Five Books

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booksIf 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.

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).

  1. The Black Swan, by Nassim Taleb
  2. Thinking Fast and Slow, by Daniel Kahneman
  3. Ubiquity, by Mark Buchanan
  4. Superforecasting, by Philip Tetlock
  5. 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.

Jason Zweig (@JasonZweigWSJ): I think I named some of these in my post from last year, but you’re asking for a slightly different purpose this time, so I will shoot from the hip and go from memory:

  • 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).
  • ‘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.

 

James Osborne (@BasonAsset):

 

Aaron Watson (@AaronWatson59):

 

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.

 

Michael Covel (@covel):

 

William Bernstein: I prefer Expert Political Judgment (Philip Tetlock) to Superforecasting; a harder read, but much meatier. I also like Asset Management by Andrew Ang.

 

Larry Swedroe (@larryswedroe):

And if can extend my list: Thinking Fast & Slow (Kahneman), Your Money and Your Brain (Zweig) and Expert Political Judgment (Tetlock).

 

Morgan Housel (@TMFHousel):

 

Phil Huber (@prhuber):

My 5 books that have influenced me the most as an investment professional are (in no particular order):

 

Dan Moisand:

 

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:

Honorable mention:

 

Dana Anspach (@moneyover55): My top 5 would be:

 

David Goldman (the Laughing Stockbroker):

 

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:

 

Wes Gray (@alphaarchitect): For me, articles often are the most influential.

 

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