Becoming an investor is not an easy thing. If you are ready to go down that rabbit hole as I have, there is a lot you need to learn.
The world of investment can seem complex at first sight, but once you learn the [basic terminology] and [the basics behind investing], you are on a good path. There is some other very important concept that you can understand in a very short period of time thanks to help of some good investment books.
Behold the list of the most useful investment books to learn how to become a good investor.
By the way, since it’s a financial article, you might want to buy a Kindle to have access to the ebooks instead of the paperback! Like that, you will save an extra bit of money!
However, if you are like my girlfriend and you prefer the feel of real paper in your hand, go ahead and please yourself!
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This book is a classic in the investing world. It was written by the legendary investor Howard Marks founder of Oaktree Capital. He became famous, among other thing, with his series of memos he wrote on Oaktree Capital. He sheds some details into the mindset you should have as a successful investor. In this acclaimed investment book, he gives all the details on his investing philosophy, a very refreshing one, on the financial market.
Marks doesn’t try to fool you by any means. He recognize that there is truth behind the Efficient Market Hypothesis and that predicting the future of stock is vastly impossible.
The author also argue that there is still opportunities for the knowledgeable investors out there. He describes in detail the mindset that you need to have to go against the consensus and be able to beat the market. Remember that beating the market is something that is very difficult to achieve even with years of experience.
If you are an investor who wants to focus on value investing, this investment book would be a good investment.
Value investing. A concept created by Benjamin Graham better known as Warren Buffet’s mentor.
This book describes the whole concept of value investing and is well known as being the bible for this investment strategy. This book highlights some very interesting concepts:
- Investment into dividend company that have a solid dividend growth history;
- Focus on not losing money instead of absolutely making money;
- Be greedy when other are fearful, market crashes are opportunity, not disaster;
- Many other thoughtful concepts.
What is very interesting about that investment book is that the author doesn’t give his advices and insight in an arbitrary way. He always give good arguments for all of them and will convince you to use his investment strategy.
As such, this book is really a must read for anyone who want to invest and those researching new investment strategies.
As a side note, once you have finished reading this book, you could take a look, and read, Security Analysis as a follow up. However, this book is much more technical and might be a tougher read for some. However, it has good and useful complimentary information in it.
An instant classic in the investment literature.
This book contains interviews of some of the most influential and successful traders of Wall Street in the history of the financial markets. The author interviews hedge funds masters and legends such a Paul Tudor Jones, Mr. Steinhardt and Bruce Kovner.
If you are new to investment, hedge funds and the like, know that these master have one of the greatest track records of Wall Street and they have managed to have returns above 20% year over year through their long careers.
As such, if you are into beating the market, this investment book will give you a very good insight on the work ethics and tricks, from the masters, that are required to be successful investor.
Don’t you believe that the big Wall Street funds have some advantages over the normal, average investor?
To be honest, they obviously do. However, Peter Lynch, through this investment book, explain that the common investor, you and I, also have some advantages over the large funds. Peter Lynch uses the term “ten baggers” to describe a stock that grow to 10 times their values.
He also believe that all investors can find those “ten baggers” if you understand the concepts he identifies in this book. However, he also acknowledge the difficulties of correctly identifying those “ten baggers” and that it would be foolish to assume that anyone could pick a complete portfolio of them. Also, he argues that if you have one of them, even if a large part of your portfolio went to 0, you could still beat the market.
The majority of this investment book explain his methodology, how he finds those “ten baggers” and how to avoid the various traps when choosing sticks.
Who would look at the stock market in a philosophical way?
George Soros explain his philosophical look at the market, the theory of reflexivity, and what to learn from it.
Basically, he criticizes some of the basics economic theories and argues that economics fails to predict the future because human being can’t be rational.
Also, he analyze how stock prices are determined and what are the forces behind price moves. This investment book thus provide a refreshing philosophical look at the market that helps to understand the markets better.
This investment book proclaim boldly: You can’t outperform the market and that managed funds, most of them, fail to achieve an above average performance. The author of the book John C. Bogle, founder of Vanguard, adds a lot of evidence to back his claim.
He also explain that if we are to invest in funds, it should be in funds that track a Market index and have the lowest possible fees. It’s the aspect of his strategy that he emphasize the most.
If you are reading this list of investment books it’s because you are planning to invest soon, and this book is one of must-read for the beginners. Also, it’s a more down to earth and easy to read compared to other investment books that shift toward a more theoretical, it aims to teach all investors to invest through common sense.
Another book by Warren Buffet’s mentor, Benjamin Graham. In this book, he details the methodology he uses to analyze stocks and he actually gives quite a lot of them. Honestly, it’s a book that, while it’s very useful, is not an easy read for beginners, the book is quite long and technical.
As such, it has more in common with a textbook but it provides an immense wealth of information and methods to understand and use Benjamin Graham signature investment strategy: Value Investing.
It will give you all the tool you need to find the “intrinsic” value of any company. All in all, it’s a boom that is crucial and a reference for value investor.
In this book, Burton Malkiel defends the efficient market hypothesis.
This hypothesis claims that on the long run market are efficient, while possibly not really efficient on short term. As such, he explains that investors can’t expect to reach extraordinary performing only by doing research.
The hypothesis also claims that whatever you find while doing your research has already being absorbed by the market, is already represented in the market valuation and therefore the price of the share. He also discuss behavioral finance and investment relating topics.
Risk is a concept that is very important, not only in the investment world but also in our personal life. Peter Bernstein goes in great length to describe both the history of risk and how the human race deals with it.
He also postulate that quantification of risk is one of the fundamental pillars of modern civilization.
This book is a bit different than the others in this list, it’s not written specifically for the investment world. However, some chapters are definitely useful for financial purposes, specifically on how risk is measured in the stock market. Another good point the author is making, is that in some mathematical fields, such as probability and statistic, the stock market have been a great source of data.
This book compile the letters that Warren Buffett sent to Berkshire Hathaway’s shareholder through the last few decades. If you want to know anything about Warren’s buffet strategy, this investment book is the best.
These letters touches a lot of different financial concept and the authors organizes them accordingly: Common Stock market, Mergers and Acquisitions, Corporate finance, Investing and many more.
In this investment book, Warren Buffet gives some good advices and lessons on investing he learnt through its career. Most importantly, that a company success is greatly dependent on its management and that return shouldn’t be the main focus at all time.
A black Swan. Such a rare occurrence that people don’t believe in their existence.
It’s a good analogy to the content of this investment book. In other word, the author claims that random events that have an incredibly high impact on our life do exist.
Since these have a very low occurrence rate, we tend to underestimate the likelihood of the event and its impact. As such, we find ways to fool ourselves by pretending that these event are not as random as they might seem and that they are predictable. More importantly, we tell ourselves that we keep on falling in the same mistake again and again.
This book describe, in a fascinating way, the topic of uncertainty and develops on the fundamental problem of our mathematical approach to that topic. However, don’t be afraid this book is quite an easy read even if it’s a bit complex.
Who doesn’t like legendary tales?
This investment book is written by such a legend: Jesse Livermore.
For those who don’t know him, he was one of the first trader to beat the market. Somewhat of an old book, it was published in 1940, but it’s still a classic on trading. The view of the author on this topic is very different from “traditional investor” as we know them.
This book is a testimony on the determination, discipline and dedication of this legend to be able to reach those fantastic returns! He didn’t reach them through sheer luck! He describes in details trading methods and technique he used to beat the market.
Are those techniques still applicable to today’s market? That’s a question for you to answer! Whatever you think about it, this book still has its place on any investor bookshelf.
Another good book by Mr. Bernstein.
This investment book details the origins of Modern Wall Street’s methods. As such, this investment book describe the history of the most often used Wall Street financial models and how they came to transform the whole industry.
Before this modern revolution, fund manager didn’t use a lots of mathematical models for valuation and portfolio analysis purposes. However, some brilliant academics from the University of Chicago and from MIT managed to send the investment world into a revolution in a really short period of time.
Indeed, they made some mathematical breakthrough related to stock market, derivative, options and other different topics, all related to the investment world.
If you want a simple summary to understand very complex mathematical ideas, this book is made for you!
A great story from a great man.
In this book, Mr Thorp details how he went from a simple math teacher counting cards gambling to a Wall Street genius. Although he also has a book on how to beat the dealer, this book is much more interesting.
The author worked on some groundbreaking theories on the field on option pricing and he explains everything on how he reached those conclusion in this book. Additionally, one of the most interesting part of the book is probably the last chapters, where is leave is life experiences behind and where he discusses investment in general.
If you like the mathematical and quantitative aspect of the investment world, this book is definitively a must-read for you.
The investment world is not all rosy and sunshine, it’s a tortuous and dangerous world.
The author describes well the dangers of the investment world. This book should act as a painful reminder of the truth that market crashes do occurs and could happen anytime.
Also, he clearly identify the danger of financial bubbles and he does a great job at explaining them. As such, price can go up without any reason and bubbles have a really negative impact on people’s lives.
Again, the author talks about the efficient market hypothesis and why it doesn’t explain market volatility and how those topics should be approached. All in all, it’s a very insightful book with a lot of common sense. It’s also is a great read for anyone who wants to learn more about market crash and market bubbles.
Another good “doom and gloom” investment book.
The author relates the story of an hedge fund: Long Term Capital Management. This hedge fund was created by the best traders at Solomon Brothers and with a Nobel Prize Winner, and one of the most brilliant academic of his time, but still managed to fail spectacularly.
All in all, this book is a cautionary tale for all those venturing in the stock markets. The main lesson to be learned from that is the danger of leverage. Additionally, several other topics are covered in this book which makes it a wonderful learning experience.
If you are also an entrepreneur, this book is a great read because it does go further than financial theories.
Also, complicated economics, financial structures and securities concepts are simplified and explained in such a way that anyone can understand. There is something in this investment book for everyone, take a copy and start learning!
The Great Finale!
You now possess a great library of very good and useful investment books that you need to read! Remember that Knowledge is Power! And now that power is in your hand.
If you want to become a good investor, you need to learn from the giants that came before, not only their good stuff but also all of their mistake and errors.
Start reading now!
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