Investing is a process, not a destination. It takes years of tweaking an investment strategy, process, and philosophy to find something that works for you. Also, there’s no RIGHT answer. Lots of things work for investors and what works for me may not work for you. The only way to speed up this continuous feedback loop is by learning — learn as much as you can.
If you’re looking to quench your thirst for investment knowledge, here are the books we believe should belong on your (and every investor’s) bookshelf.
If you’re new to investing:
- The Neatest Little Guide to Stock Market Investing, 2010 Edition (Jason Kelly): This is a book that covers the basics of investing and how to get started. It then covers how to choose specific investments using basic theory. Kelly uses a lot of historical data to back up his highly educational book.
- The Wealthy Barber (David Chilton): This book has been a favorite guide for building long term financial success on whatever salary you receive. It’s the type of book parents give to their children to help them avoid the same money mistakes we all make.
- The Investment Answer (Daniel Goldie): When Wall Street veteran Gordon Murray told his friend and financial advisor that he only had a short time to live, they decided to write a book that distilled the years of experience Murray had into a simply, valuable investing primer. The Investment Answer is the product of that process.
If you’d like to dig deeper:
How The Market Works:
- Unexpected Returns (Ed Easterling): Easterling’s work is the bible for understanding secular stock market cycles — what goes up, when and why.
- The WSJ’s Guide to the 50 Economic Indicators that Matter (Constable and Wright): Professional investors look for signposts along the way to see where the market is headed. These economic indicators come in all sizes and flavors — you just have to know where to look.
Asset Allocation:
- The Intelligent Asset Allocator (William Bernstein): Studies show that how an investor apportions her assets is responsible for 90% of a portfolio’s performance. Bernstein’s book looks at the literature and provides an actionable framework for investors to implement.
- Unconventional Success (David Swensen): Yale’s Chief Investment Officer shares his allocation techniques for leading the university’s endowment to huge gains.
- The Ivy Portfolio (Mebane Faber): Faber’s the author of one of the most downloaded investment research papers of all time. In this book, he shows how individual investors can mimic the investment styles of the large endowments.
Stocks
- Common Stocks and Uncommon Profits (Phillip Fisher): Fisher, father of billionaire investor Ken Fisher, wrote the manual on investing in growth stocks.
- The Intelligent Investor (Benjamin Graham): Ben Graham is still an icon for value investors and his book leads investors on the prowl for companies selling for a fraction of what they’re worth.
- The Guru Investor (John Reese): This book is almost like a Cliffs Notes version of all the best investing books. Reese studied a variety of history’s best investors and distills their investment strategies in this book.
- Contrarian Investment Strategies (David Dreman): In one of the first books on investor psychology, money manager Dreman invests in out-of-favor stocks by looking at market overreactions.
- One Up on Wall Street (Peter Lynch): Lynch recommends a no-nonsense buy-what-you-know approach, a process he honed as portfolio manager of Magellan Funds. One example? He bought stock in the company that made pantyhose that his wife and friends were really excited about.
Funds & Index Investing:
- Random Walk Down Wall Street (Burton Malkiel): Princeton professor Malkiel demonstrates how hard it is for investors to beat the market. Instead of actively managed investing, he recommends a passive approach.
- The Bogleheads’ Guide to Investing (various): Made famous by Vanguard Investments’ Jack Bogle, index investing has its raving fans, Bogleheads. This book attempts to create a systematic process to investing using index funds.
- The Power of Passive Investing (Richard Ferri): This book is great at making the case for passive investing and why investors who try to beat the market often fail.
Bonds:
- The Bond Book (Anette Thau): It’s hard to find a more inclusive, detailed analysis on bonds, how they work, and how to invest in them.
- The Strategic Bond Investor (Tony Crescenzi): A senior bond analyst at the world’s largest bond investor, PIMCO, shares an aggressive — yet risk conscious — approach to investing in debt.
Saving and spending:
- I Will Teach You to be Rich (Ramit Sethi): Sethi is super-smart, twenty-something who has truly pioneered helping this generation with banking, saving, budgeting, and investing.
- The Education of Millionaires (Michael Ellsberg): Our focus on academic advancement in our society has stunted our approach to building wealth. Ellsberg looks at successful practices of numerous millionaires and billionaires — many who didn’t finish college — to find a formula for how they achieved their success.
- The Millionaire Teacher (Andrew Hallam): Hallam built his nest egg on a teacher’s salary using sound practices to save and invest wisely.
- The Millionaire Next Door (Thomas Stanley): To live like a millionaire, you have to spend like one. You’ll find all kinds of surprising data on the behavior of millionaires (they spend on average $30,000 on new automobiles).
- The Richest Man in Babylon (George Clason): This book describes the monetary life of the ancients. It really is an inspirational survey of classic financial planning. Careful: people who read this book become freakishly cultish around its principles.
- The Wealthy Barber (David Chilton): This book has been a favorite guide for building long term financial success on whatever salary you receive. It’s the type of book parents give to their children to help them avoid the same money mistakes we all make.
Out of the box thinking:
- More than You Know (Michael Mouboussin): Legg Mason’s Chief Investment Officer is a Big Thinker when it comes to portfolio strategy. This book looks at alternative sources of information that investors can use to make investment decisions.
- The Intuitive Investor (Jason Apollo Voss): If you invest AND do yoga or meditate, you’ll love this book. Voss scored huge investment returns over a decade as a mutual fund portfolio manager and credits using both sides of his brain. In a funny way, this book is also a guide for life.
- MarketPsych (Richard Peterson): Written by a psychiatrist who happens to be the editor of the Journal of Behavioral Finance, this book explores our investor identities — what defines us as people in the market and our wants, needs, and fears.
What’s in your investment library?
We’d love to hear, so comment and let us know.
