If you want to become a good investor the best way is to learn as much as you can about economics, the financial markets, and the world in general. This article will highlight some of the best books you can read to become a better and more informed investor. They are books you should highlight, and make notes in the margins of – really make the most of them, and turn back to them as you develop as an investor or trader.
Top 10 Investing and Trading Books
1) The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks (Investing)
2) The Alchemy of Finance by George Soros (Trading)
3) Market Wizards: Interviews with Top Traders by Jack Schwager (Trading)
4) Reminiscences of a Stock Operator by Edwin Lefevre (Trading)
5) The Intelligent Investor by Benjamin Graham (Value Investing)
6) Security Analysis by Benjamin Graham (Value Investing)
7) All About Commodities by Tom Taulli (Commodity Investing)
8) Margin of Safety by Seth Klarman (Value Investing)
9) This Time Is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff (Business Cycle History)
10) Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay (Business Cycle History)
A Full List of Investing & Trading Book Recommendations
1) The Intelligent Investor by Benjamin Graham
Benjamin Graham’s 1949 classic is based on the investment strategy of buying undervalued securities to minimize potential losses. This is the #1 recommended book for value investors, and Benjamin Graham was actually a mentor to Warren Buffet who many people consider the best investor ever. The Intelligent Investor has been helping readers develop a smart, defensive investment strategy for decades.
2) Security Analysis by Benjamin Graham & David Dodd
This classic investing book is considered the classic textbook on value investing. It’s not as popular as The Intelligent Investor because it’s more technical and less accessible to a beginner, but the book is more in depth and can teach more about analyzing individual stocks. This is the book that gave the name to value investing, and was published 15 years before the Intelligent Investor in 1934.
3) Common Stocks and Uncommon Profits by Philip Fisher
In Common Stocks and Uncommon Profits Philip Fisher shares his framework for choosing stock investments. This goes deeper than simply reading the financial statements, and things like the company’s labor relations, an above average sales team, and a high integrity of management. This is all part of what Fisher has termed “scuttlebutt” analysis, collecting information from a wide range of sources to analyze a company.
4) Against the Gods: The Remarkable Story of Risk by Peter L. BernsteinIn Against The Gods, Peter Bernstein explores the history of risk and the role in plays in the world we live in. It is a deep dive into the development of risk management ideas and tools that have been used by gamblers, insurance actuaries, and professional finance. It provides a great perspective for investors trying to understand the often misunderstood topic of risk management.
5) This Time Is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff
“This Time Is Different” is the phrase people always use when the financial and economic system has accumulated excesses and is at risk of exploding. Reinhart and Rogoff explore eight centuries of financial crises and discover that they are an ordinary occurrence for both emerging market and developing economies. An important book for people that want to understand and avoid the risk of investing in speculative bubbles.
6) Incerto: Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile by Nassim Nicholas TalebIncerto is a collection of writings from Nassim Nicholas Taleb that include Fooled by Randomness, The Black Swan, Antifragile, and The Bed of Procrustes. Taleb is a former trader, a professor, and a risk-management professional. His books provide an incredibly unique perspective on risk, randomness, unpredictable events, and the mistakes we make in quantifying and attempting to measure risk and reward.
7) Irrational Exuberance by Robert J. Shiller
Robert Shiller, a Nobel winning economist that predicted the bubbles in both technology and housing explains how since the financial crisis, risk taking and irrational exuberance in investing has only increased. Shiller outlines the issues and also suggest policy action to improve the situation and decrease systemic risks. Another great risk management book to help protect you from downside risks.
8) Reminiscences of a Stock Operator by Edwin Lefevre
Edwin Lefevre’s Reminiscences of a Stock Operator is a biography of Jesse Livermore, one of the greatest traders in the history of Wall Street. This book was published in 1923 and is one of the most widely read books about finance, and still provides timeless wisdom for both speculators and investors. Although the book chronicle’s Livermore’s history of speculation, it will help still help long-term investors understand the financial markets from a different perspective.
9) The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks
Howards Marks of Oaktree Capital Management is one of the most successful value investors alive. The Most Important Thing is focused on defensive, value investing, and avoiding costly mistakes in the financial markets. Marks has unique investment insights based on his style of investing based on patience, understanding market cycles, and value investing with an element of contrarianism.
10) Market Wizards: Interviews with Top Traders by by Jack D. Schwager
This is a must read book for traders and investors that want to understand the different styles of people trading and investing in the financial markets. Jack Schwager interviews some of the most successful traders in the world to understand the trading methodology and psychology that make them successful.
11) The Alchemy of Finance by George Soros
George Soros’ The Alchemy of Finance explains the trading framework and ideas that helped him become one of the most successful money managers of all time. It highlights his idea of reflexivivity in the financial markets and includes a real time experiment in the 2nd half of the book where he shows his trades, rational behind them, and his profits and losses on a weekly basis. A must read book for anyone interested in global macro investing.
Jim Rogers was George Soros’ partner at the Quantum Fund, and is one of the best investors of all time. He has more of a long term perspective on investing than Soros and makes a wide variety of investments including emerging markets, precious metals, commodities, etc. Jim Rogers wrote Hot Commodities in 2004 and it outlines the basics of investing in commodities with the unique perspective on global markets that Rogers has.
This is one of the best introductory books on technical analysis, a form of trading analysis that studies market data including price and volume to understand market trends. Technical Analysis is not gospel, but with a solid understanding of markets and what past data can help you understand, technical analysis can help you make trading and investment decisions.
John Bogle was the founder of Vanguard group and created the world’s first index mutual fund. Bogle is an evangelist of passive index investing, he believed that owning a diversified portfolio over the long-term is a winning strategy in the financial markets. Owning a wide variety of investments helps to increase the chances you have a winning stock in your portfolio, and paying low fees helps you to keep more of the stock market’s gains.
15) Quality of Earnings by Thornton L. O’Glove
Thomas O’Glove’s Quality of Earnings is an book about corporate accounting with regards to common stock investments that is accessible for retail investors. A company’s financial statements are one of the most important (arguably the most important) factor when analyzing a company to invest in. Every investor should have at least a basic understanding of accounting, and if you invest in individual stocks you need to be able to read and understand financial statements.
16) Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor by Seth Klarman
Seth Klarman is one of the most successful contemporary value investors, and Margin of Safety is an absolute must read for any long-term value investors. The only issue is that this cult classic is very difficult to buy since it is out of print, although there are other ways of finding a copy if you look for it. This book focuses on safe investing strategies where investments are made in securities which have an intrinsic value above the market price, which creates a margin of safety.
17) Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports by Howard Schilit
Financial Shenanigans is a recommended read book for investors with a bias towards value-investing and stock picking. To fully understand this book you will probably need at least an solid understanding of accounting, it may not be accessible for the average retail investor. However for an investor with an interest in accounting and understanding the financials of companies this is a top recommendation.
18) Booms and Depressions: Some First Principles by Irving Fisher
Irving Fisher wrote Booms and Depressions in 1932 as an analysis of the factors that caused an exacerbated the effect of the great depression. This book should be accessible to the lay reader and retail investor, and provides an excellent explanation of the effect of debt deflation on the financial system from 1929 to 1932.
19) Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay
Charles Mackay’s Extraordinary Populary Delusions and the Madness of Crowds is a chronicle of popular delusions from the infamous Dutch tulip mania, to the witch hunts, to the 1840s railway mania. This book delves deep into various delusions and speculative manias, and is a great book for a reader seeking to understand the psychology behind asset price bubbles and other crazes.
20) Aftermath: Seven Secrets for Protecting Your Wealth in the Coming Chaos by Jim Rickards
Jim Rickards‘s Aftermath is a great food for thought about the state of the global financial system. Jim is incredibly knowledgeable about the global financial system, he was the legal council for the hedge fund Long Term Capital Management, served as a facilitator for the Pentagon’s first ever financial war games simulation, and he testified before the U.S. House Science Subcommittee on Oversight about the 2008 financial crisis. Aftermath is a book with very unique insights, and I recommend all investors at least consider his opinion because of his wealth of knowledge and experience.