The Intelligent Investor

Warren Buffett calls this the best book on investing ever written. Its author, Benjamin Graham, was Buffett's professor at Columbia and is considered the father of value investing, the school that buys assets below their real worth rather than betting on which way the price will move next.

The central idea fits in one sentence and is hard to hold to in practice: work out a company's intrinsic value and only buy when the price offers a margin of safety against that value, so that even if your calculation is off, the margin still protects you. Graham also introduces the Mr. Market allegory, a manic-depressive business partner who offers to buy or sell at a different, sometimes absurd, price every day; the trick is using him to your advantage, not catching his mood.

This is a long-term stock-investing book, not a futures-trading or short-term operating one: its examples and ratios are built for analysing companies, not reading an intraday chart. That said, the underlying discipline speaks to any trader: separating an asset's price at a given moment from its real value, not letting the market's mood dictate your decisions, and always demanding a margin that protects you from being wrong.

At 808 pages and written in the style of a classic manual, some editions include updated commentary by Jason Zweig that helps place the examples in the modern market, it isn't an afternoon read, nor one aimed at someone who trades futures or intraday exclusively. It suits you best if, besides trading, you're also interested in building a long-term portfolio, or if you want to understand where much of the vocabulary and risk-management philosophy later adapted to other market styles actually comes from.