With the dominance of the Magnificent Seven stocks, the market is in dire need of fresh ideas, and these investing books are a high-quality source of ideas and inspiration in a market that currently is ready-made for going against the tide.
The following reading list includes investment classics, some written decades ago and others more recently. Nearly all of these titles have been read (at least once, many with margin notes) by the chief analyst of the Cabot Turnaround Letter.
11 Investing Books for Your Inner Value Investor
Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism, by Jeff Gramm: Published in 2016, this engaging text 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 at Northern Pipeline to the highly entertaining letter written by Daniel Loeb to Star Gas wondering if the CEO’s 78-year-old mom belongs on the Board of Directors.
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The Snowball: Warren Buffett and the Business of Life, by Alice Schroeder. This 832-page biography is considered the most comprehensive story of the life of one of history’s greatest investors. Remarkably readable, this book offers intimate details of Buffett’s personal and investing life gained through the full access and cooperation that he granted to author and former Wall Street analyst Alice Schroeder, supplemented by facts and stories provided by countless interviews of other key people in Buffett’s life.
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 overestimate 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) 2011 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 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...” and it’s even recommended by the Federal Reserve Bank of Boston.
The Aggressive Conservative Investor, by Martin J. Whitman: Whitman’s classic book draws from his very successful experience as a deep value investor. This text discusses his perspective on being a minority shareholder, how to gauge risk and how to apply his four essential characteristics necessary for investing in a company—all built upon solid business and investing fundamentals that he describes in detail.
The Big Short, by Michael Lewis: One of the best analyses of the 2008 financial meltdown told through the stories of several investors who profited from it. The book is both entertaining and enlightening about the need for a healthy skepticism of Wall Street. The movie by the same title is also well worth the 130 minutes and stars Ryan Gosling, Steve Carell and Christian Bale, with appearances by Brad Pitt, Selena Gomez and Anthony Bourdain.
Reminiscences of a Stock Operator, by Edwin Lefevre: Long believed to be written by the legendary speculator Jesse Livermore in 1923, this book is the story of how speculators manipulated and profited from the stock market in its earlier days. Many of the principles Lefevre uses to pick stocks still echo today in the short-term mindset of Wall Street.
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.
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.
The Intelligent Investor, by Benjamin Graham: The subtitle says it all: “The definitive book on value investing.” Graham’s classic best seller, this text describes the principles of value investing and applies them to selecting securities. It also discusses the concepts of thinking as an owner of a business and the “margin of safety.” This is considered by Warren Buffett to be one of the most important reads in all of investing.
To read more about the investing insights of Benjamin Graham and Warren Buffett, both of whom are cited in this article, we recommend the “Best Warren Buffett Advice: Don’t Be Too Attached to the Outcome,” and “A Short Biography of Benjamin Graham.” You can find more content on value investing here.
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