If you don’t read it already, the Five Books series is well worth your while. Its premise is simple and profound. In new interviews published every Friday, various experts recommend the five best books on their areas of expertise. Some good examples are linked below.
- Jason Zweig on Personal Finance
- Burton Malkiel on Investing
- John Gapper on Financial Speculation
- John Kay on Economics in the Real World
- Tim Radford on Science Writing
- Vanora Bennett on Historical Fiction
- Rick Telander on American Football (and its Dark Side)
Rather than simply stealing this idea and applying it to the investing world, I asked some influential people in the world of finance about the five books that most influenced them and didn’t limit their choices to a particular field or category. I hoped to get some broadening of our collective outlook.
My five books of this sort follow (in no particular order).
- The Black Swan, by Nassim Taleb
- Thinking Fast and Slow, by Daniel Kahneman
- Ubiquity, by Mark Buchanan
- Superforecasting, by Philip Tetlock
- Against the Gods, by Peter Bernstein
And since it’s my blog, I can add a novel because I think literature is so valuable and important. My choice is Lila, by Pulitzer Prize winner Marilynne Robinson, who I think is our greatest living writer. In fact, read the trilogy (which also includes Gilead and Home) and thank me later. And, since his back-story is similar to my own (in his case at Salomon; in my case at Merrill), I love Michael Lewis’s Liar’s Poker.
Here are the replies I got. If I missed you, please provide your five in the comments.
- Kahneman, Slovic & Tversky, Judgment under Uncertainty: Heuristics and Biases. I’ve described this book as having made me feel as if someone had wrenched off the top of my head with a can opener. It showed me a new world and changed my life.
- Bertrand Russell, Skeptical Essays and The Scientific Outlook. Nobody has ever written more simply, elegantly, and compellingly about the importance of critical thinking. From here you can, and should, move on to Russell’s Autobiography (although I don’t recommend Vol. 3).
- Richard Feynman, anything. I especially like What Do You Care What Other People Think? and Surely You’re Joking, Mr. Feynman.
- Darrell Huff, How to Lie with Statistics.
- ‘Adam Smith,’ The Money Game. Probably the best-written book ever done on investing as a business, as a sport, and as a pathology.
- Fred Schwed, Where Are the Customers’ Yachts? Walk into a public place. Open this book to a random page. Begin reading aloud from it. Watch everyone in the room turn to you, listen, and laugh.
- Thomas Wolfe, Look Homeward, Angel. The novel that, when I first read it at age 13, made me want to write for a living. Everyone should have a book that gets into your bones; it doesn’t have to be this one. But if you can’t recite passages by heart decades later, you didn’t read deeply enough.
- The Psychology of Investing (Nofsinger)
- The Little Book of Common Sense Investing (Bogle)
- The Intelligent Investor (Graham) (I know, I know, but really it was)
- Letters from a Stoic (Seneca)
- Thinking Fast & Slow (Kahneman)
- Sapiens by Yuval Noah Harari
- The Alchemist by Paulo Coehlo
- The Gospel According to Larry by Janet Tashjian
- Confessions of an Economic Hitman by John Perkins
- The End of Jobs by Taylor Pearson
Tadas Viskanta (@abnormalreturns), Founder and Editor of Abnormal Returns as well as author of Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere: I have been asked for book recommendations on investing many times. The challenge is that books reach us at different times in our careers and therefore have very different impacts. Therefore, a one-size-fits-all book list is at best an illusion. Accordingly, to answer your Five Books question I have come at it from a bit of a different angle. Despite my interest in narrative non-fiction (think Barbarians at the Gate or The Big Short), I have focused on books that in some way have change my thinking about investing.
For any number of reasons, we read books that often times reinforce ideas we already hold dear. Thus a great book on a known topic is at best a marginal good. However, books that make you think AND change the way you think have a significant impact. Here follows a non-comprehensive list of some books on finance that have changed how I think about investing (in no particular order).
- Market Wizards by Jack Schwager: this book introduced the idea that you can trade (and make money) in the financial markets in a variety of ways. In short, you need to find an approach that works for you.
- Trend Following by Michael Covel: even before momentum became a mainstream topic academic finance Covel had ably covered the trend following waterfront. The challenge with trend following is that it feels somewhat paradoxical. Reading this book will help relieve you of some of that.
- Pioneering Portfolio Management by David Swensen: is a comprehensive look at portfolio management from soup to nuts. I often wonder how many people have tried to ape the Yale University endowment approach without actually having read this book.
- The Success Equation by Michael Mauboussin: we at some level recognize that both skill and luck play some role in our (and other’s) success. Until you read this book you really don’t understand just how much luck plays a role in our lives. Humbling but in a certain sense liberating as well.
- The Intelligent Asset Allocator by William Bernstein: this is Bernstein’s first book and lays out the case for an asset class-centric approach to investing. Two things about Bernstein stand out, one he was one of the first to go online with his writing and second it emphasized the ability of someone not classically trained in finance to have an impact on the field.
- Market Wizards by Jack Schwager
- More Than You Know by Michael J. Mauboussin
- The Wisdom of Insecurity by Alan Watts
- Reminiscences of a Stock Operator by Edwin Lefèvre
- The Fountainhead by Ayn Rand
- The Physics of Wall Street by James Owen Weatherall
- Successful Investing is a Process by Jacques Lussier
- Expected Returns by Antti Ilmanen
- The Success Equation by Michael Mauboussin
- Winning the Loser’s Game by Charles Ellis
- Risk Savvy by Gerd Gigerenzer
- The Science of Fear by Daniel Gardner
- Since Yesterday by Frederick Lewis Allen
- The Rational Optimist by Matt Ridley
- Stocks for the Long Run by Jeremy Siegel
My 5 books that have influenced me the most as an investment professional are (in no particular order):
- The Most Important Thing by Howard Marks
- Expected Returns by Antti Ilmanen
- Simple Wealth, Inevitable Wealth by Nick Murray
- Pioneering Portfolio Management by David Swenson
- More Than You Know by Michael Mauboussin
- The Trusted Advisor by David H. Maister
- Basic Truths for Financial Life Planners by Roy T. Diliberto
- Authentic Leadership by Bill George
- The Elephant in the Room by Ed Baker
- Success and Succession by Eric Hehman
- Evaluating Research by Francis C. Dane
Lauren Foster (@laurenfosternyc): My five choices are unrelated to the field of finance and comprise a rather eclectic selection of books that I’ve read over the past 20 years. Each left its mark on me, whether it was as the “gateway drug” to a genre of writing (biography and historical non-fiction, say, in the case of The Path to Power, or magical realism with Love in the Time of Cholera), the scale of the reporting and research (The Path to Power); the literary skill of the author as well as the material (Country of My Skull, Being Mortal), the visceral response the material and the skill of the narrator (Country of My Skull, which is about the truth and reconciliation commission in post-Apartheid South Africa), or simply the fact that a book stands as the definitive narrative of an era or event in history (in the case of Dispatches, it is the Vietnam war, and it is still has well regarded today as it was when it was first published in 1977. The book has been hailed as “the most brilliant exposition of the cultural dimension of an American war ever compiled”).
In no particular order:
- The Path to Power by Robert E. Caro
- Being Mortal by Atul Gawande
- Country of My Skull by Antje Krog
- Love in the Time of Cholera by Gabriel Garcia Marquez
- Dispatches by Michael Herr
- The Loneliness of the Long-Distance Runner by Alan Sillitoe
- We Wish to Inform You That Tomorrow We Will Be Killed With Our Families by Philip Gourevitch
- Behind the Beautiful Forevers by Katherine Boo
- Atlas Shrugged, by Ayn Rand
- The Power of Now, by Eckhart Tolle
- Getting More, by Stuart Diamond
- Snakes in Suits, by Paul Babiak and Robert D. Hare
- Raving Fans, by Ken Blanchard and Sheldon Bowles
David Goldman (the Laughing Stockbroker):
- On Writing, Stephen King
- Do The Work, Steven Pressfield
- The Intelligent Investor, Benjamin Graham
- Influence, Robert B. Cialdini
- The Big Short, Michael Lewis
Francois Gadenne: Among the hundreds of books that went into the RMA Curriculum over the last 10 years, these are among the few that I read and re-read:
- Incerto by Nassim Taleb (may count for 4 books in your system but he sees them as one coherent work)
- Generations by Howe & Strauss
- The Anatomy of Change by Richard Strozzi-Heckler
- Finite and Infinite Games by James P. Carse
- Models. Behaving.Badly by Emanuel Derman
- The Limits of Arbitrage, Shleifer & Vishny, The Journal of Finance, Vol. 52, No. 1. (March 1997).
- Contrarian Investment, Extrapolation, and Risk, Lakonishok, Shleifer & Vishny, The Journal of Finance, Vol. 49, No. 3. (June 2013).
- Value and Momentum Everywhere, Asness, Moskowitz, and Pedersen, The Journal of Finance, Vol. 68, No. 5. (December 1997).
- A survey of behavioral finance, Barberis and Thaler, from Handbook of the Economics of Finance 1, edited by Constantinides, Harris & Stulz (2003).
- The Intelligent Investor, Benjamin Graham