Book Review: How the Stock Market Works

This is a book written by Michael Becket, a financial journalist of The Daily Telegraph based in United Kingdom (UK). This book is meant to be a beginner’s guide to investment according to its subtitle. Judging from its contents, the target audience of this book should be UK citizens but I find that some concepts apply in Malaysia too. In truth, the stock market works in almost the same way at every place.


Layout of How the Stock Market Works

This book has 12 chapters. The first 4 chapters discuss about the types of investments available in UK. Chapter 1 and 2 are useful for beginners in Malaysia.

Chapter 5 to 10 talk about the techniques to pick a share and the requirements before dealing in shares. The author also gives some advice regarding share trading.

Chapter 11 tells us about the rights of a shareholder. This part does apply in Malaysia.

The last chapter is about taxation. We can safely skip this part as the taxes discussed are applicable in UK only.



This book refreshes my understanding of the stock market. It explains complex terms in a simple and easy way. What I find particularly helpful is the explanation on derivatives. Though I would not dabble in derivatives, it is always good to know more about these financial instruments.

Fundamental analysis and technical analysis are both explained in this book. The author seems to be suggesting the use of both these analyses in dealing with shares. In my opinion, the author does a good job in explaining these techniques. Nonetheless, as this is an introductory book, do not expect in-depth discussion regarding these analyses.

The author also discusses about annual reports and financial statements reported by the companies. He gives an overview of the important items in these reports and why do they matter.

The author does touch about the timing of buying and selling shares. Nonetheless, in the end, it is up to us to devise our own plan.

I bet a large number of stock investors do not know about their rights as a shareholder. The author lists down our rights as shareholders. Even if we do not plan to exercise these rights, it is always good to have a knowledge about these privileges.



How the Stock Market Works elucidates important concepts about investments. Even though it is meant for beginners, I think it is a good refresher book for intermediate investors, maybe even advanced investors too. Overall, I find this book to be easy to read and did increase my knowledge.

As usual, before I end, I will share some witty quotes from the book.

“Making money demands effort, whether working for a salary or investing.”

“Scepticism is vital but it needs to be helped with something to judge information by.”

“Leave some profit for the other chap.”

“It is never wrong to take a profit is one of the ancient rules of stock market investment.”


Recommended book

If you are interested in How the Stock Market Works, you may get the book from Kinokuniya Malaysia through the link below*.

*Disclosure: The above link is Involve Asia affiliate link. Thus, I may earn a small commission when you purchase the book through this link.

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