Five Must-Read Books on Investing, Trading, and Building Wealth

Editor's Note: This might be the most valuable information you'll ever receive.

At DailyWealth, our goal is to show you how to make great money with your investments... without taking big risks. That's why we typically focus on "actionable" ideas – like the best way to buy silver... or how to earn double-digit yields in real estate... and the world's best dividend-paying companies.

But we're doing something a little different here. Rather than focusing on a single investment idea, each essay contained in this report will be a book review. I believe these reviews could be a huge help to you as an investor.

Why book reviews?

Collectively, the DailyWealth staff and our circle of contacts have made thousands of different investments... spent hundreds of years in the markets... and read thousands of books on wealth. Thus, we've acquired an incredible amount of knowledge.

I'd like to share this knowledge with you. And since a lot of it resides in books, we're passing along five book reviews. In these reviews, you'll find some of the best, most influential investment books ever written. You'll learn why these books are so powerful... And you'll learn the best ideas each one contains.

In the pages that follow, you'll find…

We hope you enjoy them... and consider reading a recommended book or two.

Regards,

Brian Hunt
Editor in Chief, DailyWealth

An Unconventional Book That Changed My Life
By Brian Hunt, Editor in Chief, Stansberry & Associates

I was probably 20 years old when I read Market Wizards for the first time...

I was very early in my career as a trader and investor. I barely knew the difference between a stock and a bond. I wasn't even sure what I wanted to do for a living.

Since my first read, I've made a lot of money in the market. And I've read the entire book five more times... I've read certain interviews at least 10 times.

I keep coming back to it for two reasons...

First, it's useful.

Market Wizards, which was published in 1988, isn't a conventional "how to" investment book. It doesn't show you how to read a balance sheet. It doesn't focus on a specific stock-selection method. It's simply a collection of interviews author Jack Schwager conducted with some of the greatest traders in history.

These people made hundreds of millions – even billions – of dollars in the markets.

The information and insight shared by these "wizards" – which they collected through decades of learning, taking risks, losing money, making money, and struggling through adversity – is priceless. I learned how to structure my own trading in part by studying the victories and losses of great traders.

Second, it's inspirational.

The people in Market Wizards gain financial freedom through their ability to analyze the markets and trade them successfully.

The personal stories in Market Wizards showed me it was possible to achieve extraordinary success in the market. The book inspired me to start the long journey of learning about the market. This journey has taken me all over the world... allowed me to meet dozens of smart people... and has helped me gain financial freedom, as well.

Two of Market Wizards' most powerful interviews are with Paul Tudor Jones and Jim Rogers.

Reading the Paul Tudor Jones interview will take you less than 10 minutes... And it might be the greatest "time put in versus value received" proposition an investor or trader will ever get.

For many years, Jones was the picture of a hot shot Wall Street trader. He owned an enormous Chesapeake Bay mansion. He took skiing trips to Switzerland. He married a fashion model. To this day, Jones controls one of the largest hedge funds in the world. According to Forbes, he's a billionaire.

You'll find that for a guy associated with "winning" so much money, Jones talks a lot about losing. He emphasizes that successful trading is all about playing great defense. Some quotes from Jones about this idea:

The most important rule of trading is to play great defense, not great offense... I am always thinking about losing money as opposed to making money... Risk control is the most important thing in trading... Never play macho man with the market.

Like all great traders, Jones sees his No. 1 job as cutting risk to the bone. He became so successful by focusing on not losing money.

Anyone can put Jones' ideas to work by making sure to keep their trading "bets" small. You never want to risk a substantial portion of your wealth on just one idea. Be conservative.

Another important idea I took away from Market Wizards was Jim Rogers' "picking up money in the corner" idea.

Rogers is one of the most successful money managers in history. He made so much money investing and trading during the 1970s, he left the conventional side of work to travel and manage his own money.

In his interview, Rogers explains how important it is be selective with trades and investments. He emphasizes that there's nothing wrong with doing nothing... simply sitting in cash... and waiting patiently for high probability trades.

"I just wait until there is money lying in the corner," he said, "and all I have to do is go over there and pick it up. I do nothing in the meantime."

In that short quote, Rogers nails one of the most important factors of trading and investment success: Don't spend your time and energy chasing mediocre opportunities. Be patient. Only move when the odds are overwhelmingly in your favor.

This ability to stay patient – and wait for "fat pitch" opportunities – is a tremendous skill to master. But the average market participant always feels like he has to be "doing something." So he gambles against long odds... which makes him a sure loser.

Jim Rogers and Paul Tudor Jones are just two of more than a dozen great traders that offer up advice in Market Wizards... And while these interviews are geared toward traders, many of those lessons apply to long-term investing as well. For example, master investor Warren Buffett often emphasizes being patient. He emphasizes waiting for "fat pitch" opportunities. He also says his No. 1 investment rule is "Don't lose money."

The book also shows readers that if you apply yourself and learn the timeless fundamentals of great trading, you can be extremely successful... and achieve financial freedom. The individual stories make it entertaining.

The book changed my life. It's the first trading book I recommend when anyone asks. And I think every DailyWealth subscriber should read it.

Regards,

Brian Hunt

What REALLY Works on Wall Street
By Dr. Steve Sjuggerud, editor, True Wealth and True Wealth Systems

What really works on Wall Street?

James O'Shaughnessy knows...

He's not guessing. He did the math...

He got a hold of the most powerful historical stock-market databases on Earth, with data going back to 1926. And he crunched the numbers in every possible way, trying to figure out what works on Wall Street.

He published his results in his book What Works On Wall Street. The updated version of that book came out in late 2011, and it is excellent.

It covers more than 250 strategies. It's the "Bible" of stock market strategies... And it's an indispensable book in my office.

So what really does work on Wall Street?

In short, combining some valuation measure with some measure of trend...

It almost doesn't matter how you measure your trend (as long as it's up) or value (as long as it's cheap). As long as you have value and the trend, the odds are in your favor.

If you had invested $10,000 in O'Shaughnessy's specific "Trending Value" strategy in 1965, it would have turned into $48 million by 2009. Based on return versus risk taken, that was the best-performing idea out of the hundreds O'Shaughnessy tested.

Let me repeat that... $10,000 turned into $48 million.

Another strategy turned $10,000 into $298 million... going back to the 1920s. That's buying companies that return cash to shareholders (through dividends and buybacks). I wrote about that strategy here.

With O'Shaughnessy, it's just the facts. He says:

There's nothing random about long-term stock market returns. Investors can do much better than the market if they consistently use time-tested strategies...

This book is not a casual read... It's not filled with entertaining stories to keep you reading. But it is full of answers...

It is full of facts... Like: Which value measure works the best in which sectors... whether small stocks are worth the risk or not... and which trending indicators work the best.

If you want to know what strategies REALLY work, you need to keep a copy of What Works on Wall Street on your desk, like I do.

I would have happily paid 10 times the cover price... Heck, I would have paid 100 times the cover price. The book is that valuable to me.

If you're serious about making money in the markets, you can buy What Works on Wall Street from Amazon for less than $30...

Good investing,

Steve

I'll Refer to This Book for the Rest of My Life
By Tom Dyson, publisher, The Palm Beach Letter

It costs less than $2 at Amazon.com.

But it's the most valuable book they sell.

It was published in 1992.

But it's as relevant as any current book today.

I discovered it during the financial crisis in 2008. As the stock market collapsed and the banks failed, I'd been staying up all night trading the markets while watching the financial news channels. All that "noise" was sucking me into the television and turning me into a news junkie. I was beginning to lose my perspective on the big picture...

I needed a book that could explain to me what was going on... and center me. I needed a guidebook for the crisis.

Reading it for first time was like being elevated 20 yards off the ground on a busy street corner.

"With as much debt as there is today," the book explains in the third chapter, "the wave of bond and mortgage defaults would cascade through the economy. Loan defaults would wipe out banks, and foreclosure sales would depress prices and wipe out the net worth of individuals."

The book goes on to explain exactly why the crisis happened, where it would lead, and how the authorities would respond. It was like an instruction manual for my money. And it was such a relief after CNBC's blather.

The book I'm talking about is Crisis Investing for the Rest of the '90s by Doug Casey.

First of all, you should ignore the book's title. This book is an education in money, markets, and philosophy. I'd estimate that 95% of the information in this book is timeless and will benefit you forever. But the remaining 5% of the material – the "time-specific" stuff – is still relevant, even today.

In case you haven't heard of the author, Doug is a famous philosopher and speculator, and a longtime friend to DailyWealth readers. As well as making a fortune and traveling the world, Doug has also written four books, which have all become cult classics: International Man, Crisis Investing, Strategic Investing, and Crisis Investing for the Rest of the '90s. I'd recommend them all, but Crisis Investing for the Rest of the '90s is by far the best one.

It's been a close companion of mine since 2008... And I'll probably refer to it for the rest of my life.

Doug composed the book in three sections. He titled the first section "What's going on and why?" In this part, he explains the basics... how money works, how politicians manipulate money, and how their manipulations always lead to bank runs and credit crunches.

Except for the timing, his forecast of the 2008 crisis was so accurate, it was eerie.

In the second section, Doug introduces the investment strategy he recommends to profit from these trends. He calls it the "Ten Times Ten Approach." The gist is, you divide your portfolio into 10 unrelated areas, making sure each has the potential to increase tenfold in value.

This way, you have the potential to make a fortune, but at the same time, you've spread your risk out. Even if only one of your 10 speculations pays off, you're still a winner.

Then, he discusses almost every investment you can think of – from Japanese real estate to biotech stocks to agricultural commodities to convertible bonds. And he explains how to profit in each of them.

It's the ultimate reference guide to all the different investments you have available to you, written by a professional speculator. And with the possible exception of his call to bet against the Japanese stock market (which was a great call at the time), his recommendations are still relevant today.

But the final section is my favorite. It's where the book blossoms into a work of total genius.

Here, Doug forecasts the big trends in warfare, science, and society. He explains his philosophy on religion, environmentalism, and politics. I won't spoil the ending, but he comes to some radical conclusions.

The hardcover version of Crisis Investing for the Rest of the '90s is on sale at Amazon for less than $2. If you can ignore the reference to the '90s in the title, it'll be the best $2 you ever spent.

Good investing,

Tom

The Door to America's Millionaire Club Is Not Locked
By Mark Ford, wealth coach, The Palm Beach Letter

"Contrary to popular modern belief, it is still quite possible for the successful individual to make his million – and more."

J. Paul Getty wrote these words in 1960, in his book, How to Be Rich. It's as true now as it was then... and Getty shows his readers that anyone with the right mentality can get rich by developing a handful of habits.

Getty was a very rich man. I've heard it said that in today's dollars, his wealth was greater than Bill Gates' and Warren Buffett's put together.

Getty made his fortune by buying up oil businesses at bargain prices just after the depression. A small portion of the book is devoted to telling this story. The rest of it presents his thesis: that anyone with the right mentality can get rich by developing a handful of habits.

How to Be Rich is very easy to read. Written as a series of essays for Playboy magazine, it feels like a casual conversation with a very rich friend.

"Although there are no sure-fire formulas for achieving success in business," Getty says, "there are some fundamental rules to the game, which, if followed, tip the odds of success very much in the business man's favor."

Those rules include:

  • The best way to make a fortune is to own your own business.
  • The central aim of every business is to produce more and better goods (or more and better services) to more people at a lower cost.
  • A sense of thrift is essential for success in business.
  • Legitimate opportunities for expansion should not be overlooked.
  • The business owner must run his own business. He cannot expect employees to run it for him.
  • The business owner must be constantly alert for new ways to improve his products and services and increase his production and sales.
  • Nothing builds confidence and volume faster than a reputation for standing behind one's product.

The book is loaded with practical advice for business owners and employees who want to share in the profits of their businesses.

How to Be Rich also has a chapter devoted to passive investing. Most people don't realize it, but Getty's record as a buyer of stocks was stellar. What was his strategy? To buy great companies with distinct competitive advantages when their shares are cheap.

Sound familiar?

Another chapter talks about real estate. Getty was a big believer in real estate as a secondary investment and made millions that way. He also talks about investing in fine art. In the course of his business life, Getty acquired one of the greatest private collections of art in his time. He left much of that collection to various museums, including the Getty Museum in Malibu, California.

What I like about this book – besides the fact that Getty has come to the same conclusions on wealth-building that I have – is that it is extremely motivational. There is something about the way he writes that feels authentic. (As opposed to Donald Trump, for example.) When you have the world's richest man giving you advice on getting rich, you want to listen.

That said, a few of his ideas might be surprising to some readers. For example, Getty is famous for pinching pennies... But he believed in paying his employees well and letting his best employees get wealthy by sharing in the profits. He was not condescending to his employees. He treated them like partners.

The most successful business people I know share this view.

Another contrarian idea: Getty disputes the idea that the business owners should think big and take big chances. His success, he says, came from "thinking small" (i.e. paying attention to details) and avoiding risk at every juncture.

If you have ambitions of being truly rich one day, you should read How to Be Rich. If you have already read it once, you should read it again and again.

Best,

Mark Ford

You Can't Be a Millionaire. Unless…
By Dr. Steve Sjuggerud, editor, True Wealth and True Wealth Systems

A friend of mine has a net worth that's comfortably in the tens of millions of dollars.

I don't know for sure of course... It's not polite to ask. But I know of his business dealings. And I've been to his stunning house on the ocean in Palm Beach County, Florida. (A few years ago, he bought his neighbor's house – rumor had it he didn't like the dog barking next door. He connected the two properties, renovating the neighbor's house to match his own.)

For the last decade or so, he's spent his days doing what he wants... which, it turns out, ends up making him even more money...

My friend's story starts at a Dale Carnegie public speaking course maybe 30 years ago. In that course, my friend was asked to pick the one thing he'd like to achieve in life and give a speech on how he planned to achieve it.

My friend wanted to do so many things in life... He wanted to teach a college-level course (his father was a college professor), he wanted to write a screenplay for a movie, he wanted to appreciate art as well as any art critic, he wanted to write a fiction story and have it published... The list goes on. Oh, also on the list was "make a lot of money."

He thought about his list. And he figured if he accomplished the last one – "make a lot of money" – then he'd have the opportunity to accomplish the other things on that list, too. So that's what he gave his speech about... How he'd get rich.

My friend set out to get rich. For years, he made that his main goal. You might not like the idea of dedicating your life to amassing wealth. (And you don't need a fortune to live well.) But it worked for my friend... and it worked for Felix Dennis.

Recently, I read one of the best books ever written on getting rich. It's Felix Dennis' How to Get Rich.

Unlike most of the writers of self-help books, Dennis is actually very rich. And unlike most self-help writers, he didn't make his money pitching self-help seminars or DVDs. Instead, he made hundreds of millions of dollars publishing magazines like Maxim.

In short, he didn't need to write How to Get Rich. But I'm glad he did. It is brutally honest and filled with wisdom. You should read How to Get Rich with a highlighter in hand. Like my friend, Dennis set out to get rich. He makes no bones about it... which makes reading this book refreshing.

As Dennis says, getting rich isn't easy to do, and most people won't even try. People as rich as Dennis are rare. Few people as rich as Dennis have actually tried to put down on paper, for the layman, the legitimate secrets of getting rich. Dennis did, and did it well.

At DailyWealth, we have spent lots of time with many hugely rich entrepreneurs. We have heard the stories of how they got to where they are now... we've heard their insights. No book we're aware of captures those insights as well as this one.

Are you capable of being rich? Are you willing to make it your goal now, so you can later conquer all your other dreams, like my friend and Felix Dennis?

Read How to Get Rich and find out...

Good investing,

Steve

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