I recently had the pleasure of giving a talk to CSIMA, which is the Columbia Student Investment Management Association. Afterwards, they asked for a list of investing book recommendations. I thought I would post it here on Medium for the benefit of anyone who was interested. The list became quite long, so I italicized the ones that were most important to me.
Recommended reading order that I think builds knowledge in a logical way:
1) “One Up on Wall Street,” 2) “The Warren Buffett Way,” 3) basic accounting via “Why Stocks Go Up and Down,” 4) basic valuation via Bruce Greenwald’s “Value Investing,” 5) the anthologies especially “Market Wizards” and “Money Masters of Our Time,” 6) competitive advantage via “Competition Demystified” and “Understanding Michael Porter,” 7) “Warren Buffett’s Letters to Shareholders,” 8) behavioral finance via “The Undoing Project” and “The Little Book of Behavioral Finance,” 9) “The Checklist Manifesto” and “Superforecasting,” 10) Mauboussin’s books and essays and 11) then whatever seems most interesting to you.
I also highly recommend Patrick O’Shaughnessy’s podcast “Invest Like the Best,” which can accelerate one’s learning especially if done in conjunction with reading.
If you are going to be an analyst at an investment firm, you must have absolute mastery over accounting, modeling and valuation. I did not focus on books that will lead to deep technical mastery of accounting and modeling; these skills are likely best obtained through classes and/or the CFA. Modeling in particular can only be mastered through actually doing it.
If you are going to be an analyst, I would also suggest reading “Best Practices for Equity Research Analysts” which is the only real how-to guide to being an analyst that I have found. Reading “Pitch the Perfect Investment” is also highly recommended for anyone who wants to be a successful professional investor. Rightly or wrongly, selling your ideas to portfolio managers is a critical part of success as an analyst and selling your ideas to clients is essential to success as a portfolio manager. Finally, the book that best conveys what it is like to be a professional portfolio manager is “Investing Against the Tide.”
After a point, there are diminishing returns to the study of the “craft” of investing whereas there are increasing returns to improving your understanding of companies and industries.
If you are interested in technology investing, I highly recommend reading Ben Thompson’s Stratechery newsletter, Benedict Evans’s newsletter, the a16z blogs and podcasts and Bill Gurley’s blog abovethecrowd.com. Might even be wise to start at the beginning and read all of them all the way through. I have also begun to recently enjoy deeplytechnical.com.
Interesting to note how few books have been written about growth investing vs. the hundreds of books on value investing.
My intention is to update this list over time and perhaps write some book reviews given that writing this has inspired me to go back and read books that I have not read in 10–20 years.
Favorites are italicized
“One Up on Wall Street” by Peter Lynch
“Beating the Street” by Peter Lynch
“Poor Charlie’s Almanack”
“Think Twice” by Michael Mauboussin
“The Success Equation” by Michael Mauboussin
“More than you Know” by Michael Mauboussin
“Expectations Investing” by Alfred Rappaport and Michael Mauboussin
All of Michael Mauboussin’s essays. Especially “Measuring a Moat.” Can be found on the internet in various places: michaelmauboussin.com, ValueWalk’s Michael Mauboussin’s resource page, Reddit and Ritholtz.com.
Bill Gurley’s blog posts on abovethecrowd.com
“The Little Book that Beats the Market” by Joel Greenblatt
“Value Investing” by James Montier
“Value Investing” by Bruce Greenwald
“Investing against the Tide” by Anthony Bolton. The only real description of what it is like to be a professional portfolio manager.
“The Most Important Thing” by Howard Marks. I like the annotated version.
“Mastering the Market Cycle” by Howard Marks.
“Big Money Thinks Small” by Joel Tillinghast
“Common Stocks and Uncommon Profits” by Philip Fisher. One of the few books about growth investing.
“Reminiscences of a Stock Operator” by Edwin Lefevre. I like the annotated version.
“The Warren Buffett Way” by Robert Hagstrom
“The Essays of Warren Buffett” by Lawrence Cunningham
“Warren Buffet’s letters to Shareholders”
“Buffett: the Making of an American Capitalist” by Roger Loewenstein. I prefer to this to “The Snowball.”
“How to Think like Benjamin Graham and Invest like Warren Buffett” by Lawrence Cunningham
“A Man for All Markets” by Edward O. Thorp
“Contrarian Investment Strategies” by David Dreman
“How to Make Money in Stocks” by William O’Neil
“Margin of Safety” by Seth Klarman
“Intelligent Investor” by Benjamin Graham. Mostly Chapters 8 and 20.
“A Zebra in Lion Country” by Ralph Wanger
Chuck Akre’s essays and letters. Especially the “Art of (Not) Selling.”
“You can be a Stock Market Genius” by Joel Greenblatt
“The Little Book that Builds Wealth” by Pat Dorsey
“The Misbehavior of Markets” by Benoit Mandelbrot
“Capital Returns” by Edward Chancellor
“Quality Investing” by Lawrence Cunningham. One of the few books about growth investing.
“The Craft of Investing” by John Train
“Pitch the Perfect Investment” by Paul Sonkin and Paul Johnson
“Deep Value” by Tobias Carlisle
“The Investment Checklist” by Michael Shearn
“Best Practices for Equity Research Analysts” by James Valentine. The best practitioners guide to being a professional analyst.
“The Successful Technology Investor” by William de Gale
“Diary of a Hedge Fund Manager” by Keith McCullough
“Style Investing” by Richard Bernstein. Difficult to obtain as its not available on Kindle, so I will just summarize by saying that statistically value investors differentiate themselves on their entries whereas growth investors differentiate themselves on their exits.
“Tao Jones Averages” by Bennett Goodspeed
The “Invest Like the Best” podcast hosted by Patrick O’Shaugnessy. Obviously not a book, but just so good.
I *really* love anthologies of interviews with great investors and traders:
“Market Wizards” by Jack Schwager
“New Market Wizards” by Jack Schwager
“Stock Market Wizards” by Jack Schwager
“Hedge Fund Market Wizards” by Jack Schwager
“The Money Masters” by John Train
“The New Money Masters” by John Train
“Money Masters of our Time” by John Train. Please note that this book combines most of the chapters of the previous two.
“Inside the House of Money” by Steven Drobny
“The Manual of Ideas” by John Mihaljevic
“Big Mistakes” by Michael Batnick
“The Little Book of Behavioral Finance” by James Montier
“The Undoing Project” by Michael Lewis
“Inside the Investors Brain” by Richard Peterson
“Behavioral Investing” by James Montier
“Thinking Fast and Slow” by Daniel Kahneman. This book is a serious time commitment and is effectively summarized in “The Undoing Project.”
“Misbehaving” by Richard Thaler
Strategy, Forecasting, Competitive Advantage and some light Technology reading:
“Competition Demystified” by Bruce Greenwald
“Understanding Michael Porter: The Essential Guide to Competition and Strategy” by Joan Magretta
“Good to Great” by Jim Collins
“Built to Last” by Jim Collins
“The Everything Store” by Brad Stone. Understanding Amazon is important for almost every investor.
“Inside the Plex” by Steven Levy. Same goes for Google.
“Steve Jobs” by Walter Isaacson. And Apple.
“Stratechery” newsletter by Ben Thompson. Fantastic newsletter focused on technology.
Benedict Evans’s newsletter. See above.
The a16z blog and podcast. See above.
Jeff Bezos’s Letters to Shareholders. I believe these are on a par with Buffett’s.
The Incerto series by Nicholas Nassim Taleb
“Superforecasting” by Philip Tetlock
“The Signal and the Noise” by Nate Silver
“The Gorilla Game” by Geoffrey Moore
“The Innovators Dilemma” by Clayton Christiansen
“Investing: the Last Liberal Art” by Robert Hagstrom
“Seeking Wisdom” by Peter Bevelin
“The Outsiders” by William Thorndike
“Money Ball” by Michael Lewis
“Great Mental Models” by Shane Parrish
“Zero to One” by Peter Thiel
“The Checklist Manifesto” by Atul Gawande
“Loonshots” by Safi Bahcall
“Hidden Champions of the 21st Century” by Hermann Simon
Accounting, Valuation, Technical Analysis and Risk:
“Why Stocks Go Up and Down” by William Pike is the easiest introduction to accounting. Mastering accounting is critical and this book is a good first step on a long road.
“How to Read a Financial Report” by John Tracy — another easy introduction to accounting.
“Warren Buffett & Interpretation of Financial Statements” by Mary Buffett
“Quality of Earnings” by Thornton O’Glove
“Financial Shenanigans” by Howard Schilit
“Warren Buffett Accounting Book” by Preston Pysh
“Financial Statement Analysis” by Martin Fridson
“Valuation: Measuring and Managing the Value of Companies” by McKinsey is the best book on valuation.
“Value: The Four Cornerstones of Corporate Finance” by McKinsey
“Trading Risk” by Kenneth Grant
“Your Complete Guide to Factor-Based Investing” by Andrew Berkin and Larry Swedroe. I do not believe in factor based investing, only that understanding factors is critical for risk management and this is an accessible introduction.
I would recommend reading the Barra manual before you become a portfolio manager to have a more complete understanding of factors and how they are calculated — i.e. have a robust understanding of the differences between Momentum, Volatility and Beta.
“How to Lie with Statistics” by Darrell Huff
“Fortunes Formula” by William Poundstone. I’ve never found a great way to apply the Kelly criterion to position sizing but was nonetheless helpful.
“Trading for a Living” by Alexander Elder. Most professional investors pay attention to charts.
“Efficiently Inefficient” by Lasse Pedersen