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No. of Recommendations: 6
DeliLama, I recommend "The Art of Speculation" by Philip L.Carret, for the following reasons:

Do not be mislead by "Speculation" in the title and let it to discredit its value for "Investing". Many Buffett's admirers failed to recognize his background and experiences with the workings of the stock market (started very early by working with his father at his brokerage). This book provides valuable information for investors investing in a often very speculative market. To add some credit to the author for those who are not familiar with him, quote from Foreword of the book, "Carret, ..., is revered as the founder of the first mutual fund, The Pioneer Fund. A 1,000 investment at the fund's inception in 1929 would be worth $2.3 million today. Warren Buffett, no easy judge refers to Carret's record as the "best long-term investment record of anyone in America."

As a sample, Chapter 1 What Is Speculation?, its topics include:
Speculation in Every Business--The Investor Cannot Escape Speculation--A Definition--Importance of Organized Markets--The Speculator Points the Way to the Investor--Speculators Help Support the Financial Machinery--The Analysis of Values.

It covers not only on Speculation topics such as "The Short Sale"(Short Selling Is Essential to an Orderly Market...), "Arbitrage (Arbitrage in Reorganization, which no doubt Buffett is known for participating occasionally), "The Machinery of Markets", "The Tides of Speculation"(Bull and Bear Markets -- Why Prosperity Never Lasts Forever..), and many other topics.

It also has chapters such as:
“How to Read A Balance Sheet”, “How to Read An Income Statement”.
It starts the former chapter with this "Finance has its anatomy and its physiology. The former is studied through the medium of balance sheets, the latter through income statements."

Of course the book's emphasis is not on how to evaluate a business but its value for a new investor participating in the stock market is to make him become familiar and be more comfortable with the environment in which he invests and its making easily understandable connection among workings of stock market, the operations of a public business in connection with the stock market, and investing in a public business by a small investor through stocks.


I also appreciate others comment on this book.

Two more quotes from the book:
“Even in the highest-grade securities there is a certain inescapable speculative risk. It is not decreased by burying one's head in the sand like an ostrich and saying, “I never speculate!””
“Just as water always seeks its level, answering the pull of gravity, so in the securities markets prices are always seeking a level of values”
“During a period of persistently declining prices a novice asked Russell Sage whether he thought stocks would rally. “They always have, “ was the laconic response.
“It is now possible to define “technical position”. Briefly, it is the ratio of stocks in strong hands to stocks in weak hands.”
“Fortunes are usually made by expansion of values, not by their destruction.”
“Fashions plays their part in the stock market as in other affairs of life.”
“Finance has its anatomy and its physiology. The former is studied through the medium of balance sheets, the latter through income statements.”
“One of the essential qualifications of the successful speculator is patience.”
“Applied to individual stocks, price earnings ratios in themselves mean nothing.”

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