I am always on the lookout for new books on investing to read to broaden my horizons. I came across a Professor at the Wharton School of Business, Jeremy Siegel, who has written two outstanding books on equities. This week’s post will discuss his two excellent works that I highly recommend for anyone who invests in the markets. His approach is refreshing and leads one down a path that they may not otherwise choose. You do not have to read both books, but they complement each other very well. I do recommend both as one builds on the other to a large degree.
Stocks for the Long Run
While I am not exactly sure which was written first as this one is currently on its fifth edition titled “Stocks for the Long Run.” In this book, Siegel makes a strong and compelling argument that equities or stocks are less risky than people realize when considered over a longer period. And these less risky investments have far superior returns that cannot and should not be avoided. Investing solely in stocks is less risky than anyone realizes as the risk is minimal when the investment is spread over decades and not viewed in any short-term manner.
This edition of the book is written after the financial collapse of 2008 and 2009, so it takes the Great Recession into account in his various analysis, which provides a perspective that most adults can relate to. This is compared to those invested and lived through the Great Depression, which most of us only know about through our reading and what we know of history. Few of us alive today have firsthand knowledge of this catastrophic financial event. Few books of this one’s caliber were written or revised since the Great Recession, so it provides excellent advice based on the history of the markets from the 1920s through the early 2010s. And while most do not remember the Great Depression, many Boomers will remember the recessions of the late 1960s and late 1970s that went into the 1980s. Then there was one of the best bull markets of late 1987 after Black Monday through the dot com bubble in 2001 and 2002, which lead to a shorter bull market that leads up to the Great Recession of 2008-2009. What will be interesting is any future analysis that takes the longest bull market from 2009 to the spring of 2020 into account and the resulting recession caused by the COVID pandemic. The 21st Century has seen some extremes in the 20 years we have been in it, and I am sure we will experience many more before it is said and done.
The book also takes a good look at investing outside the US borders and, in particular, China and India. But he also looks at the global markets as a whole that we should consider when we do our investing for the long haul. While I may not recommend investing in individual stocks in foreign companies unless they are listed as an ADR on a US market, investing in them via mutual funds and exchange-traded funds spreads the risks around and reduces them due to their diversification that otherwise would be impossible to obtain on your own.
And after reading this book, you will view investing in stocks in a new light as an investment that has the highest return of any asset while, when viewed over the long run, has one of the lowest risks as well. And after you read this book, you will see and understand where this viewpoint comes from. To get your copy of “Stocks for the Long Run,” go to https://amzn.to/3mjrL56.
The Future for Investors
In this work, Siegel builds on his previous work and shows us why investing in stocks is the best way to go when it comes to long-term results. Here he provides some insight into how you can pick stocks that will provide long-term results that beat anything that you might invest in. This book reminds me of Ben Graham’s classic, “The Intelligent Investor.” Both take the approach of looking at undervalued stocks in good companies with a large upside potential that you are willing to exploit for your benefit. You can get Graham’s classic from https://amzn.to/3ogAZ3U.
Siegel does an amazing job of explaining how one goes about looking for value stock to invest in. He takes what Graham outlined decades ago and made Warren Buffett the greatest investor and makes these concepts available for the average investor. Siegel examines older companies that thrived at one time and declined and, in many cases, into their very exit from the corporate landscape and shifts to the current state of corporate activity. Along the way, he explains how you can learn from the past to assist you in selecting the next value play that will have longevity in its performance and existence. While no one can predict the future or what will happen in the corporate world, much less the markets, he does provide you with some tools to guide you along the path.
This book is a must-read along with the first we discussed. You can get the “The Future for Investors” by visiting https://amzn.to/37EdbBo. But it may be wise to read Graham’s “The Intelligent Investor” before Siegel’s two books. And I do recommend “Stocks for the Long Run,” then read “The Future for Investors.” By reading these three books in this order, you will learn the basics of value investing from the master in Graham and then get an updated version from Siegel in his excellent books.
If you want to understand value investing better, these three books are an excellent start. While they may not be for everyone, I think that regardless of whether you do your own investing or have an advisor handle the matter for you, you should have a basic understanding of why you own what you do. I also noticed a basic understanding of what you will get from these books if you decide to read them. And yes, they can provide you with much more than a basic understanding if you want to dive into them more deeply rather than just reading them.
If you need assistance in your financial affairs, please reach out to me or any fee-only Registered Financial Consultant.
