asset classes since 1802 if you take a 20 year period, even if you bought just before the Great Depression.
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