Top 10 Books Every Investor Should Read
“Barbarians at the Gate: The Fall of RJR Nabisco” (2003) by Bryan Burrough and John Helyar
Experienced financial journalists Bryan Burrough and John Helyar capture the essence of the leveraged buyout craze through a narrative look at the players involved in the groundbreaking $25 billion deal to take control of an American icon. It is a tale rife with greed, corruption, secret deals and manipulation of every kind.
“The Richest Man in Babylon” (2002) by George S. Clason
This book is a rare find in the world of financial services literature. Written in parable form, it seems almost hokey until you realize just how much wisdom the author has packed into this slim volume. Instead of the jargon, hot tips and glorification of get-rich-quick schemes offered by so many books these days, this work of art provides a heaping dose of financial common sense. It’s the perfect choice for anyone who cringes at the sight of yet another portfolio manager or prognosticator touting the latest new idea.
“When Genius Failed: The Rise and Fall of Long-Term Capital Management” (2002) by Roger Lowenstein
When Salomon Brothers arbitrage genius John Meriwether founded a hedge fund and staffed it with the best and brightest minds in the country, including two Nobel Memorial Prize winners in economics, there was no doubt that his brainchild was destined to be a winner. The fund’s principals were so convinced that their success was inevitable that they held losing positions until the Federal Reserve had to orchestrate a bailout to avoid a broader collapse in the financial markets. Lowenstein provides an inside look at how it all happened.
“The Wall Street Journal Guide to Understanding Money and Investing” (1999) by Kenneth M. Morris, Virginia B. Morris and Alan M. Siegel
Perfect for the novice investor on your list, this book opens with the history of money and closes with an overview of options trading. In the pages in-between, it provides a thorough, reader-friendly introduction to stocks, bonds and mutual funds. This book should be required reading for anyone interested in building a firm foundation of market knowledge and establishing a basic understanding of Wall Street’s vocabulary.
“John Bogle and the Vanguard Experiment” (1997) by Robert Slater
John Bogle founded the Vanguard Group and turned it into a mutual fund powerhouse by building on a foundation of low-cost index funds. Bogle’s story is a fascinating look at how one man can have an enormous impact on an entire industry and shape the habits of millions of investors. It’s a well-told tale about one of the good guys in a business where good guys are sometimes hard to find.
“Extraordinary Popular Delusions and the Madness Of Crowds” (1995) by Charles Mackay
First printed in 1841, this timeless classic delves into the history of bizarre behavior perpetrated by large crowds. It’s a detailed look at the impact of fear, greed and euphoria on human behavior. While it’s not the most gripping book you will ever read, it does provide timeless lessons that those who fail to heed are doomed to repeat.
“Den of Thieves” (1992) by James B. Stewart
Professional journalist James B. Stewart brings to life a story of high finance, insider trading and scandal. Telling the tale of how four of the biggest (and most infamous) names on Wall Street in the ’80s – Ivan Boesky, Michael Milken, Martin Siegel and Dennis Levine – created the greatest insider-trading ring in financial history and almost got away with it, this book paints a disturbing portrait of the temptations of greed.
“Liar’s Poker” (1989) by Michael Lewis
Liar’s Poker is a Wall Street gambling game based on deception. It is also a near-perfect metaphor for life on the bond trading desk at Salomon Brothers, as experienced by Lewis during his tenure there in the 1980s. Lewis provides an entertaining, yet disheartening, look at yet another way in which the Wall Street money machine ripped off investors. Despite its age, this book is still required reading at some of the country’s top business schools.
“The Predators’ Ball: The Inside Story Of Drexel Burnham And The Rise Of The Junk Bond Raiders” (1988) by Connie Bruck
Michael Milken’s junk bond empire came out of nowhere to change the face of the banking industry. Billionaires were made on the leveraged buyout deals financed by the king of junk and his colleagues at Drexel Burnham. When greed got the upper hand, Milken’s world collapsed. Bruck weaves a compelling tale, making this story read more like a novel than a case study.