The Top 3 Investment Books
I have read a lot of investment books in my life (including academic books from University and from the CFA Program) and every year I add plenty of more books to my library.
I have recently finished Principles: Life and Work by Ray Dalio and Mastering the Market Cycle by Howard Marks. Both great books! However, there are only a few books I always get back to year after year and that have influenced my personal way of investing [8020 Investing] as much as the following books listed below.
I will start with my top three choices followed by their close contenders. My top three choices never change but the list of contenders always gets longer as I grow my personal library, so check back regularly and fill up your own library.
The Intelligent Investor – Benjamin Graham
This book doesn’t need any introductions. A true investment classic and the bible for many value and growth investors alike. Yes, this book is not only for value investors but for those interested in investing in general. It goes beyond teaching buying low PE ratio stocks or Net-Nets, but this classic teaches one of the most modern aspects of investment education – behavioral finance!
As his most famous disciple, Warren Buffett recommended, Chapter 8 and Chapter 20 should be reread several times. Even the short part on work-out situations or so-called “special situations” is still a treasure chest for any enterprising investor.
Don’t forget, that some of his search techniques developed for a computerless age are outdated, but the core of the book is as relevant and money making as first published in 1949. I recommend getting the old versions written and re-edited by Benjamin Graham himself.
Adventure Capitalist: The Ultimate Road Trip – Jim Rogers
Also known as the Indiana Jones of capitalists, Jim Rogers has done what only a few investors at Wall Street have dared: To actually visit the countries he has been investing in and to see with his own eyes, how markets work and business is actually done in these countries.
He circumnavigated the globe twice, once on his motorbike and another time in a custom-made Mercedes SLK. While traveling he experienced several life-threatening situations, but he always found time to visit the stock exchanges, major banks of each country and to interview people who actually did business and not only write about it.
I recommend his second book “Adventure Capitalist” as it contains some interesting forecasts that are still relevant today. On top of that, you will get a lot of common sense advice on investing while being captivated by his stories of each country he explored.
I understand how Christopher Columbus must have felt on his journey to discover America when consulting only one source over and over again: the collection of Marco Polo’s letter and manuscripts. For me, that would be “Adventure Capitalist” or “Investment Biker”. If you are interested in history and traveling you can’t lose with these books!
Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger – Janet Lowe
My third choice was a tough one! I was struggling between “The Snowball: Warren Buffett and the Business of Life”, “Buffett: The Making of an American Capitalist by Roger Lowenstein”, and Janet Lowe’s book. All three books have given me endless inspirations and hidden gems I seem to find each time I reread these books.
In the end, I decided to give Damn Right the number three spot, for the simple reason it is easier to read than Snowball and more up to date than Buffett. Not to mention the fact that Warren Buffett and his story has been digested and chewed through by so many bloggers, authors, and journalists.
Charlie Munger truly deserves more acclaim for his contribution to Berkshire Hathaway and Warren Buffett’s personal development to becoming the investment titan he is today.
The book itself will not win many literature prices. The desperate attempt to include pieces of Munger’s private family life failed in my point of view. The author should have focused on Munger’s earlier business life before he met Warren Buffett in Omaha through a mutual friend. Nevertheless, there are so many gems to be found about Munger and Buffett that this book deserves a top-three spot.
The Top Contenders
The Snowball: Warren Buffett and the Business of Life – Alice Schroeder
I added Snowball, due to Alice’s direct access to Warren Buffett and his family. Alice included some valuable information nuggets about his early partnership and most successful deals that weren’t available anywhere else. A close second when it comes to Buffett books is “Buffett: Making of an American Capitalist” Roger Lowenstein.
Margin of Safety: Risk-averse Value Investing Strategies for the Thoughtful Investor – Seth Klarman
Seth Klarman is most likely the most successful investors when it comes to professional investment management based on a strict value investing philosophy. His book, written in his early years, is a classic and even though his style of writing is almost as boring as Graham’s style I prefer this book over Joel Greenblatt’s You Can Be a Stock Market Genius. Seth’s book contains the exact same trading strategies but with a more professional perspective on investment management.
Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition Peter D. Kaufman.
This is not a book in the traditional sense. More of a lexicon or collection of letters and anecdotes similar to “Of Permanent Value.” Yet, it made it on the top ten as it just such a dignifying book filled with so much wisdom and inspiring stories and pictures. Also, it is probably the most expensive books I have paid for a non-collectible, mundane business book – I bought the first edition – so it deserves a special place on my list. But jokes aside, the high purchase price is worth ev ery penny as it gives back plenty.
Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone
Excellent book about a less-known hedge fund manager who has the same predictive capabilities as Warren Buffett himself. Naturally, their paths crossed several times in history. Excellent overview of how to calculate odds and how much to bet using an underrated formula: The Kelly Formula
Barbarians at the Gate: The Fall of RJR Nabisco Kindle Edition by Bryan Burrough, John Helyar
A masterpiece of investigative journalism! As the title suggests, you will find out what high levels of testosterone does to men with much money. Insider tip: Check out The Taking of Getty Oil: Pennzoil, Texaco, and the Takeover Battle That Made History by Steve Coll. Not on the same level, but equally entertaining and educational.
Den of Thieves: by James B. Stewart
Again, a masterpiece of investigative journalism! This time from an angle when a few bankers and investors went rogue. It ain’t pretty! One could argue it provided a blueprint for many scandals and financial crime to follow. Check out The Predators Ball as well!
Value Investing: From Graham to Buffett and Beyond by Bruce Greenwald
Excellent research case studies and biographies of leading value investors by a University Professor who initially wasn’t even a value investor.
One Up On Wall Street: How To Use What You Already Know To Make Money by Peter Lynch
No investors’ library is complete with at least one book by Peter Lynch. His track record is something of a freak appearance in the world of Mutual Fund Management. I never understood how he managed the internal conflicts of investment management and the supervision by incompetent business managers. Peter pulled it off and hence deserves a place on the Olymp of investing.
King Icahn: The Biography of Renegade Capitalist:
The person alone makes for a great book for any student of investing. The advantages of such biographies are, that they guide you through time bringing important political and business events in a context. King Icahn doesn’t disappoint when it comes to summarizing historic Wall Street case studies, the different market cycles from the late 70s to the 21st century. The book is entertaining and educational at the same time – highly recommended read!
These are my personal top three investment books and their top contenders. All the books mentioned here, I can recommend without hesitation year after year and I highly recommend you to invest in your own library if you are serious about your training and education about investing and financial markets in general
I’m aware that my readers might have totally different investment books in mind and certainly, the library will only grow over time as I explore different facets of this fascinating field. But the fact is, that all books mentioned here will help you shape your investor’s mind to think independently and intelligently and in context so that such an abstract topic as investing becomes more approachable. Please do share your favorite books on investing in the comments section below. What are your top three choices?