As we edge closer to the Summer and beach/poolside reading time, I wanted to summarize the books I have found most helpful in becoming a better investor.
I would place investing books into 5 categories although many books may fall into more than one category.
- Biographies of Successful Investors
- History
- Psychology/Sentiment
- Fundamentals
- Other
I will start by reviewing some books about successful investors. No two successful investors are alike and many different styles can work. There is no right way to invest like there is no right way to swing a baseball bat. The one similarity I have found among the most successful investors is that they are able to think apart from the crowd. I consider a biography worthwhile if I can pick up one trait or method that the investor has used.
The book,
Market Wizards, is a classic and is written in interview format. The author, Jack Schwager, interviews top traders and investors. The most interesting aspect of this book was the trials and tribulations that many of these investors went through in order to hone their craft. I have found that I have learned a lot more from losing than from winning.
A more modern version of
Market Wizards is
Inside The House Of Money which is a series of interviews with successful hedge fund managers. In addition to learning about the methods of successful money managers, it gives a look into the workings of the hedge fund world.
Anyone who is serious about investing has probably read a book about Warren Buffett. There are dozens of them out there and I have only read a handful. The best one being
Buffett, The Making Of An American Capitalist.
I enjoyed reading all of the above books. However, the next two books fall into a separate category. They are books that I got useful information out of, but are not very entertaining. Julian Robertson was able to show amazing performance for many decades. Even after his blowup he returned investors who were with him from the beginning over 100 times on their money. I found learning about where he went wrong (style drift, spreading himself too thin), just as useful as what he did right.
Michael Steinhardt has an equally impressive track record, only he left at the top of his game. The book contains a lot about his personal life. I was more interested in his investing skills and wish there was more about that.