My Top Ten Investment Books

They say “experience is the best teacher” and I sincerely believe that is true. My very best investment education came not from investment books, but from the live fire trading during my time as a hedge fund manager.

But even live experience only goes so far.

The Value Of Investment Books

The best experience, comes after investing time studying the markets and understanding how they work. A balance of book learning (preparation), and live experience (actual trading) is the perfect recipe for honing your investment skill.

Thats why I created this list of my favorite investment books.

Many of these books were foundational in my own investment career. By reading these books, I believe you’ll be able to build a great baseline of understanding. I’m talking about knowledge of how markets work, where opportunities can be found, and most importantly how to protect your investments against risk.

From there, you’ll be better equipped to learn from your own market experience.

1) Market Wizards

This is one of the first investment books I ever read. When I first interviewed with the hedge fund I would eventually work for, my future boss recommended this book. It’s a compilation of interviews with the very best professional investors. Hearing how each of these investors got started was inspirational. Plus, understanding how they make money in the markets is a great way to learn about new opportunities.

If you like Market Wizards you’ll also enjoy The New Market WizardsStock Market Wizards as well as Hedge Fund Market Wizards.

2) Expectations Investing

This book shows you how to take a very unique approach to investing. Instead of focusing on traditional measures like cash flow and earnings per share, the authors look at what other investors are expecting. The idea is that if you can know what other investors expect, you can better understand when surprises will happen. And surprises can be big catalysts for driving stock prices higher or lower.

Expectations Investing challenged me to look at the market differently, and has given me more of a profitable edge.

3) How to Make Money in Stocks

William O’Neil’s book was required reading for me when I started my hedge fund job. It’s an easy read and I finished the book in my first week. But don’t let the simplicity fool you. O’Neil’s straightforward approach to investing in stocks can help you identify some of the very best growth opportunities in the market.

If you like How to Make Money in Stocks, you may want to follow the book up with a subscription to Investor’s Business Daily. It’s a great resource for finding investment opportunities that match O’Neil’s approach.

4) The Invisible Hands

Much like Market Wizards, this book is a compilation of interviews with some of the best investors and traders of our time. The interviews are especially intriguing because they are intended to be anonymous. And yet, the interviews are with financial titans who are well known for their investment approaches.

Understanding how these leaders think about markets and investments is a great way to lay a foundation for your own market experience.

5) Trading Risk

Ready to get serious about protecting your hard-earned money? Trading Risk is an excellent resource for better understanding how to measure, manage, and minimize the risk in your investment account. I found this book to be surprisingly easy to read, even though it deals with some very heavy investment concepts.

If your family’s wealth is worth protecting, then Trading Risk should be part of your investment library.

6) Reminiscences of a Stock Operator

It’s amazing to me how some investment books can withstand the test of time. This book chronicles the fictionalized account of “Jesse Livermore” in the 1920’s. However, the stories and market observations from nearly a century ago are still just as relevant for today’s investors.

This investment book reads like an engaging novel. Yet, there are so many lessons to be learned (both investment and life lessons) that I’m putting it on the reading list for my older children.

7) Diary of a Professional Commodity Trader

The author, Peter Brandt, is a personal friend of mine and one of the few great traders I’ve had the opportunity to spend time with. Peter’s account of a 21-week real trading period offers you a refreshingly genuine view into what it’s like to be a professional trader.

I have a tremendous amount of respect for Peter’s journey as a trader, and for his ability to share his insights in an easy-to-understand manner.

8) When Genius Failed

The legendary implosion of Long Term Capital Management is now a distant memory. But the lessons we can learn from this financial catastrophe are still applicable today. While the financial “geniuses” who ran LTCM were the best and the brightest minds in the world, hubris and an unwillingness to adapt sunk their company.

The main takeaway from this book is that markets can change quickly. Investors must adapt or risk devastating losses.

9) Inside the House of Money

Ever wonder what hedge fund managers actually do? This investment book takes you inside the highly competitive hedge fund industry, showing you the strategies and investment approaches these private firms use to make money for their wealthy clients.

Hedge funds have earned a negative reputation. But many of the strategies these funds use can be extremely lucrative. Best of all, you can use some of them in your own retirement account.

10) More Money Than God

The biggest investors have enough capital to actually move markets with their buy and sell orders. That’s why its so important to understand how these giant funds invest their capital. From specialized investment strategies, to value and growth investments, More Money Than God gives you a real-life understanding of how the largest players allocate money.