Investing Reading List

I am a big proponent of not reinventing the wheel and that means learning about those who have previously mastered the art of investing. I am often asked who I think these masters are and for a list of books about them. After sending individual emails and paper lists to people through the years, I finanlly decided to put it up somewhere permanent and I have done my best to break them up into relevant sections, give short descriptions and reasons why you should read them.

Sections

Essentials

If you only read 4 books about investing, these are the ones to read. Intelligent Investor is a classic of value investing, Reminiscences of a Stock Operator is a classic of trading, Common Stocks and Uncommon Profits is the classic of growth investing and it can't hurt to also learn straight from Warren Buffett who is one of the greatest investors of all time.

The Intelligent Investor

Publisher Description: The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham's philosophy of "value investing" -- which shields investors from substantial error and teaches them to develop long-term strategies -- has made The Intelligent Investor the stock market bible ever since its original publication in 1949.
Why Read this Book: The more accessible of Graham's seminal value investing books (the other being Security Analysis), The Intelligent Investor is a clearly writen, concise and level-headed introduction to value investing.
Useful Topics Introduced
  • Draws a distinct line between investing and speculation, where investment requires both safety of principal and adequate return, while speculation does not adequately protect principal.
  • Ownership of equity should be regarded first and foremost as a share of ownership of a business.
  • Stock owner should not be concerned what Mr. Market believes in the short-term as true value in the long run will be reflected in its stock price
  • When a company is available on the market at a price which is a discount to its intrinsic value, a "margin of safety" exists, which makes it suitable for investment.

Reminiscences of a Stock Operator

Publisher Description: Reminiscences of a Stock Operator is the fictionalized biography of perhaps the most famous financial speculator of all time-Jesse Livermore. This annotated edition bridges the gap between Edwin Lefevre's fictionalized account of Livermore's life and the actual, historical events, places, and people that populate the book. It also describes the variety of trading approaches Livermore used throughout his life and analyzes his psychological development as a trader and the lessons gained through hard experiences.
Why Read this Book: The story of Jesse Livermore's progression from day trading, to market speculator, market maker and finally to Wall Street where he made and lost his fortune several times over. Well before behavioural economics was invented, Livermore learned the lessons of the psychology and behaviour of traders and shared them with readers.
Useful Topics Introduced
  • "It never was my thinking that made the big money for me. It always was my sitting."
  • "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."
  • "Of course there is always a reason for fluctuations, but what the tape does not concern itself with the why and wherefore. It doesn't go into explanations. The reason for what a certain stock does today may not be known for two or three days, or weeks, or months. But what the dickens does that matter? Your business with the tape is now - not tomorrow. The reason can wait. But you must act instantly or be left."
  • "A stock operator has to fight a lot expensive enemies within himself."
  • "I never argue with the tape. Getting sore at the market doesn't get you anywhere."
  • "The game of speculation isn't all mathematics or set rules, however rigid the main laws may be."

Common Stocks and Uncommon Profits

Publisher Description: Widely respected and admired, Philip Fisher is among the most influential investors of all time. His investment philosophies, introduced almost forty years ago, are not only studied and applied by today's financiers and investors, but are also regarded by many as gospel. This book is invaluable reading and has been since it was first published in 1958.
Why Read this Book: The pioneer in growth investing, the book lays how to buy great growing companies at a reasonable cost. His method for determining if a company is a good growth investment can be stated as a 15 point checklist.
Fisher's 15 Points Checklist
  1. Is there sufficient market potential to increase sales?
  2. Is management developing new products or processes?
  3. How efficient is the R&D effort?
  4. Is there an above average sales organization?
  5. Does the company have a high profit margin?
  6. Is the profit margin improving?
  7. Does the company have stable labor relations?
  8. Does the company have stable executive relations?
  9. Does the company have a deep bench of experienced managers?
  10. Are the companies cost and audit controls sufficient?
  11. Are there peculiar industry conditions involved?
  12. Does the company take a short or long term view?
  13. Does continued growth require additional capital raising?
  14. Is management transparent to investors?
  15. Can management be trusted?

Berkshire Hathaway Letters to Shareholders

Publisher Description: There are hundreds of books about Buffett's life, advice, and methods. These are his actual letters -- word for word -- a "lesson plan" of his views on business and investing. You can find most of the letters for free on Berkshire's website, but this compiles them into a well-designed, easily readable format.
Why Read this Book:

There are a couple of reasons to read this book:

  • He is one of the greatest investors of all time, with a compounded annual return of 19.7% from 1965 to today.
  • While he started out as a straight value investor in the mold of Graham, overtime he amends his investing philosophy to also look at exceptional companies at a reasonable price.
  • By reading 47 years of annual reports annual reports you get a sense of how much has changed since 1965 in business and investing, as well as what hasn't.
  • Lots of folksy wisdom, "You don't see who is swimming naked until the tide goes out"
  • He's now the second richest man in the world, and the richest takes a great deal of investment advice from him

Value Investing

You Can Be A Stock Market Genius

Publisher Description: Fund manager Joel Greenblatt has been beating the Dow (with returns of 50 percent a year) for more than a decade. And now, in this highly accessible guide, he's going to show you how to do it, too. You're about to discover investment opportunities that portfolio managers, business-school professors, and top investment experts regularly miss -- uncharted areas where the individual investor has a huge advantage over the Wall Street wizards.
Why Read this Book:

The Most Important Thing Illuminated

Publisher Description: Informed by a lifetime of experience and study, Marks helps readers understand the keys to investment success and how to avoid the pitfalls that can destroy capital or ruin a career. Utilizing passages from his memos to illustrate his ideas, he teaches by example. Part memoir, part creed, the book shows the development of an investment philosophy that fully acknowledges the complexities of investing and the perils of the financial world. Marks's insight applies brilliantly to today's markets, supplying many broad takeaways for both the amateur and seasoned investor.
Why Read this Book:

Margin of Safety

Publisher Description: Taking its title from Benjamin Graham's often-repeated admonition to invest always with a margin of safety, Klarman's 'Margin of Safety' explains the philosophy of value investing, and perhaps more importantly, the logic behind it, demonstrating why it succeeds while other approaches fail. The blueprint that Klarman offers, if carefully followed, offers the investor the strong possibility of investment success with limited risk.
Why Read this Book:

The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

Publisher Description: Written by Morningstar's Director of Stock Analysis, Pat Dorsey, The Five Rules for Successful Stock Investing includes unparalleled stock research and investment strategies covering a wide range of stock-related topics. Investors will profit from such tips as: How to dig into a financial statement and find hidden gold . . . and deception, How to find great companies that will create shareholder wealth and How to analyze every corner of the market, from banks to health care
Why Read this Book:

Growth/Momentum Investing

Beat the Market: A Scientific Stock Market System

Publisher Description: The book offers step-by-step instructions, with explanatory, charts and tables, whereby anyone with 2000.00$ brokerage account can conduct his own investment program. Details are given of actual investments made by the authors, one of whom more then doubled $100,000 in five years.
Why Read this Book:

One Up On Wall Street

Publisher Description: The former star manager of Fidelity's multibillion-dollar Magellan Fund, Lynch reveals how he achieved his spectacular record. Writing with John Rothchild, Lynch offers easy-to-follow directions for sorting out the long shots from the no shots by reviewing a company's financial statements and by identifying which numbers really count. He explains how to stalk tenbaggers and lays out the guidelines for investing in cyclical, turnaround, and fast-growing companies.
Why Read this Book:

How to Make Money in Stocks: A Winning System in Good Times and Bad

Publisher Description: Through every type of market, William J. O’Neil’s national bestseller, How to MakeMoney in Stocks, has shown over 2 million investors the secrets to building wealth.O’Neil’s powerful CAN SLIM® Investing System—a proven 7-step process for minimizingrisk and maximizing gains—has influenced generations of investors.
Why Read this Book:

Systematic Investing

What Works on Wall Street

Publisher Description: What Works on Wall Street continues to provide the most effective investing strategies, presenting incontrovertible data on what works and what doesn’t.What Works on Wall Street offers data on almost 90 years of market performance, including: Stocks ranked by market capitalization, Price-to-earnings ratios, EBITDA to enterprise value, Price-to-cash flow, sales, book ratios, Dividend, buyback, and shareholder yields, One-year earnings-per-share percentage changes
Why Read this Book:

Quantitative Value

Publisher Description: Quantitative Value provides practical insights into an investment strategy that links the fundamental value investing philosophy of Warren Buffett with the quantitative value approach of Ed Thorp. It skillfully combines the best of Buffett and Ed Thorp--weaving their investment philosophies into a winning, market-beating investment strategy.
Why Read this Book:

Finding #1 Stocks: Screening, Backtesting and Time-Proven Strategies

Publisher Description: Based on Zacks Research Wizard product, this book provides you with market beating stock selection techniques and advice on how to build your own stock selection system. This practical guide discloses several trading methods that have outperformed the market for a long period of time and shows you how to screen stocks and develop selection criteria to build various types of stock portfolios, such as aggressive growth; growth and income; momentum; and value.
Why Read this Book:

Quantitative Strategies for Achieving Alpha

Publisher Description: Based on Zacks Research Wizard product, this book provides you with market beating stock selection techniques and advice on how to build your own stock selection system. This practical guide discloses several trading methods that have outperformed the market for a long period of time and shows you how to screen stocks and develop selection criteria to build various types of stock portfolios, such as aggressive growth; growth and income; momentum; and value.
Why Read this Book:

Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals

Publisher Description: Evidence-Based Technical Analysis examines how you can apply the scientific method, and recently developed statistical tests, to determine the true effectiveness of technical trading signals. Throughout the book, expert David Aronson provides you with comprehensive coverage of this new methodology, which is specifically designed for evaluating the performance of rules/signals that are discovered by data mining.
Why Read this Book:

Investor Biographies

The Value Investors: Lessons from the World's Top Fund Managers

Publisher Description: In an attempt to understand exactly what kind of temperament Buffett was talking about, Ronald W. Chan interviewed 12 value-investing legends from around the world, learning how their personal background, culture, and life experiences have shaped their investment mindset and strategy. The Value Investors: Lessons from the World’s Top Fund Managers is the result.
Why Read this Book:

Market Wizards: Interviews with Top Traders

Publisher Description: In an attempt to understand exactly what kind of temperament Buffett was talking about, Ronald W. Chan interviewed 12 value-investing legends from around the world, learning how their personal background, culture, and life experiences have shaped their investment mindset and strategy. The Value Investors: Lessons from the World’s Top Fund Managers is the result.
Why Read this Book:

Hedge Fund Market Wizards: How Winning Traders Win

Publisher Description: Exploring what makes a great trader a great trader, Hedge Fund Market Wizards breaks new ground, giving readers rare insight into the trading philosophy and successful methods employed by some of the most profitable individuals in the hedge fund business. Includes interviews with Jamie Mai, Joel Greenblatt, Michael Platt, Ray Dalio, Colm O’Shea, Ed Thorp, and many more.
Why Read this Book:

Behavioural Economics

Thinking Fast and Slow

Publisher Description: Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation—each of these can be understood only by knowing how the two systems shape our judgments and decisions.
Why Read this Book:

The Winner's Curse

Publisher Description: Richard Thaler challenges the received economic wisdom by revealing many of the paradoxes that abound even in the most painstakingly constructed transactions. He presents literate, challenging, and often funny examples of such anomalies as why the winners at auctions are often the real losers—they pay too much and suffer the "winner's curse"—why gamblers bet on long shots at the end of a losing day, why shoppers will save on one appliance only to pass up the identical savings on another, and why sports fans who wouldn't pay more than $200 for a Super Bowl ticket wouldn't sell one they own for less than $400. He also demonstrates that markets do not always operate with the traplike efficiency we impute to them.
Why Read this Book:

How We Know What Isn't So

Publisher Description: When can we trust what we believe—that "teams and players have winning streaks," that "flattery works," or that "the more people who agree, the more likely they are to be right"—and when are such beliefs suspect? Thomas Gilovich offers a guide to the fallacy of the obvious in everyday life. Illustrating his points with examples, and supporting them with the latest research findings, he documents the cognitive, social, and motivational processes that distort our thoughts, beliefs, judgments and decisions. In a rapidly changing world, the biases and stereotypes that help us process an overload of complex information inevitably distort what we would like to believe is reality. Awareness of our propensity to make these systematic errors, Gilovich argues, is the first step to more effective analysis and action.
Why Read this Book:

Behavioural Technical Analysis: An introduction to behavioural finance and its role in technical analysis

Publisher Description: This book provides an introduction to the six main areas of behavioural finance: dealing with complexity; how humans perceive what is around them; sense of self; aversion to risk; the impact of society and crowds; and gender. An overview is given in each case and for each key concept details are provided about how it can affect the work of technical analysts.
Why Read this Book:

Bubbles

Extraordinary Popular Delusions and The Madness of Crowds

Publisher Description: Extraordinary Popular Delusions and the Madness of Crowds is a history of popular folly by Scottish journalist Charles Mackay, first published in 1841. The book chronicles its subjects in three parts: "National Delusions", "Peculiar Follies", and "Philosophical Delusions". Despite its journalistic and rather sensational style, the book has gathered a body of academic support as a work of considerable importance in the history of social psychology and psychopathology.
Why Read this Book:

Manias, Panics and Crashes: A History of Financial Crises

Publisher Description: Manias, Panics and Crashes, is a scholarly and entertaining account of the way that mismanagement of money and credit has led to financial explosions over the centuries. Covering such topics as the history and anatomy of crises, speculative manias, and the lender of last resort, this book has been hailed as 'a true classic...both timely and timeless
Why Read this Book:

Antifragile

Publisher Description: In The Black Swan, Taleb showed us that highly improbable and unpredictable events underlie almost everything about our world. In Antifragile, Taleb stands uncertainty on its head, making it desirable, even necessary, and proposes that things be built in an antifragile manner. The antifragile is beyond the resilient or robust. The resilient resists shocks and stays the same; the antifragile gets better and better.
Why Read this Book:

Stabilizing an Unstable Economy

Publisher Description: In The Black Swan, Taleb showed us that highly improbable and unpredictable events underlie almost everything about our world. In Antifragile, Taleb stands uncertainty on its head, making it desirable, even necessary, and proposes that things be built in an antifragile manner. The antifragile is beyond the resilient or robust. The resilient resists shocks and stays the same; the antifragile gets better and better.
Why Read this Book:

Why Stock Markets Crash: Critical Events in Complex Financial Systems

Publisher Description: In this book, Didier Sornette boldly applies his varied experience in these areas to propose a simple, powerful, and general theory of how, why, and when stock markets crash.
Why Read this Book:

The Alchemy of Finance

Publisher Description: Alchemy of Finance, Soros presents a theoretical and practical account of current financial trends and a new paradigm by which to understand the financial market today. This edition's expanded and revised Introduction details Soros's innovative investment practices along with his views of the world and world order. He also describes a new paradigm for the "theory of reflexivity" which underlies his unique investment strategies. Filled with expert advice and valuable business lessons, The Alchemy of Finance reveals the timeless principles of an investing legend.
Why Read this Book:

Financial Statement Analysis

Financial Intelligence: A Manager's Guide to Knowing What the Numbers Really Mean

Publisher Description: In Financial Intelligence, Karen Berman and Joe Knight teach the basics of finance--but with a twist. Financial reporting, they argue, is as much art as science. Because nobody can quantify everything, accountants always rely on estimates, assumptions, and judgment calls. Savvy managers need to know how those sources of possible bias can affect the financials and that sometimes the numbers can be challenged. While providing the foundation for a deep understanding of the financial side of business, the book also arms managers with practical strategies for improving their companies' performance--strategies, such as "managing the balance sheet," that are well understood by financial professionals but rarely shared with their nonfinancial colleagues.
Why Read this Book:

Financial Shenanigans

Publisher Description: Referred to as the “Sherlock Holmes of Accounting“ by Business Week, Howard Schilit and renowned forensic accounting expert Jeremy Perler take you deeper into the corporate bag of tricks, exposing new levels of accounting gimmickry and arming you with the investigative tools you need to detect.
Why Read this Book:
By Jon Eickmeier