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The Best Stock Market Books for a Winning Portfolio

Sam has been writing for 15 years and is interested in health, investing, science and history. He is certified in public health from Harvard

NASDAQ trading floor

NASDAQ trading floor

Learn and Succeed in the Stock Market

I have been an investor and a trader in stocks, mutual funds, and options since 1983, and along the way, I have learned a lot of lessons. And many of those lessons I learned the hard way, which might sometimes be the best way to learn.

To succeed in investing or trading in the stock market, you have to read, practice with paper trading, and read more. You can read a book once and think you understand it. Then go into the market and forget some of what you read in that one book. Read more books. Each author will have different experiences that you can learn from.

The more books you read on the subject, the better you will understand investing and trading because different authors will explain the topic in various ways. The more you read, the better you will understand the concepts of investing and trading.

There are no get-rich-quick stock market books listed here because that doesn't really exist unless you get lucky. The way you get rich in the stock market is by learning the fundamentals first. Always keep plugging away smartly and learn how to control risk so you can stay in the game. If you lose all of your money, you cannot stay in the stock market. So not losing all your money is the number one lesson, especially when trading.

Since the stock market does not always go up, certain books will teach you how to profit during bear markets or stock market corrections. Some books will teach you how to hedge your risk by learning about risk strategies and risk management.

These books listed here are all worth your time and money to read. You will find yourself referring back to them again to make sure you understand each concept as you trade and invest in the stock market daily.

Learning about investing is necessary for you to make the right investment and trading decisions.

$100 dollar bills

$100 dollar bills

Dividend Paying Stocks

Dividends are the best way to reach a long-term financial goal. The way the stock market fluctuates is enough to keep anyone awake at night wondering about their 401k plans and retirement.

Good dividend-paying stocks are usually stocks of companies that can endure rough economic times and will not fluctuate wildly. These dividend-paying stocks will keep accumulating money for your portfolio year after year.

Finding dividend-paying stocks for investments is not just about finding the highest yield because a high yield can be very deceiving. If a stock has an uncommonly high yield for that industry, there is usually a reason.

And the reason could be that the stock price recently fell dramatically, making it possible the company is in financial trouble. A company in financial trouble could cut or eliminate its dividend.

You want to find good steady companies that have paid and raised dividends each year for many years. These books about dividends will teach what to look for when choosing dividend-paying stocks for your portfolio.

You can look at what at lists of dividend-paying stocks like the S&P 500 Aristocrats. This list will show you the stocks that have raised their dividends consistently for years and years. These are the best dividend-paying stocks and are the most reliable.

There are no get-rich-quick schemes with dividends, just steady and accumulating dividends that add up over time. Another benefit of good dividend-paying stocks is that they are usually older and more established companies. More established companies will sometimes do a stock split, which means you end up with more stocks over time, accumulating more dividends.

One of the best dividend investing books is The Single Best Investment: Creating Wealth with Dividend Growth. This book is definitely a must-read and a book I refer to many times.

Today, many of us worry about our government pensions, company retirement plans, and social security. Investing in dividend stocks is the best way to protect your retirement plans for the future.

Wall Street journal

Wall Street journal

Stock Market Investing

Stock market investing is different than trading the stock market. Investing requires the investor to do his homework. Picking companies that you believe in for investing purposes, investing in companies for the long term.

Over time, investing in good companies is what makes your portfolio earn money for you. Investing in companies that pay dividends and reinvesting those dividends along with stock splits can add up nicely. These types of companies are usually the more established companies.

But investing is more than investing in the established companies. There are growth companies that you can find that do not pay dividends. They reinvest their profits into bettering the company and its products. These companies are great for your portfolio in addition to the more established companies.

Finding these companies takes research, reading, and paying attention to trends. This does not mean investing in every new IPO that comes out. Many companies have been in business quietly for years and are only now becoming noticed. Or maybe they recently came out with a new product or discovered a new method of accomplishing something.

Finding new companies to invest in can be exciting and financially rewarding. The following books are excellent and can help you learn the correct ways to find companies to invest in.

One of the most definitive books about investing and specifically value investing is The Intelligent Investor by Benjamin Graham. This book is a classic and has been revised to reflect investing in the 21st century.

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This book is written more for the value investor, but it has valuable information for any type of investor.

Investing books written by Peter Lynch like One Up On Wall Street is an excellent book about finding good companies for your portfolio. This book will teach you about investing in both growth and value stocks since owning both types of stocks will diversify your portfolio.

Peter Lynch is still of the best-known investors of all time. He ran the large Magellan Fund at Fidelity and was one of the most successful mutual fund managers of the time.

He has a real knack for finding the best investments and for finding new companies to invest in. His book One Up On Wall Street is still referred to as the book to read for investing advice and finding new companies.

With all of the fast-moving markets and the stock market noise today, it can be very confusing. Reading these books will make you a confident investor and help you get through all of that fast talk, noise, and market mumbo-jumbo.

Peter Lynch was one of the best mutual fund managers of all time, and his book can keep you grounded when it comes to finding the best stocks for your investment goals.


Option Trading

Options trading can be simple, or it can involve complicated strategies. Buying calls or puts is fairly simple, but you can lose your money fast if you do not understand the basics.

Options trading can be very profitable and can be used to hedge stock market volatility risks. Unlike stocks, options have a finite life and do expire at certain times. When you buy a call or a put option, you have to be correct with the direction of the price movement and the amount.

When you buy a call, you believe the underlying stock or index is going up in price by a certain date, the expiration date. And when you buy a put option, you believe the underlying stock or index will go down in price by the expiration date.

If you are wrong in either the amount the price will move or the amount of time, the most you can lose is the amount the option cost.

Selling or writing call or put options are riskier, but your chances of profiting are greater. When you write an option, you are selling to the buyer of the option.

Sellers of options can gain a certain amount, but they can lose more than they received for the option if the trade goes the wrong way.

Many different hedging strategies can limit the risk to the point you will know exactly what you will gain or lose. But understanding these options takes learning and practice.

Trade Your Way to Wealth is an excellent book that will teach you simple but effective options trading strategies that could reduce your trading risk. If you already know the basics of options trading, this book will give you some new ideas for options trading.

Writing covered calls is another options strategy that many use to make reliable profits every month. Once you understand the different trading strategies of options, covered calls can be profitable.

Technical trading chart

Technical trading chart

Fundamental and Technical Analysis

Fundamental analysis is an important step in picking the best stocks. Fundamental analysis is all about analyzing a company's earnings, revenue, bottom line, and all of its fundamentals.

Learning how to read a company's annual report, earnings report, and other financial data is crucial to understanding the financial health of any company. Understanding these numbers will help you decide if you should buy stock in the company.

Technical analysis is learning about reading charts. Learning at least the basics of reading charts can visually show you where the stock has been and where it might be going. Technical analysis can also help you decide where to enter a trade and when to exit a trade.

Understand both fundamental and technical analysis can let you know everything there is to know about the health of a company and how they look on a chart. Both fundamental analysis and technical analysis have their place among investors and traders.

You will hear a lot about technical chart formations and how this or that formation is a buy or sell indicator. But fundamental analysis shows you the financial health of a company.

Once you learn how to read a company's annual report, you will know exactly what that company's value is and if you should invest in it at this time or wait. Knowing the value of a company can tell you it is priced correctly in the market.

Investors mainly use fundamental analysis to pick stocks, and traders use technical analysis to trade in and out of stocks more frequently than an investor might.

Fundamental analysis might not be as sexy as technical analysis with all the pretty chart formations, but it will help you discover wonderful investment opportunities. A good book to learn about fundamental analysis is Fundamental Analysis for Dummies. A book I still refer to today.

© 2009 Sam Montana

Reader Feedback

KathyZ1 on October 16, 2013:

Interesting lens. Thanks for your sharing.

RothIRACustodians on December 06, 2012:


profit confiden on November 17, 2012:

It is always nice to take the help of any investment genius before doing the investment. By the way , nice lens.

mstcourtjester on November 14, 2012:

Good lens, My kinda lens :)

mstcourtjester on November 08, 2012:

Very good lens! My favorite stock market book is "The Intelligent Investor" By Benjamin Graham.

PowerDividends on April 14, 2012:

Great list of books!

freeship on March 16, 2012:

1: Never lose money. Rule No. 2: Never forget rule No. 1stock market today

Sam Montana (author) from Colorado on December 18, 2011:

@Tennis-Elbow-Cures: Thank you for your comments. These books should be a great help for anyone looking to trade, invest or learn.

Tennis-Elbow-Cures on June 13, 2011:

Excellent source of information you've given for someone looking to jump into the stock market game. Well put together lens SamMontana! :-)All the best!Mike - penny stock investing

anonymous on November 06, 2009:

Hey thanks for this interesting insight Penny Stocksor Big and Hot Penny Stocks is a great topic to share...

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