I remember my first interview at the hedge fund like it was yesterday.
Sitting across from my future boss, I was told there weren’t any positions available. But Bill would keep my resume on his desk and remember me if anything opened up.
It felt like a dead end.
But I DID get something valuable from the interview… A list of trading and investing books Bill suggested I read.
Little did I know, these books would have a profound effect on my career.
And as luck would have it, a position opened up a few weeks later. So I got the education from the books AND a new job at the hedge fund.
Today, I thought I would share a few of my favorite trading and investing books. And I also have some thoughts about how to get the most out of these books below.
Take a look!
Interviews With Market Legends
Market Wizards: Interviews With Top Traders
By Jack D. Schwager
The first book Bill Recommended was Market Wizards. And I still keep a copy of this book on my shelf behind my desk.
Each chapter is an interview with an iconic trader or investor. And each interview contains nuggets of wisdom from different strategies, to fundamental concepts, to trading psychology and behavioral finance.
These interviews took place decades ago. But it’s amazing how relevant the concepts are to this day.
Schwager’s interview became so popular that he wound up publishing several additional books with the same interview format. I’ve read and learned from each!
The Classics…
Today’s market is full of cryptocurrencies, NFTs, SPACs and high frequency trading.
But despite all our technology, human nature is still the same. Which is why the information in many of the classic trading and investing books is so helpful.
The Intelligent Investor – by Benjamin Graham
Graham is considered one of the ultimate authorities on value investing.
And since value stocks are finally coming back into play, this classic book is once again quite timely.
For more detailed study of Graham’s value investing philosophy, check out his Security Analysis book (much heavier text that reads more like a textbook.)
Reminiscences of a Stock Operator – by Edwin LeFevre
The autobiography of Jesse Livermore is both entertaining and instructional.
Many of the quotes in this book are quite memorable (and applicable for today’s market).
Reading through this book always makes me excited about trading, and helps me remember the importance of having a plan and sticking to it!
How to Trade in Stocks – by Jesse Livermore
This classic includes a lot of practical advice for building positions, adding to those positions, managing risk and locking in profits.
Jesse Livermore was a genius when it came to trading. But he faced some demons in his personal / mental life.
Some have chosen to discount his theories because of the author’s troubled life. But I think the concepts are extremely valuable — and of course want to focus on a healthy work / life balance separate from my investments.
Market Theory Trading and Investing Books
Expectations Investing – by Michael J. Mauboussin
“The market is a forward discounting mechanism.”
In other words, stock prices show us what investors already expect for specific situations.
This book helped me learn to A) understand what investors are expecting in different situations…
And B) learn what surprises could cause big stock moves.
If you want to understand the human decisions behind specific stock moves, this book is extremely helpful.
How to Make Money in Stocks – by William J. O’Neil
This is one of the first trading and investing books I ever read. It was recommended by one of the portfolio mangers at Bill’s hedge fund.
While the book’s name may be unfortunate (or uncreative), the concepts are very important.
Reading this book will help you develop a better fundamental understanding of companies you invest in — and how the stock could trade for weeks and months to come.
Stories to Learn From
Sometimes the best education comes from hearing other people’s stories. And the added benefit is that learning from other’s mistakes is much less painful than learning from your own!
A Hedge Fund Tale – by Barton Biggs
A great “rags to riches” story of what’s possible in the world of investing.
While the story is fictional (and reads like a novel), there are some helpful concepts about position sizing, managing risk, handing investments for other people, and more…
I won’t spoil the ending. But if you pick this book up, be sure to read the finish!
Fooling Some of the People All of the Time – David Einhorn
David Einhorn is my favorite hedge fund manager — possibly because he’s an accomplished poker player too. (That’s a story for another day).
This book tells the story of one of Einhorn’s bearish plays — and the hot water he got himself into by exposing an unscrupulous business.
I’m impressed by the rigor of Einhorn’s research process. And also his determination despite very personal risks.
Broken Open – David Clark
This one isn’t specifically a trading and investing book.
It’s the story of an ultramarathon runner’s “mountains, demons, treadmills and a search for nirvana.” And for some reason when I read it last year it really resonated with me.
I don’t agree with everything in the book. But the ultra-running stories inspired me, and the introspective parts were helpful for me to chew on.
I wish David was still around so I could take him to lunch and hear more about his life.
Books Only Take You So Far…
I love reading trading and investing books and learning everything I can from some of the best in the business.
But books can only take you so far. At some point, experience is truly the best teacher.
If a brand new trader asked me for advice, I would certainly recommend some of these books.
But I would follow that up with — “put some skin in the game and learn what you can!”
There’s nothing like the lesson you learn from booking a profit, taking a loss, or missing out on a position that you failed to pull the trigger on.
Lessons like these don’t sink in until you’ve felt the joy or pain of your own success (or failure) in the market. So don’t be afraid to put some small positions in play just to learn how the market works in real time.
This list of trading and investing books isn’t exhaustive in the least. It’s simply a list of top-of-mind books that I’ve learned from throughout my career.
There are many other great resources — and I’d love it if you responded with some of your favorites!
One final thought.
If you have years of experience in the markets, consider picking up an old trading book you read earlier in your career.
Chances are, you’ll pick up something different from the book now that you have more experience. I love going back and reading many of the classics every year or two.
Here’s to growing and protecting your wealth!
Zach
