Columbia Business School Publishing, £24.95
Investment books tend to fall into one of two categories. There are those that are targeted at professionals and which tend to be narrowly focused on a particular approach. At the other end of the scale you have how-to guides aimed at the general public. This book aims to bridge the gap between the two extremes.
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Written by Joel Tillinghast, who has successfully run Fidelity's low-priced stock fund since 1989, it aims to give investors advice on how to go about finding stocks that can beat the market.
The book is divided into five sections. The first looks at how human biases affect investing decisions, and discusses the differences between gamblers, investors and speculators. It then moves on to more advanced topics, such as the value of economic forecasting and overseas investing. The third part deals with company management, and how bad managers can mislead investors. The fourth section looks at the lifespan of companies, from formation to bankruptcy. The final part examines the various ways to value a company, concluding by contrasting the value-oriented approach of Warren Buffett with the passive approach.
One of the most refreshing things about the book is that Tillinghast refuses to go down the well-trodden route of "buy a low-cost index fund and hold it until you retire". While he acknowledges that indexing can work for some, and agrees investors should focus on cutting costs, he considers that to be a "bland" approach that fails "when the market is not normal, but raving bonkers". He makes the case instead for a combination of research, intelligent analysis and a recognition of our own behavioural flaws to help investors get outsize returns.
Complete beginners to investing may need a more basic guide; more experienced hands may find it a little light in terms of data. Still, both will find it useful. It is an intelligent guide to stock selection and investment that deserves a place on everyone's bookshelf, whether they work in the City or just want to find some shares to put into their Isa.
