The Intelligent Investor
The Intelligent Investor by Benjamin Graham can be summarised in one sentence: Buy a portfolio of stocks, hold on to them. Ok, this of course is too much of an exaggeration but that is one of the lessons I took away from the book.
The book is rather long and the audiobook I had came with commentary on each chapter. Many specifics are about the 1960’s and thus are also less relevant. But that doesn’t mean the lessons are any less so.
An investor is in it for the long-term, a speculator wants to make money now. A speculator will almost always lose (and always lose in the long run). You can’t beat the market.
One great example of this is a fund that has found a way (or a group that has a new formula). Once more money joins the fund, they can’t make the same ‘niche’ bets anymore and regress to the mean. Or the formula that you found (which might just be a coincidence/correlation) will start to be used by others (and again you’re back to the average).
One thing that is also important not to forget is that you will pay quite a lot of transaction costs if you’re investing actively. By buying and holding, you will probably only pay <1% when you put the money in, and <0,25% per year for ‘managing’ the money.
I can highly recommend the book, especially in conjunction with A Random Walk Down Wall Street.
A last lesson I found interesting/hadn’t thought about, is that when you retire (let’s say at 68) you will still need the money for a long time (say 20 years), so still then you want to have a part (25%) of your money in stocks (vs bonds).