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The Calculating Investor Reading List: Part 1 » The Calculating Investor

A Reading List for Individual Investors

I enjoy reading about investing, and, over the years, I have built up quite a large library of investing books. I thought I’d share a few of my favorites.

Readers may notice that the books I’ve listed cover several different investment philosophies. I’m an advocate of indexing, but I have included one “stock picking” classic (The Intelligent Investor). I’ve also included several books on behavioral finance. I think it is important for investors to be exposed to a variety of viewpoints, and I believe that each of these books contains some valuable wisdom.

I have labeled this list as “Part 1” because I plan to follow-up in a week or two with another list which focuses more on the analytics of investing. The “Part 2” list will include textbook and “how-to” book suggestions.

  1. Common Sense on Mutual Funds – John C. Bogle:  This is a must read for every investor.  The book makes an excellent case for indexing.  Regardless of your investing philosophy, you should read this book and think hard about Bogle’s arguments.
  2. Unconventional Success – David F. Swensen: Swensen is the manager of Yale University’s endowment.  This book is geared towards individual investors (he has another book aimed at institutional money managers), and it is entertaining and informative to read Swensen’s attacks on much of the money management industry.  Before I read this book, I was unaware of many of the sneaky methods which are used to hide fees within actively managed funds.
  3. A Random Walk Down Wall Street – Burton G. Malkiel: I haven’t read the latest edition of this book, but this is an investing classic.  The book advocates indexing and intelligent asset allocation.
  4. Stocks for the Long Run – Jeremy J. Siegel: Siegel is typically very optimistic about the future of equities, and, in this book, he makes his case using a tremendous amount of historical data.  This is another book where I haven’t read the latest edition.  I have read that he recommends overweighting dividend stocks in this edition. I’m not sure I would agree, but I’d love to read the argument and see the data. 
  5. Irrational Exuberance – Robert J. Shiller: Shiller makes a strong case for keeping an eye on market valuation, and he attempts to explain some of the factors which drive financial bubbles.  I’m not convinced by everything he has to say, but I do think there is a lot in this book that is worth considering.
  6. Your Money and Your Brain – Jason Zweig: This book provides a very accessible look at the psychology of investing.  The idea behind this book is that developing a better understanding the emotions and biases that humans bring to financial decisions will help you develop strategies to minimize their impact.
  7. The Intelligent Investor- Benjamin Graham: Benjamin Graham was the father of value investing, and he was a mentor to the young Warren Buffett. I’m not a stock picker, but I do appreciate the book’s emphasis on value and margin of safety. The wild swings of the stock market often cause investors to let emotion overpower reason, and learning to think more like Benjamin Graham will help investors to ignore the noise and stay the course.
  8. The Winner’s Curse – Richard Thaler (Advanced):  Most standard economic theories assume that individuals make rational choices, but behavioral economics argues that this is often not the case. This book summarizes much of the recent research in behavioral economics. This book is advanced reading, and it includes a lot of economic theory.
  9. Inefficient Markets – Shleifer (Advanced):  Modern behavioral finance is often said to rest on two pillars. The first pillar is “investor psychology” and this is covered very well by The Winner’s Curse and Your Money and Your Brain. The second pillar is “limits to arbitrage” and this book delves deeply into that idea. This is advanced reading. There are a lot of equations and knowledge of financial theory is assumed. However, I found the book to be fascinating. If you have some background in financial theory, then this book is highly recommended.

Disclosure: The links in this post are affiliate links. That means that if you click through from my link and buy the book, I receive a small commission. 

2 Responses to “The Calculating Investor Reading List: Part 1”

  1. Nice list. Its interesting that you have books on the psychological aspects of investing – an important area for investors to learn about why they make certain decisions.
    You may also want o consider “The Intelligent Asset Allocator” by William Bernstein.

    • Thanks, the “Intelligent Asset Allocator” is another great suggestion. I considered including it on this list, but I’m also working on a second reading list which has more “hands on” selections which show how investors can do some of their own analysis and calculations. I decided to save Bernstein’s book for the second list since it goes step-by-step through some of the key math concepts.

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