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Seeking recommendations: "what one book . . . ?" Wednesday update: 21+ titles, several fascinating

Wednesday's count: 9 responses, 21 books or book sets, and no overlaps! You folks have some really cool recommendations. Here's the mid-week title list. The original call for suggestions appears just below it.

Montier, The Little Book of Behavioral Investing: How not to be your own worst enemy
Hobbes (remember "the war of all, against all"?) or Machiavelli ("a prince never lacks legitimate reasons to break his promise")
Mutual Funds for Dummies
Malkiel, A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
Bogle, Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition
Ferri, All About Asset Allocation, Second Edition
Swensen (the Yale manager), Unconventional Success: A Fundamental Approach to Personal Investment
Faber and Richardson, Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets
Zweig, Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich
Jones, The Intelligent Portfolio: Practical Wisdom on Personal Investing from Financial Engines
Peter L. Bernstein Classics Boxed Set : Capital Ideas, Against the Gods, The Power of Gold
Graham, The Intelligent Investor
McGrath, The Asylum: The Renegades Who Hijacked the World's Oil Markets, largely about NYMEX traders
Olson, Zero Sum Game: The Rise of the World's Largest Derivatives Market, about the Chicago Exchanges
Lewis, The Big Short: Inside The Doomsday Machine
Morgan, Market Forces, "a futuristic novel"
Elton, Modern Portfolio Theory and Investment Analysis
Heady, The Complete Idiot’s Guide to Making Money on Wall Street
Stikky Stock Charts (yes, two k’s)
Bach, The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich
Clayson, The Richest Man in Babylon
Pond, Your Money Matters: 21 Tips for Achieving Financial Security in the 21st Century

---------------

I would like to help extend the reach of your expertise. Collectively, you've got a lot of wisdom and I'd like to make it a bit more accessible to new visitors and old friends alike. One plan for doing that is to create two new pages dedicated to your recommendations.

The first page will focus on books. I'd like to solicit nominations for books in two categories: the one best investing book that every new investor (perhaps, every investor?) should read. The other is the one best personal finance book (that is, the one that covers the "bigger picture" stuff) that every one should read.

The rules are simple: pick a book that you've read and that others might plausibly read. And explain in a sentence or two what the book argues and why it's good.

I'll collate your recommendations and our crack technical team will create a page highlighting the top offerings (three? five? don't yet know) in each category, with a survey of comments and a link to Amazon.

Chuck Jaffe of MarketWatch called Friday, with a recommendation for a second reader-inspired page that he's been hoping for for quite a while. Once we have a good start to the book discussion, I'll raise Chuck's suggestion and offer up a second survey.

Thanks, as ever, for your time, patience and good spirits. They help a lot!

David

Comments

  • edited April 2011
    "The Little Book of Behavioral Investing: How not to be your own worst enemy " by James Montier. The title says it all but what sticks out is the importance of learning to prepare, plan, and then commit to a strategy while you are in a "cold" rational state, before entering in the markets—and then following your analysis and action steps once you are there. He also stresses the folly of trying to forecast what the markets will do.

  • edited April 2011
    Mark - Thanks for mention of the the Montier book on behavioral investing.
    David, of the boxful of books I own on investing, I can't say I'd recommend any one to a "beginner" or to "all investors." That box includes the classics: Malkiel's *A Random Walk Down Wall Street* and John Bogle on investing. It's helpful to get around to them someday. Vanguard used to, may still, have a checklist test that combined quant questions (age, household debt/income status) with behavioral ones (Would you invest on the advice of a friend? If you were invested during the last downtown, did you sell everything?) to try to eliminate some flailing and help people evaluate their conservative v. aggressive-risk posture and maybe face up to what they were doing. The score from the self-check test was linked to guidance on relative proportions of bond funds and equity funds one should hold. I do not know whether it would stand as such in today's environment, but something extremely simple along those lines would be v. good for the masses of employees in company plans now thrown on their own to choose funds.
    Hobbes. Machiavelli.
    Maybe *Mutual Funds for Dummies,* because true beginners need to know what a mutual fund is, a bond fund, a balanced fund, a load. Or *Investing for Dummies.*
  • edited April 2011
    A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
    by Burton G. Malkiel
    http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393081435

    I recommend this book because it covers a lot of ground for beginner investor and this is 10th edition of book which even long time investors can find something for themselves. I strongly believe this should be one of the first set of books an investor should read. If I had to pick only one book, I would pick this one.

    All About Asset Allocation, Second Edition
    by Richard Ferri
    http://www.amazon.com/All-About-Asset-Allocation-Second/dp/0071700781

    This book covers in good detail the act of building a portfolio that incorporates different asset classes. There are many books in this category which I could recommend, but this one is easily digested by an beginning investor.

    Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition
    by John Bogle
    http://www.amazon.com/Common-Sense-Mutual-Funds-Anniversary/dp/0470138130

    This is updated version of Bogle's 1999 book. He actually left the original text in and updated data, charts and provided comments of what happened in the 10 years, what worked and what didn't. As the title indicates, it is geared towards mutual funds and mutual fund investors.

    Unconventional Success: A Fundamental Approach to Personal Investment
    by David F. Swensen
    http://www.amazon.com/Unconventional-Success-Fundamental-Approach-Investment/dp/0743228383

    This book, written by Yale Endowment Manager David Swensen, has useful discussions regarding asset classes and which ones to use in a portfolio, the conflicts of interests in the industry and some model portfolios.

    Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich
    by Jason Zweig
    http://www.amazon.com/Your-Money-Brain-Science-Neuroeconomics/dp/0743276698

    This book might help an investor avoid common behavioral mistakes in investing which most everyone (beginners and seasoned alike) fall from time to time. By understanding what happens when we feel emotions like Greed, Fear, Regret, and Confidence we might (hopefully) avoid some of the costly mistakes. The earlier an investors is aware of these behavioral shortcomings, the better.

    The Intelligent Portfolio: Practical Wisdom on Personal Investing from Financial Engines
    by Christopher L. Jones
    http://www.amazon.com/Intelligent-Portfolio-Practical-Investing-Financial/dp/0470228040

    FinancialEngines.com is a company that Nobel Laureate William Sharpe has founded. This book explains the use of Monte-Carlo portfolio simulation techniques to determine the likelihood of reaching goals (retirement etc.) and success rate. Armed with this knowledge an investor can be better prepared for the future (adjust savings level, portfolio risk, lifestyle etc.)

    Peter L. Bernstein Classics Boxed Set : Capital Ideas, Against the Gods, The Power of Gold
    by Peter Bernstein
    http://www.amazon.com/Peter-Bernstein-Classics-Boxed-Set/dp/0471736252

    A classic from Financial Historian, late Peter Bernstein. This is probably not a beginner set. But, this 3-book set is important to understand how financial theories evolved and portfolio construction and management changed from complete ad-hoc to what it is today.

    Note: Hard to pick a best investment book of all times. It is probably yet to be written.
  • Not really investing books, but investing world books, two newer books: "The Asylum" (largely about NYMEX traders) and "Zero Sum Game" (about the Chicago Exchanges) are entertaining reads about the characters in these exchanges.
  • edited November 2011

    THE BIG SHORT:Inside the Doomsday Machine - By Michael Lewis

  • If you are going to highlight the most highly recommended books,
    these won’t make that list… but for years I’ve recommended these to students
    of my investment classes and they have always been well received.

    For new investors -
    The Complete Idiot’s Guide to Making Money on Wall Street
    By Christy Heady – financial journalist for The Wall Street Journal
    This is a true beginner’s book. It starts with everyday economics and creating
    a financial battle plan, and then carries through with strategies for stocks,
    mutual funds, bonds, futures and options.

    If you are forever wondering when to get in and if you should consider getting out
    of stocks, funds or the overall market -
    Stikky Stock Charts (yes, two k’s)
    This is not an ordinary book. As stated on the cover – “Learn the 8 major patterns
    used by professional and how to interpret them to trade smart – in one hour, guaranteed.”
    When they say “trade”, they mean long-tern trading using trend lines as a guide.
  • Here are a couple for the beginning investor about personal finance in general:

    The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach

    Bach promotes the benefits of "paying yourself first" and recommends practical solutions for automatically paying bills, saving money, and investing in today's day and age.

    The Richest Man in Babylon by George S. Clasonbas

    This is a short easy read that uses Babylonian parables to explain personal finance basics. The main ideas are budgeting, living within your means, systematic saving, systematic paying down debt, systematic investing, understand your investments, don't be fooled by get rich quick schemes, own your house, and keep learning.
  • Ivy Portfolio from Meb Faber's a good investment book.
  • Investing:

    Benjamin Graham, The Intelligent Investor, Collins Business Essentials Edition with commentaries by Jason Zweig and Preface and Appendix by Warren Buffett.

    This book is available in a variety of flavors. I found that this edition with the Zweig commentaries made the book more accessible and relevant.


    Personal Finance:

    Jonathan Pond, Your Money Matters: 21 tips for achieving financial security in the 21st century

    I found this book to be a nice, sensible overview. Pond is not particularly quirky or charismatic: he just gives you a good foundation.
  • FYI; Books !

    Mary Rowland, 'The New Commonsense Guide To Mutual Funds" (Primer)
    Gerald W. Perritt, "Mutual Funds Made Easy" (Primer)
    Jeremy Siegel, "Stocks For Long Run"
    Peter Lynch, " Beating The Street"
    Max Gunther, The Zurich Axioms
  • FYI: I forgot Kirk Kazanjian, "Value Investing With The Masters", with twenty value mutual fund managers thoughts on value investing. The Link gives you the twenty names.
    Regards,
    Ted
    http://search.barnesandnoble.com/Value-Investing-with-the-Masters/Kirk-Kazanjian/e/9780735203211
  • William J. Bernstein, The Intelligent Asset Allocator
  • Lest we forget "The Bond Book" by Annette Thau. Nearly all, if not all, you need to know about bond investing in a clear, concise, light on the math read.
    http://www.amazon.com/Bond-Book-Third-Everything-Treasuries/dp/007166470X/ref=sr_1_1?s=books&ie=UTF8&qid=1303421691&sr=1-1
  • edited April 2011
    Andrew Tobias, "The Only Investment Guide You'll Ever Need"

    In a short, humorous mind-bender, Tobias moves investing out the mundane world of accounting and into the simple daily decisions we all make. Covers everything from buying insurance to selecting mutual funds. Memorable is his tale of a millionaire purchasing Cepacol mouthwash in caseloads, generating greater after-tax "returns" than might be gained from stocks over a short period.

    Originally published in 1978, Tobias has continued to publish updated editions.

    http://www.amazon.com/Only-Investment-Guide-Youll-ebook/dp/B003WUYPU6/ref=sr_1_1?ie=UTF8&m=AG56TWVU5XWC2&s=digital-text&qid=1303481318&sr=1-1ndrew
  • Howdy,

    I cheated !!! This is a copy/paste of a review of this book; which is on a book shelf at this house. However, I could not have written a better summary; and for the most part this review and the words speak volumes about this house, too; and many who frequent this board. The review is a bit long; but many here will be nodding in agreement and saying "uh-huh" silently. The review itself contains many words of wisdom.

    Buy it through the Amazon link for MFO. You will not be disappointed with the many lessons of the book and will allow for a better self-understanding. This would also be a wonderful gift for those you know who need more understanding of what it takes to "get on the right side of the investment tracks".

    Regards,
    Catch

    The Millionaire Next Door (1996)
    By Thomas J. Stanley & William D. Danko


    The Millionaire Next Door is one of the most important books recently published on the subject of personal finance.

    Thomas Stanley and William Danko are professors of sociology who have made studying wealthy Americans their specialty. They have performed extensive statistical research to profile who wealthy Americans are, how they acquired their wealth, how they live, and how their families function.

    From the inception, Stanley and Danko make it clear that the image of "Lifestyles of the Rich and Famous" has nothing to do with the lifestyle of most wealthy Americans, especially first-generation wealthy Americans. Contrary to the belief of many people who believe most wealth is inherited and "you can’t make it in America today," eighty percent of America’s millionaires are first-generation rich.

    I am going to focus on first-generation wealthy Americans here, because they give the most valuable lessons for acquiring wealth. I’ll call them "the wealthy."

    The wealthy are extremely frugal. They do not live in extravagant homes and drive Rolls Royces or BMWs. They live in modest homes and mostly drive full size American cars. (57.7% of the vehicles millionaires are driving are American cars or trucks.) Many of them buy used cars (about 36%).

    Most of the wealthy have their own businesses. Self-employed people are four times more likely to be millionaires than those who work for others. Most of their businesses are not Fortune 500 corporations.

    20% of affluent households in America are headed by retirees. Of the remaining 80%, more than two-thirds are headed by self-employed owners of businesses.

    The wealthy did not necessarily accumulate their wealth from high salaries or high incomes. Instead, they are excellent at managing their assets. The two main approaches used to accumulate their assets are budgeting and the "pay yourself" or set aside approach. (Take 15% of your earnings and set them aside as "untouchable" for personal spending.)

    The wealthy are very proactive in their investment programs. They study investments and consistently invest in the areas they understand best.

    The wealthy highly value education. Almost uniformly they underwrite the education of their children and encourage their children to pursue a profession, such as law, medicine, dentistry or accounting.

    Many of the wealthy are immigrants who haven’t been caught up in the American consumer lifestyle.

    The American consumer lifestyle is the greatest enemy of accumulating wealth. The children of the wealthy do not understand how their parents accumulated wealth, so they consume it. This is the reason family fortunes are dissipated. There are no wealthy Vanderbuilts today.

    Why should the study of the wealthy concern you? Isn’t money the root of all evil?

    The economic facts are that the median (typical) household in America has a net worth of $15,000, excluding home equity. The median household net worth for the top one-fifth of American households, excluding home equity, is less than $60,000. Without Social Security benefits, almost one-half of Americans over age sixty-five would live in poverty. (And Social Security is in trouble!)

    I should think that one goal that should be on the list of most people is to be financially independent. There is a certain confidence one has when in this position. Call it "peace of mind." You can do an enormous amount of good when you have the means. Yet, despite the fact that many people with relatively modest incomes achieve financial independence, most of us never get out of the starting gate!
  • Howdy,

    ANY of the 19 Harry Browne books (list link here). My first was, "Inflation Proofing Your Investments". This book is the basis for the "Permanent Portfolio" PRPFX.

    ---I will also second the nomination for "Beating the Street" by Peter Lynch.

    http://harrybrowne.org/Books.htm

    Regards,
    Catch
  • I love this book, by the way. I like Tobias's writing style and the breadth of his vision (time to stockpile canned tuna?), both of which make it easily accessible to folks who would really rather not be reading about personal finance.

    That fact that I learned a lot and agreed a lot, also helped!

    The most recent edition seems to be 2005.

    David
  • Re: "...folks who would really rather not be reading about personal finance."

    Afraid ya got my number. (-: (-:
  • edited April 2011
    Margin of Safety by Seth Klarman. For years it has been out of print, it is now available online by doing a Google search. Klarman is one of the most successful private money managers for the last 20 years and his philosophy of managing risk first and the return is refreshing and obviously very successful.
  • The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein (2010)

    This book is entertainingly written and covers several bases, such as relevant history, Fama and French's findings, discussions of risk and the benefits of diversification, investors' behaviorial issues, ideas on portfolio construction and several model portfolios including for tax-sheltered and non-tax-sheltered accounts. I confess I was disappointed that the 2010 update of the book (from the original 2002 edition) included only a new afterward (albeit a worthwhile one).
  • The consequences of ignoring optionalities inherent in investments explored by Nassim Taleb in The Black Swan.
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