Need some help getting through the dog days of summer and social distancing? Try these classic investing books.
If you’re like me, you love to read a good book. But, not just any book will do. Not one of those saccharine, written-by-formula books that we’ve all been tempted by at a (pre-pandemic) airport bookstore, but real books, written by the top minds in the investing world. Books that engage our minds, that make us think, that show us different perspectives, and make us better investors.
Below are some of my favorite investing books (I’ve read all of them). The list includes some classics that were written long ago but are still remarkably relevant for investors of all types today.
8 Classic – and Entertaining – Investing Books to Read
Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism, by Jeff Gramm: Published in 2016, this engaging book recounts several of the more colorful shareholder efforts to change bad management practices. Each chapter is based on an actual letter written by an activist investor, starting with Benjamin Graham’s comparatively genteel pressure on Northern Pipeline to the highly entertaining letter written by Daniel Loeb to Star Gas wondering whether the CEO’s 78-year-old mother belongs on the Board of Directors.
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Reminiscences of a Stock Operator, by Edwin Lefèvre: Although it was first published almost a century ago, this book inspired generations of investors. You may find some roots of your own trading philosophy in this book about Jesse Livermore, a trader who emerged in the late 1800s to make a fortune trading stocks. This book, which my colleague Mike Cintolo frequently references, is often listed as among the most entertaining and informative investment books ever published.
Security Analysis, by Benjamin Graham and David Dodd: One of the most influential books on investing and originally published in 1934, it describes the timeless value investing concepts and methods of Benjamin Graham, the “father of value investing.” This read is considered the foundation for Warren Buffett’s success and recent editions include commentary by some of today’s most successful investors.
Fooled by Randomness, by Nassim Nicholas Taleb: The author, once considered an investment heretic but now thought of as a genius and the essence of mainstream, uses stories and anecdotes to illustrate how the world is much more random than we believe. He describes how human nature leads us to over-estimate causality, which is often followed by our mistakes. This book opens the reader’s mind to a view of the world that is frequently hidden.
The Most Important Thing, by Howard Marks: Warren Buffett’s quote on the title, “This is that rarity, a useful book” conveys the merits of this highly-readable and brief (180 pages) book on thoughtful investing. Marks discusses how to define, recognize and control risk, and comments on contrarianism, finding bargains and “knowing what you don’t know.” Marks co-founded and runs Oaktree Capital Management and is widely considered one of the today’s icons of value investing.
Against the Gods, by Peter L. Bernstein: Peter Bernstein was one of the most insightful writers of our time. His book provides a comprehensive history of man’s efforts to understand risk and probability, beginning with early gamblers in ancient Greece, continuing through the 17th-century French mathematicians Pascal and Fermat and up to modern theory. Barron’s describes the book as “an extremely readable history of risk.…”
Lords of Finance: The Bankers Who Broke the World, by Liaquat Ahamed: This text tells the story of how four central bankers once dominated the world of finance in the early 1900s. Not only does Ahamed provide fascinating insight into their personalities, he also illustrates how these men were all too human, using tools and methods they believed were effective, yet they were unable to prevent the financial crises that plausibly led to World War II. Highly readable, this book remains relevant in our own time as central bankers continue their experiments with global monetary policy.
Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor, by Seth A. Klarman: Considered one of the most insightful books on value investing, Klarman’s book describes the foundations of his philosophy that led him to become one of the most successful (and unheard of) value investors. Klarman still oversees the $27 billion in assets Baupost Group. This out-of-print investing book on “buying low” ironically sells for $1,194 on Amazon, but probably is worth the price.
Bruce has more than 25 years of value investing experience, managing institutional portfolios, mutual funds, and private client accounts. He has led two successful investment platform turnarounds, co-founded an investment management firm, and was principal of a $3 billion (AUM) employee-owned investment management company. Now he is helping his Cabot Undervalued Stocks Advisor readers find those undervalued stocks that let you buy low and sell high!Learn More >>