People interested in investing frequently ask us for book recommendations. Thus, we’ve decided to compile a list of ten of our favorite works related to investing and finance. Some deal directly with investing and analyzing businesses while others help improve decision making and the way in which recognize and account for cognitive biases.
General Investing
The Intelligent Investor by Benjamin Graham
If you’re looking to get started as a value investor, The Intelligent Investor is one of the best places to begin your journey. Benjamin Graham, whom many consider the father of value investing, lays out his investment philosophy and his most well-known principles that are followed by many of the world’s most successful investors.
The Most Important Thing by Howard Marks
Howard Marks, co-founder of Oaktree Capital Management, lays out a checklist of sorts for investors to keep in mind when conducting due diligence with a value framework. This book is filled with great insights for novice and experienced investors alike.
Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor by Seth Klarman
Margin of Safety, titled after the Graham principle of buying a security for much less than its intrinsic value, has become a bit of a cult classic within the investing community. Klarman thoroughly explores the “margin of safety” principle and examines practical application of Graham’s strategy. As the book is out of print, it may be difficult to get your hands on a copy. Your best bet may be to try to track down a copy through your local library network.
You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits by Joel Greenblatt
Despite the ‘clickbait’ title, Greenblatt’s book has become the de facto manual for investing in special situations. The book examines spin-offs, restructurings, merger securities, rights offerings, recapitalizations, bankruptcies, and more. Greenblatt details a number of case studies showing how disciplined investors can profit from certain market inefficiencies.
The Essays of Warren Buffett: Lessons for Corporate America by Warren Buffett and Lawrence A. Cunningham
Warren Buffett is reknowned not only for his investing prowess but also for his ability to communicate in a manner that is simultaneously educational, easily understandable, and entertaining. This collection of writings, mainly from Berkshire Hathaway’s annual reports, covers a vast array of topics relevant to investors, businessmen, and anyone that wants to learn the philosophies that have made Buffett one of the most successful and respected figures of the modern era.
Financial Analysis
Security Analysis by Benjamin Graham and David Dodd
Security Analysis is essentially the go-to manual for value-based financial analysis. Although it was written in 1934, just a few years after the start of the Great Depression, the methods and techniques detailed within its pages still remain relevant today. Security Analysis is a must read for investors learning to value businesses and manage risks through Graham-style investing.
Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports by Howard M. Schilit and Jeremy Perler
Financial Shenanigans is a book that can save an investor from making disastrous decisions. The authors examine several ways in which accountants and executives manipulate numbers to make their businesses appear more robust than they truly are.
Behavioral Finance / Psychology
Poor Charlie’s Almanack, edited by Peter D. Kaufman
Every value investor should be familiar with Warren Buffett and Charlie Munger. Poor Charlie’s Almanack has become virtually required reading for members of the value investing community because its insight into human behavior and thought. We even recommend this book to non-investors, as it will teach you to think more rationally, make better decisions, and learn to be successful in other facets of life. Munger and Kaufman do a fantastic job of taking complex concepts and distilling them into small bits of wisdom that are digestible by just about anyone.
Thinking Fast and Slow by Daniel Kahneman
Thinking Fast and Slow examines the human mind through what Kahneman dubs “System 1” and “System 2.” System 1 allows us to act on instinct without deliberation. System 2 is the more calculating version of our mind that enables us to solve complex problems or make decisions that may require conscious thought. Throughout the book Kahneman examines series of experiments that show how these two systems can often lead to contradicting outcomes depending on inputs or how information is framed.
Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke
Some may be familiar with Annie Duke through her successful poker career. While this book doesn’t directly address investing, it presents ideas that can be applied to multiple disciplines including the world of money management. Many investors often take notice of the similarities between poker and investing, mainly the fact that both involve putting capital at risk in situations that rely on an unknown future. What’s the optimal way to think when you are lacking critical pieces of the puzzle? How do you evaluate your decision making in a scenario where you can still lose even if you made the correct choice?