What kind of investor are you?
Do you like to pick stocks or would you rather own index funds?
Are you drawn to technical work or do you prefer a great story?
Does history excite you or are you obsessed with what is happening right now?
Depending on how you answer these questions will affect what kind of investing books you might find most appealing. Unfortunately most articles on the “best investing books” don’t provide any such differentiation.
For this reason, I have compiled a list of the best investing books based on where you are on your investment journey. The list is a starting point for further exploration and should include a little something for everyone to enjoy.
If you are brand new to the world of investing, then you should focus on learning foundational theory while also getting broad exposure to the investment world. The books in this section will give that exposure while also providing investing frameworks that you can refer back to for the rest of your life.
[Author’s Note: If you are not in a place financially where you have extra money to invest, then I’d recommend starting with Dave Ramsey’s Total Money Makeover or Ramit Sethi’s I Will Teach You to Be Rich to improve your personal finances first. The investment advice contained in the books below will be far more useful when you can actually apply it.]
The Four Pillars of Investing by William Bernstein
The Four Pillars of Investing is my favorite introductory investment book because it provides in-depth coverage of the theory, history, psychology, and business of investing (hint hint: the four pillars). Yes, this book is slightly more technical than other popular books on investing, but it needs to be! If you want to have a great foundational understanding of investing, this is the book to read.
A Wealth of Common Sense by Ben Carlson
A Wealth of Common Sense is probably the most comprehensive book on investing that I have ever read. It covers history, human behavior, asset allocation, market myths, and much, much more. It’s no wonder why I highlighted 48 separate sections in my Kindle (the most of any investment book I have read). Yes, Ben Carlson is one of my colleagues, but I first read his book back in 2016 (before we met) and I have been recommending it to friends ever since.
The Essays of Warren Buffett by Lawrence A. Cunningham
If you want the wisdom of Warren Buffett without reading every one of his Berkshire Hathaway letters to shareholders, then The Essays of Warren Buffett is the book for you. Packed with decades of wit and wisdom from the world’s most famous investor, this collection makes the Oracle of Omaha accessible to everyone, especially new investors. Even if you don’t care to pick individual stocks, Buffett’s writings are foundational for all investors.
For Stock Pickers/Traders
Assuming that you have read a little of Buffett and want to go deeper into the world of stock picking, the books in this section will provide the necessary financial and psychological frameworks to do so.
The Intelligent Investor by Benjamin Graham
No list of best investment books is complete without The Intelligent Investor by Benjamin Graham. Though the investment world has changed considerably since Graham’s time, reading the foundational work on value investing is essential to the future of any would-be stock picker. Graham’s ability to separate the act of investment from the act of speculation is one that will stand the test of time. If you found this work helpful, consider reading Security Analysis by Graham and David Dodd for a more technical analysis of the topic.
Reminiscences of a Stock Operator by Edwin Lefevre
Considered to be the best book on stock trading ever written, Reminiscences of a Stock Operator follows the life and times of one of the most famous traders in history, Jesse Livermore. Livermore, who made and lost a fortune multiple times in the 1920s and 1930s, provides timeless lessons on the psychology of trading that would benefit every investor. Even if you don’t consider yourself a trader, the advice provided in this book may one day save you from yourself.
What I Learned Losing a Million Dollars by Jim Paul & Brendan Moynihan
What I Learned Losing a Million Dollars is my favorite book ever written on the psychology of investing because it highlights how your ego can get in the way of making good investment decisions. More importantly, it teaches this lesson through an entertaining story. The story in this case involves one of the book’s authors (Jim Paul) who loses over $1 million after a series of poor financial choices. The book analyzes these choices in depth and then concludes that while there are many ways to make money, there are only a few ways to lose it.
If you enjoy this book, you may also like Why You Win or Lose: The Psychology of Speculation by Fred C. Kelly for another examination on the psychology of investing.
You Can Be a Stock Market Genius by Joel Greenblatt
Despite the cheesy title, You Can Be a Stock Market Genius was incredibly useful book when I first was learning about stock picking. Some of the methods that Greenblatt recommends likely no longer work in today’s markets, but the level of detail that he includes in this book make for an intriguing read. If you want a more introductory view of Greenblatt’s investment style, check out The Little Book That Beats the Market before diving into this material.
One Up on Wall Street by Peter Lynch
In a similar vein as Greenblatt, Peter Lynch’s One Up on Wall Street is another classic among stock pickers the world over. Lynch, who is most known for his exceptional performance while managing Fidelity’s Magellan fund, makes the case that you should “invest in what you know” because you can pick up on emerging trends before Wall Street does.
If you enjoyed Lynch’s work you may also enjoy the investment classic Common Stocks and Uncommon Profits by Philip A. Fisher. Unfortunately, I never got the chance to read Fisher’s work because by the time I had heard about it, I had already left the world of stock picking behind.
For Indexers/Asset Allocators
If you don’t want to take the time to pick individual stocks (or you don’t think you can do it well), then being an indexer might be right for you. This section contains books that would be most useful to those who believe in indexing as an investment philosophy. For this reason, this section is ultimately a guide to asset allocation.
A Random Walk Down Wall Street by Burton Malkiel
This book, along with The Little Book of Common Sense Investing by the late Jack Bogle, helped to popularize the index fund revolution that has taken place among retail investors over the past few decades. Yes, the message of the book is simple (“buy index funds”), but for those who haven’t heard the argument before (or who haven’t heard it argued well), then this is the book for you.
The Intelligent Asset Allocator by William Bernstein
The Intelligent Asset Allocator by William Bernstein opened my eyes to the wonders of asset allocation and why it is one of the only “free lunches” in investing. With this book you will be able to better understand the nuance of risk and return and why asset allocation is the most important tool in an investor’s toolkit.
Global Asset Allocation by Meb Faber
If you want a sampling of the world’s most popular asset allocation strategies, then consider Meb Faber’s Global Asset Allocation. This short, easy read will provide a standard framework for thinking about asset allocation before showing you exactly how many of the world’s top money managers allocate their money. My favorite part of the book is actually the ending where Faber compares the performances of these different strategies and comes to a surprising conclusion. Read it to learn more.
If reading about the nuances of asset allocation make your eyes glaze over, then maybe you need an investment book with a little more excitement. This is where the entertainment section comes along. All of the books in this section are some of the most entertaining reads in all of finance.
Liar’s Poker by Michael Lewis
Michael Lewis is known for his many books, some of which have since graced the silver screen. Whether it be The Big Short, Moneyball, or Flash Boys, there is no shortage of entertainment in his body of work. However, the book that started it all was Liar’s Poker. Set in 1980s Wall Street, this classic takes you inside the wild world of bond trading at Salomon Brothers. A book that is part history and part thriller, Liar’s Poker is a tale that should be required reading for all investors.
Black Edge by Sheelah Kolhatkar
If you ever wanted to know more about insider trading and how some of the richest people on Wall Street have gotten away with it, then Black Edge is the book for you. Kolhatkar’s work provides a glimpse into the world of high finance and how information is traded for profit. Besides shining a light on Wall Street’s dark information underbelly, the book also chronicles the quest to take down one of the most successful hedge fund managers of all time.
If you liked this book, also check out More Money Than God by Sebastian Mallaby for a similarly intriguing look into the history of hedge funds.
The Devil’s Financial Dictionary by Jason Zweig
Unlike the others in this section, The Devil’s Financial Dictionary doesn’t tell a story, but, rather, provides a useful reference guide on the actual definitions of some of Wall Street’s most used terms. Yes, this is a dictionary, but unlike any you have ever read before. One of my favorite lines reads, “I put two children through Harvard by trading options. Unfortunately, they were my broker’s children.” Pick this up if you want a good laugh and don’t mind learning a few things along the way.
Where are the Customers’ Yachts? by Fred Schwed
Despite being originally published in 1940, Where are the Customers’ Yachts? is as true today as it was then. As the saying goes, the players have changed, but the game remains the same. This book is a fun, yet informative read on the underlying motivations and behaviors of many of those who have worked on Wall Street through the ages.
The Money Game by Adam Smith (pseudonym)
Despite being written under the pseudonym “Adam Smith”, there is nothing fake about the many investment lessons in The Money Game. Smith (aka George Goodman) writes about financial markets in a way that is uniquely informative and entertaining. While the material in this book is a bit dated, it also contains more timeless quotes on investing than any other book I have read.
For History Lovers
If you are someone who believes that “this time is different,” then you may want to consider some of the books in the following section. Not only is history intriguing in its own right, but financial history has some additional appeal because of what hasn’t changed over the centuries. As Jesse Livermore once said, “I learned early that 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.”
Devil Take the Hindmost by Edward Chancellor
If you ever wanted a history of market bubbles, look no further than Devil Take the Hindmost. Easily my favorite book on financial history because it is packed with so many peculiar and interesting details about every major asset bubble in the past few centuries. If you think human nature has changed in the last few hundred years, this book provides compelling evidence to the contrary.
Against the Gods by Peter L. Bernstein
In Against the Gods Peter L. Bernstein recounts the fascinating history of risk starting from simple games of chance and progressing to modern financial markets. His work illustrates that writing about probability and statistics can be both entertaining and informative at the same time. I particularly liked this book because of how much it transformed my view of risk. With that being said, if you want to learn from one of the greatest financial writers of all time, Against the Gods is a good place to start.
Hetty by Charles Slack
Most of the books on this list are centered around men, but, in Hetty, the richest woman in Wall Street history takes center stage. Hetty Green was a titan of the Gilded Age alongside the likes of John D. Rockefeller, Andrew Carnegie, and J.P. Morgan. And I don’t make that comparison lightly. Hetty was a real powerhouse. She bailed out New York City not once, but twice during her life and died worth $100 million in 1916, placing her in top 40 richest Americans ever. If you want to get the history of the Gilded Age while also learning about the richest woman in Wall Street history, then Hetty is the place to turn.
The Great Depression: A Diary by Benjamin Roth
Have you ever wondered what it was actually like to live during the Great Depression? In The Great Depression: A Diary, Benjamin Roth provides the answer. This fantastic work is a primary source material to one of the darkest times in American economic history. What’s more interesting is that Roth provides a side-by-side reflection on what was happening in the stock market as the Depression deepened. If there ever was a piece of evidence illustrating that the stock market is not the economy, this is it.
Wealth, War & Wisdom by Barton Biggs
If you like WWII history and the stock market, then consider Wealth, War & Wisdom by Barton Biggs. Biggs does a great job of illustrating how quickly global stock markets priced in new information during the war while also dispensing investment advice along the way. My favorite part of the book is the conclusion where Biggs discusses how you should invest to survive great wealth destruction events (i.e. war, famine, pestilence, etc.).
For Advanced Readers (aka The True Investment Nerds)
If you’ve read most of the material above and realize that you want a little bit more, than this section might be right for you. Below are works that are for more technical audiences and the true investment nerds among us (myself included).
The Ages of the Investor by William Bernstein
If you have noticed by now, I am a huge fan of William Bernstein. And if you liked The Four Pillars of Investing and The Intelligent Asset Allocator, then you’ll probably enjoy his four-part series The Ages of the Investor. In this series Bernstein takes a deeper dive into life-cycle investing, correlations, risk, and asset allocation. If you want to learn practical investment tips from one of the best in the business, consider spending the time reading this four part series.
Value Averaging by Michael E. Edelson
For those that have heard of dollar cost averaging and lump sum investing, Michael Edleson presents a radical new idea in Value Averaging. Value averaging is the idea that you want to make contributions to your portfolio so it rises the same amount every month (or every quarter). This sometimes means selling more as markets rise and buying more when markets fall. Though I truly enjoy the thought experiments posed in this book, the implementation of a value averaging portfolio is much harder to pull off when compared to other methods. Only more advanced investors need consider this strategy.
What Works on Wall Street by Jim O’Shaughnessy
If you have ever heard of factor investing, What Works on Wall Street is the book that helped to popularize the term with mainstream retail investors. While academia had been talking about factors in decades prior to the book’s release, Jim’s work is the first to empirically test these factors and present the results in great detail. While many of the strategies in this book no longer work (due to changes in their popularity + market structure), understanding why they no longer work can be useful for more technical investors.
The Misbehavior of Markets by Benoit Mandlebrot
If you’ve heard of The Black Swan by Nassim Taleb, then you should probably consider reading its biggest influence, The Misbehavior of Markets by Benoit Mandlebrot. Mandlebrot was a mathematician and longtime IBM employee who became a pioneer in the field of fractal mathematics. He used what he learned in fractal geometry and applied it to financial markets where he discovered that risk was consistently underestimated.
In The Misbehavior of Markets, Mandlebrot explains this underestimation and how to correct for it. More importantly, the ideas in Mandlebrot’s work were a big influence on Nassim Taleb, an even more popular financial thinker. I highly recommend both Mandlebrot and Taleb to get a non-traditional view of risk in financial markets.
The Bottom Line
No matter what kind of investor you are, if you want to learn more about finance, books are your best bet. Since 2012 I’ve read over 100 different books on investing (about one a month), all of which I considered when writing this article. I don’t say this to brag, but to illustrate how much great material I had to exclude in order to keep this post relatively short.
There is no “right” list of the best investment books. What I like you may not like and vice versa. As I have said before, most things in life are in the eye of the beholder. However, I do hope that you found this list useful as a starting point for further exploration. With that being said, happy investing and thank you for reading!
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This is post 208. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data
Where to Invest $10,000 Right Now
Investors face a dilemma. The global pandemic has completely disrupted markets. and finding promising investments is harder than ever. Bloomberg asked experts where they’d invest right now and they overwhelmingly recommended alternatives like art.
After all, the ultra-wealthy have placed their bets on art for centuries. From Rockefellers to Bezos and Gates — all actively collect art.
There are a few main reasons why 1.) Contemporary art prices have appreciated 14% annually on average (1995-2020) 2.) The total wealth held in art is projected to increase another 51% by 2026 3.) It has the lowest correlation to public equities of any major asset class, according to Citi.
Thanks to Masterworks you can invest in art (Banksy, Monet, Basquiat) without needing millions. I’ve personally invested in five different pieces on Masterworks, and plan to allocate more. Of Dollars and Data Readers skip their waitlist so you can begin investing in art today.*
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