Knowledge is basically free for the taking in a world of libraries and the Internet. For those interested in learning more about margin of safety investing, the following list is a good place to start. If you have some suggestions of your own, please send them along.


Books

David Dreman, The New Contrarian Investment Strategy: The Next Generation: Beat the Market by Going Against the Crowd | Money manager and Forbes Columnist David Dreman makes the case for a focus on the opportunities offered by beaten down, out of favor securities. His book also draws on the research of cognitive psychologists to show how investment decisions can go awry.

Dreman, Psychology and the Stock Market: Investment Strategy Beyond the Random Walk | A good little book focusing on the behavioral dimensions of the marketplace.

Peter Drucker, Innovation and Entrepreneurship | While Drucker’s book is not about investing per se, it provides an exceptionally good look at the dynamism and instability of market competition–and by extension when the opportunity for market leadership (and durable long-term profitability) does and doesn’t exist.

Phillip Fisher, Common Stocks and Uncommon Profits | Fisher’s company specific discipline and his “buy and hold” outlook were important influences on Buffett; the book is packed with practical insights–from Fisher’s argument against excessive diversification to his fifteen points to look for in a stock.

Benjamin Graham, The Intelligent Investor | A classic of traditional value investing, by the founder of margin of safety thinking.

Graham, The Interpretation of Financial Statements | A slim but valuable guide to understanding balance sheets and income statements.

Graham and Dodd, Security Analysis (multiple editions) | A comprehensive, massive treatise analyzing fixed income and equity securities and how to value them. There is a trade-off for readers between the original edition, written with the 1929 Crash clearly in mind, and a more recent version, revised after Graham’s and Dodd’s deaths, that updates the topics but sacrifices some of the original’s philosophic clarity.

Robert Hagstrom, The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor | A clearly written synthesis of Buffet’s investing approach using a sequence of Buffett’s investments (Washington Post, GEICO, Gillette etc.) as case studies.

Seth Klarman, Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor | A very interesting book on value investing by the manager of the highly successful Baupost Group funds. It addresses several of the areas where big discounts to intrinsic value often are found, including rights offerings, spin-offs, and bankruptcies.

Peter Lynch, One Up on Wall Street: How to Use What You Already Know to Make Money on Wall Street | Former Fidelity Magellan Fund manager Peter Lynch makes the case for investing in “what you know;” Lynch’s easy to read style and his clear explanation of the investing basics make this an excellent introduction to sensible investing (though it lacks the analytical detail of some of the other suggestions here).

Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds | A book (written in the nineteenth century) concerned with mass hysteria generally and stock market pathology as one example thereof.

Joel Greenblatt, You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits | Greenblatt is an entertaining writer and superb investment manager whose book maps the world of special situation investing: spin-offs, rights offerings, recapitalizations, etc., and the time-consuming but hugely rewarding world of exploring regulatory filings. Greenblatt’s analogy of digging for buried treasure is apt: investigating opportunities requires hard work and can lead to real rewards.

Howard Schilit, Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports | Well written book with interesting cases of companies playing fast and loose with their financial reporting.

Martin Whitman, Value Investing: A Balanced Approach | Whitman’s book is a densely argued case for his approach to both valuation and calculating risk.


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