Reading Room - Books
"A little learning is a dangerous thing;
Drink deep, or taste not the Pierian spring:
There shallow draughts intoxicate the brain,
And drinking largely sobers us again"
Here you will find books which will discuss investing issues broadly. For a more detailed discussion of narrow topics, see our Reading Room for Articles and Papers. If you have questions about any of the materials referenced here, contact us—we love talking about this stuff!
Books for Beginners
- Frank Armstrong, Investment Strategies for the 21st Century, (1995). This is an outstanding online book which is freely available to all. Click on the link above to read it.
- Gary Belsky and Thomas Gilovich,Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From Life-Changing Science Of Behavioral Economics, (Simon & Schuster, 1999). This book describes the irrational biases we all occasionally have, which conspire to cause us to do things which are adverse to our financial well-being. Being aware of them will help us to overcome them.
- William J. Bernstein, The Four Pillars of Investing: Lessons for Building a Winning Portfolio (McGraw-Hill, 2002). This is one of the best investing books ever written, in our opinion. Interestingly, Dr. Bernstein's primary occupation was that of a practicing Neurologist.
- William J. Bernstein, The Investor's Manifesto (John Wiley & Sons: 2012). This is one of the best investing books ever written, in our opinion. Interestingly, Dr. Bernstein's primary occupation was that of a practicing Neurologist.
- John C. Bogle, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (John Wiley & Sons: 2009). John Bogle is the founder of The Vanguard Group and one of the leading advocates for low-cost index investing strategies. Any other books by Bogle should also be a good read.
- John C. Bogle, The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (John Wiley & Sons: 2007). Largely an update to his Common Sense book above. Any other books by Bogle should also be a good read.
- Charles D. Ellis, Winning the Loser's Game (McGraw-Hill, 2013). This book is basically an instruction manual for how to be a prudent consumer of asset management services. Mr. Ellis is brutally honest and pulls no punches in criticizing the excesses of the financial services industry. While the book's topics are assembled in a somewhat haphazard order, he makes his points effectively.
- Burton G. Malkiel, A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (W.W. Norton & Company, 2011). Originally published in 1973 but updated several times since, this is a true investing classic.
- Larry E. Swedroe. Larry Swedroe has written many books about investing aimed at the layperson. All of them are good and worthwhile reading.
Books for Professionals
- Ian Ayres and Barry Nalebuff, Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio, (Basic Books, 2009). An outstanding book on the importance of evening-out stock exposure over an investor's lifetime. Their recommendation that younger folks invest with leverage for the first few decades of their adult life is a bit troubling, but the idea that younger folks should have high stock allocations (i.e., as high as they can tolerate, up to and including 100%) is important.
- Peter L. Bernstein, Capital Ideas: The Improbable Origins of Modern Wall Street (The Free Press: 1992). This is a lucidly written history of the major innovations in modern investing principles. Mr. Bernstein tells the stories so that most lay readers should be able to understand the ideas being discussed. Any other books by Peter Bernstein should also be a good read.
- Peter L. Bernstein, Capital Ideas Evolving (Wiley: 2007). An update of his outstanding book above, detailing advances since 1980. Any other books by Peter Bernstein should also be a good read.
- Peter L. Bernstein and Frank J. Fabozzi, Streetwise: The Best of The Journal of Portfolio Management (Princeton University Press: 1998). This compendium of the best papers from 25 years of the Journal of Portfolio Management should be on any serious professional investor's bookshelf.
- William J. Bernstein, The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk, (McGraw-Hill, 2001). This is a well-written (though somewhat technical) book. You can also read an archived copy of an earlier electronic version of this book here.
- Paul Cootner, The Random Character of Stock Market Prices (Risk Books, 2000). This book is a true classic of financial economics. Originally published in 1964, it contains, among other papers, the classic Theory of Speculation, Louis Bachelier's amazing dissertation, written in 1900, which may be the earliest work describing the Efficient Markets Theory.
- Aswath Damodaran, Investment Philosophies (John Wiley & Sons, 2002). This book is freely available on-line here. There are also lots of supporting materials (also available free) here. Dr. Damodaran is a professor at New York University's Stern School of Business. He brings a refreshing objectivity to the issues. His material is somewhat technical, but very well written.
- Elroy Dimson, Paul Marsh, and Mike Staunton, Triumph of the Optimists: 101 Years of Global Investment Returns (Princeton University Press, 2002). An outstanding book surveying most major themes in investing and investigating supporting trends over the past 101 years in all the major (and many less major) markets in the world.
- Roger C. Gibson, Asset Allocation: Balancing Financial Risk (McGraw Hill, 2013). This book covers asset allocation for the professional.
- William Reichenstein and William Jennings, Integrating Investments & the Tax Code (John Wiley & Sons, Inc., 2003). This outstanding book authoritatively addresses many questions dealing with the tax effects of investing.
- Mark Rubinstein, A History of the Theory of Investments (John Wiley & Sons, Inc., 2006). This book might be thought of as a much more thorough (and harder to read) version of Peter Bernstein's "Capital Ideas" book above.
- Frank Sortino and Stephen Satchell, Managing Downside Risk in Financial Markets (Elsevier, 2003). An excellent primer on the concept of Downside Risk.
- Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life (Texere, 2001). An excellent book about the relationship between chance (i.e., luck) and results.
- Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (Random House, 2007). An excellent follow-on to Fooled by Randomness above.
Unreviewed Books
The books listed below should also be worthwhile.
- Frank Armstrong, The Informed Investor: A Hype-Free Guide to Constructing a Sound Financial Portfolio (Amacom, 2002). This is an updated, printed version of Mr. Armstrong's (freely available) online book.
- Gregory Arthur Baer and Gary Gensler, The Great Mutual Fund Trap (Random House, 2002). A no-holds-barred exposé of the actively-managed mutual fund industry. Here's a good review of the book.
- Rick Ferri, All About Index Funds (McGraw-Hill, 2002). Anything else by Rick Ferri should be good too.
- Rick Ferri, All About Asset Allocation (McGraw-Hill, 2005).
- Taylor Larimore, Mel Lindauer, and Michael LeBoeuf, The Bogleheads Guide to Investing (John Wiley & Sons, Inc., 2006). A basic book on prudent investing principles. Written by and for laypeople.
- Dean LeBaron and Romesh Vaitilingam, The Ultimate Investor: The People and Ideas that Make Modern Investment. This is an online book which is freely available to all. Click on the link above to read it.