Education, education, education! There are two key aspects too improving yourself in any given venture, whether in sport, in business, in your personal life and certainly when it comes to trading and investing. And the first is educating yourself in whatever you are trying to achieve. The second is to then practice all that you have learnt. Critically however, first of all you must learn!
Isaac Newton said, “If I have seen further, it is by standing upon the shoulders of giants”, and it is via reading and education from those that have been successful in their field before us, that we are able to improve ourselves.
We, therefore, present a list of our Top Ten books on trading and investing. This is far from an exhaustive list with there being countless books on the subject on offer, but these are the books that have stood the test of time and we believe are in some instances practical and in other instances entertaining.
We hope you enjoy making your way through our list.
Market Wizards, Jack Schwager (1989)
Jack Schwager has written a number of very well-received trading books, that started with “Market Wizards“. This contain interviews with some of the most successful, post-World War II traders, notably from the 1970s and 1980s, such as Warren Buffet and Paul Tudor Jones.
It is often argued that the best way to learn any craft or occupation is to be mentored by people who have already attained success in the field. “Market Wizards”, allows the reader to onboard sage-like guidance from successful traders. Moreover, the interview style offers captivating, humorous and inspiring experiences, who rely on a wide range of trading and investing strategies.
The original “Market Wizards” book was followed up by five further books since; “The New Market Wizards”, “Stock Market Wizards”, “Hedge Fund Market Wizards”, a compilation, “The Little Book of Market Wizards” and most recently “Unknown Market Wizards”. This latest book interviews individual trading their own accounts, who have had phenomenal success, on many instances surpassing the professional money and investment managers.
A must read, enjoyable page-tuner! Also make sure to check out our interview with Jack Schwager.
Technical Analysis of the Financial Markets, John J. Murphy (1999)
“Technical Analysis of the Futures Markets” was first published in 1986 and has been the go-to book for learning basic and intermediate level technical analysis since then. Murphy updated the book in 1999 with “Technical Analysis of the Financial Markets” to encompass all of the financial markets.
This book has introduced and educated numerous traders about the theories of technical analysis and how to apply them to the financial markets. In particular it conveys t the reader a clear and precise understanding of how to analyse charts, interpret indicators and apply technical analysis in both trading and investing, the reader will certainly benefit from this step-by-step guide through the world of charting. This book is vital reading for all traders and investors.
A key starting point for any budding technical trader, analyst or investor.
Reminiscences of a Stock Operator, Edwin Lefèvre (1923)
Written nearly 100 years ago, but still not the oldest penned book on our list, “Reminiscences of a Stock Operator” has long been acclaimed as a key book for all would-be investors and traders. Jesse Livermore is considered by many very successful investors and traders as the greatest stock trader of all time. This book is an adapted account of his life story, in the guise of the central character, Larry Livingston.
The book is bursting with countless pearls of wisdom on trading, many of which are still frequently quoted today, such as, “Always sell what shows you a loss and keep what shows you a profit“.
The book offers thought-provoking insights into Jesse Livermore’s self-education as a trader but is simply a good read too.
A Random Walk Down Wall Street, Burton Malkiel, 1973
With over a million copies sold, it is hard to ignore this book by the Princeton economist, Burton Malkiel. It promotes the random walk and efficient-market hypotheses and also looks at behavioural finance, plus the psychology behind trading and investing. The author looks across the spectrum of financial market assets; bonds and stocks, real estate and commodities, amongst others.
If you are looking at investing and portfolio building, this is the book for you.
Buffett: The Making of an American Capitalist, Roger Lowenstein, 1995
This book regularly makes bestseller lists in both the investing world, but also in the mainstream. Warren Buffett, the Oracle of Omaha started from stock picking to amassing one of the largest fortunes in the 20th century. He is a cult figure, and the author has drawn on access to those close to Buffett for his biographical insight into the man and his methods.
A great read and must read for the longer-term investor.
The Intelligent Investor, Benjamin Graham, 1949
Written in 1949 Benjamin Graham’s “The Intelligent Investor” is seen to be the definitive text on “value investing” and acclaimed as the best investing book ever written by Warren Buffett. “Value investing” is one of the most widespread of investing strategies and suggests buying shares that seem under-valued, in respect of their intrinsic value (calculated via fundamental analysis).
Graham examines numerous ways of managing a portfolio, from both a defensive and positive methodology. The Intelligent Investor has sold over 1 million copies and should be read by investors and traders alike.
Liar’s Poker, Michael Lewis, 1989
A first-hand, semi-autobiographical account of being a bond market salesman in the heady days of the late 1980s at the Wall Street giant, Salomon Brothers. This will not likely directly help you with your trading or investing, but it does make for a fascinating read and insight into the institutional world of financial markets in this era. It looks at the mentality and the culture of how Wall Street used to, and to some extent still works.
Michael Lewis went on to write another book on our list, The Big Short. Both make for great reads!
Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay, 1841
The oldest penned book on our list, an early guide to broader crowd psychology, but of particular note for the trader and investor in relation to financial market and asset price bubbles. The book covers the South Sea bubble, Tulipomania and the Mississippi Company and bubble, and highlights how herd mentality created asset price bubbles throughout history. A great exploration and guide for identifying and managing both current and future bubbles.
Irrational Exuberance, Robert Shiller, 2000
Robert Shiller was the winner of the Nobel Prize in Economics in 2013. This bestseller’s title, “Irrational Exuberance” was a nod to Alan Greenspan, the Federal Reserve Chairman, who used the term in reference to the surging, late 1990s stock market. Having predicted the dotcom bubble collapse, it has been updated to now reference the 2007-2008 Global Financial Crisis and has obvious implications for the coronavirus world. It is a well-researched understanding of human behaviour in relation to economics and financial markets.
The Big Short: Inside the Doomsday Machine, Michael Lewis, 2010
Michael Lewis is the only author to have two books on our list (alongside Liar’s Poker). The entertaining film based on the book, “The Big Short”, also made it onto our Top 10 Trading Movies list.
It follows the US housing market bubble of the 2000s and some of the key players who “bet” against the market, that this bubble would burst, culminating in the 2007-2008 Global Financial Crisis. The book was short-listed for various book awards and was on The New York Times bestseller list for over 6 months!
A combination of detailed, but very understandable explanation and at times dark humour, another enjoyable read.
We trust that you enjoy making your way through our list of Top Ten Trading and Investing Books. Please feel free to leave comments below on any of these you have read or let us know if you have any other books you feel are must reads.