A Recommended Reading List for Trading, Investing & General Knowledge

After spending far too long attempting to add the most relevant books to my Goodreads widget for this site I gave up. Nevertheless, this encouraged me to sit down and pen a post on the most valuable books I have read to date, as well as some of the ones I intend to read – in part, a Talebian “anti-library” if you will.

“The writer Umberto Eco belongs to that small class of scholars who are encyclopedic, insightful, and nondull. He is the owner of a large personal library (containing thirty thousand books), and separates visitors into two categories: those who react with “Wow! Signore professore dottore Eco, what a library you have! How many of these books have you read?” and the others — a very small minority — who get the point that a private library is not an ego-boosting appendage but a research tool. Read books are far less valuable than unread ones. The library should contain as much of what you do not know as your financial means, mortgage rates, and the currently tight real-estate market allows you to put there. You will accumulate more knowledge and more books as you grow older, and the growing number of unread books on the shelves will look at you menacingly. Indeed, the more you know, the larger the rows of unread books. Let us call this collection of unread books an antilibrary.” – Nassim Taleb

I’ve had the fortune of a lot of freedom to read and think, the two are not mutually exclusive, as in my opinion the most progress is made when you read deeply, reflect and interact with your library every time you encounter a problem that reminds you of a passage or concept you might have encountered previously, or one you intend to encounter. For this reason, Taleb’s quote above is one which serves to illuminate how I go about educating myself.

I have constructed the below list with two further quotes in mind as inspiration.

“You’ve got to have models in your head. And you’ve got to array your experience – both vicarious and direct – on this latticework of models… The first rule is that you’ve got to have multiple models – because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does… And the models have to come from multiple disciplines – because all the wisdom of the world is not to be found in one little academic department.”   – Charlie Munger

I’ve always aspired to a cross-disciplinary approach, in fact I always wanted to be able to design my own college/university degree, in order to pick and choose courses I wished to study. In my opinion, the journey towards erudition is man’s greatest imperative. Munger certainly characterises this ethic regarding the acquisition of wisdom with his description of a “latticework of models”. When reading this list, think of the headings as your latticework.

“One bit of advice: it is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, ie the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.” – Elon Musk

Musk, another extraordinary erudite, delivers a similar message, also relaying a spatial structure to convey his message; that one should understand the fundamental principles of a discipline before working down to the nuances. I’ve tried to do so in the way I’ve ordered the books under each heading.

For those of you who are time poor and don’t have the luxury of spending an inordinate amount of time reading as I do, and you’re simply curious about the financial markets, the first three books I recommend are all by Michael Lewis. Lewis has a remarkable ability to educate the reader about key institutions, their interconnectedness – the plumbing; the securities, the players and ultimately the challenging lexicon (full of acronyms) which characterises modern finance. Read these three, preferably in order.

• Liars Poker
• The Big Short
• Boomerang

Now comes the juicy stuff!

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First off, here’s a tome recommended by Michael Mauboussin on cross-disciplinary thinking:

• Consilience: The Unity of Knowledge by Edward O. Wilson

Discretionary Macro:

1. Reminisces of a Stock Operator by Edwin Lefèvre
2. Global Macro Trading by Greg Gliner
3. Diary of a Professional Commodity Trader by Peter L Brandt
4. Market Wizards by Jack Schwager
5. Hedge Fund Market Wizards by Jack Schwager
6. Inside the House of Money by Stephen Drobny
7. Invisible Hands by Steven Drobny
8. The New House of Money by Steven Drobny
9. Alchemy of Finance by George Soros
10. Soros on Soros by George Soros
11. Rational Macro by John Butters
12. Expected Returns by Antti Imanen
13. Handbook of Exchange Rates by Jessica James
14. Dynamic Hedging by Nassim Nicholas Taleb

Behavioural Macro/Econs/Psychology:

1. Thinking Fast and Slow by Daniel Kahneman
2. More Than You Know: Finding Financial Wisdom in Unconventional Places by Michael Mauboussin
3. Think Twice by Michael Mauboussin
4. Structured Analytic Techniques for Intelligence Analysis by Rechards J. Heuer Jr.
5. Predictably Irrational by Daniel Ariely
6. Animal Spirits by Shiller & Akerlof
7. Irrational Exuberance by Robert Shiller
8. The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences by Herbert Gintis
9. Behavioral Game Theory by Colin F Camerer
10. Behavioural Investing: A Practitioners Guide to Applying Behavioural Finance by James Montier
11. The Little Book of Behavioral Investing by James Montier
12. Judgement Under Uncertainty: Heuristics and Biases by Daniel Kahneman
13. The Hour Between Dog and Wolf: How Risk Taking Transforms Us, Body and Mind by John Coates

Thinking & Logic:

1. Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger by Charles T. Munger
2. Seeking Wisdom from Darwin to Munger by Peter Bevelin
3. Intuition Pumps and Other Tools for Thinking by Daniel C. Dennett
4. A Rulebook for Arguments by Anthony Weston
5. Being Logical: A Guide to Good Thinking by D. Q. McInerny
6. Think Like an Engineer by Mushtak Al-Atabi
7. Thinking in Systems: A Primer by Donella H. Meadows

Political Economy, International Relations, Foreign Policy and Geopolitics:

1. Social Theory of International Politics by Alexander Wendt
2. Constructing the World Polity by John Ruggie
3. Foreign Policy: Theories, Actors, Cases by Steve Smith
4. The Political Economy of International Relations by Robert Gilpin
5. Expert Political Judgement by Philip Tetlock
6. Geopolitics: The Geography of International Relations by Saul Bernard Cohen
7. Perception and Misperception in International Politics by Robert Jervis
8. The Grand Chessboard: American Primacy and Its Geostrategic Imperatives by Zbigniew Brzezinski
9. The Trial of Henry Kissinger by Christopher Hitchens
10. Diplomacy by Henry Kissinger

Probability & Decision Theory:

1. Rational Decisions by Ken Binmore
2. Philosophical Theories of Probability by Donald GIllies
3. A Treatise on Probability by John Maynard Keynes

Risk Management: Statistics, Position Sizing & Mathematics:

1. Fortunes Formula by William Poundstone
2. Beat the Market by Edward O. Thorp
3. The Kelly Capital Growth Investment Criterion: Theory and Practice by Leonard MacLean
4. Fooled by Randomness by Nassim Nicholas Taleb
5. The Black Swan by Nassim Nicholas Taleb
6. The Misbehavior of Markets: A Fractal View of Financial Turbulence
7. Against the Gods by Peter L Bernstein
8. The Definitive Guide to Position Sizing by Van Tharp

History:

1. Manias, Panics and Crashes: A History of Financial Crises by Charles P. Kindleberger
2. Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay
3. Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor
4. The Ascent of Money: A Financial History of the World by Niall Ferguson
5. Virtual History: Alternatives and Counterfactuals by Niall Ferguson
6. The Rotten Heart of Europe by Bernard Connolly

Economics:

1. Essays in Persuasion by John Maynard Keynes
2. The Collected Works of F. A. Hayek
3. Imperfect Knowledge Economics by Roman Frydman
4. Can Capitalism Survive? Creative Destruction and the Future of the Global Economy by Joseph A. Schumpeter
5. Stabilizing an Unstable Economy by Hyman P. Minsky

Sociology:

1. Economy and Society: An Outline of Interpretive Sociology by Max Weber

Philosophy of Science:

1. The Logic of Scientific Discovery by Karl Popper

Philosophy:

1. Letters from a Stoic by Lucius Annaeus Seneca
2. Meditations by Marcus Aurelius

Biology, Cosmology & Physics: 

1. Richard Feynman’s Lectures by Richard Feynman
2. Sapiens: A Brief History of Humankind by Yuval Noah Harari
3. Darwin’s Dangerous Idea: Evolution and the Meanings of Life by Daniel Dennett
4. The Greatest Show on Earth: The Evidence for Evolution by Richard Dawkins
5. The Grand Design by Stephen Hawking
6. A Universe From Nothing by Lawrence M. Krauss
7. Cosmos by Carl Sagan
8. Death By Black Hole by Neil deGrasse Tyson

Value Investing:

1. Security Analysis by Benjamin Graham
2. Value Investing: Tools and Techniques for Intelligent Investment by James Montier
3. The Essays of Warren Buffett by Warren Buffett
4. You Can be a Stock Market Genius by Joel Greenblatt
5. Fooling Some of the People All of the Time by David Einhorn
6. Margin of Safety by Seth Klarman

Short Selling & Cooking the Books:

1. The Art of Short Selling by Kathryn Staley
2. Financial Shenanigans by Howard Schilit
3. Quality of Earnings by Thornton O’Glove
4. Unaccountable Accounting: Games Accountants Play by Abraham Briloff

Technical Analysis:

1. Technical Analysis and Stock Market Profits by Richard W Schabacker
2. Evidence Based Technical Analysis by David Aronson
3. Technical Analysis of Stock Trends by Robert Edwards & John Magee
4. Technical Analysis of the Financial Markets by John Murphy

Quantitative Finance, Systematic Trading, Programming & Coding:

1. The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed it by Scott Patterson
2. Quantitative Trading with R: Understanding Mathematical and Computational Tools from a Quant’s Perspective by Harry Georgakopolous
3. My Life as a Quant: Reflections on Physics and Finance by Emanuel Derman
4. Statistically Sound Machine Learning for Algorithmic Trading of Financial Markets by David Aronson
5. Algorithmic Trading by Ernie Chan

Biography:

1. Elon Musk: Tesla, SpaceX and the Quest for a Fantastic Future by Ashlee Vance
2. The King of Oil by Daniel Ammann
3. Losing My Virginity: How I Survived, Had Fun, and Made a Fortune Doing Business My Way by Richard Branson
4. Steve Jobs by Walter Isaacson
5. Arnold: The Education of a Bodybuilder by Arnold Schwarzenegger
6. The Greatest Minds of All Time by Will Durant

Business & Entrepreneurship:

1. Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel
2. Bold: How to Go Big, Create Wealth and Impact the World by Peter H. Diamandis

Personal Development:

1. How to Get Rich: One of the World’s Greatest Entrepreneurs Shares His Secrets by Felix Dennis
2. Think and Grow Rich by Napoleon Hill
3. How to Win Friends and Influence People by Dale Carnegie
4. Awaken the Giant Within by Tony Robbins
5. The 7 Habits of Highly Effective People by Stephen R. Covey
6. Influence: The Psychology of Persuasion by Robert B. Cialdini
7. The 48 Laws of Power by Robert Greene
8. The 4-Hour Workweek by Tim Ferriss
9. The Alchemist by Paolo Coelho
10. The Four Agreements by Don Miguel Ruiz
11. Outliers by Malcolm Gladwell

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I left out a lot of books that were close to making this list, but for the sake of deconstructing it to a (semi) realistic number of recommendations and selecting the top percentiles within each topic, some great books were culled. I’ve still got a lot more to read and learn, which means that this list as well as the breadth of topics will probably grow. Albeit, I certainly wish someone had shared this list with me when I first caught the bug – it would have saved me plenty of time!

I’ve found I can optimise the time it takes me to read using audio, particularly for the non-technical tomes. For example, Liars Poker on iTunes is three hours, The Big Short is nine hours and Boomerang is seven hours, hence, there’s no reason you can’t do all three inside a week. I’m a little particular about my books and like to have them in audio, soft copy (pdf) and print. If you’re working to a budget and have a tablet, you’ll find some of these books as pdf’s on the web.

 

Get reading people and actualise your potential!
Carl

Nb. Please note, I’m an amazon affiliate, so if you buy through this site I’ll receive a referral fee.