Looking for a good, accessible book about the stock market.

January 17, 2013 7:22 AM

Posting for my sister. Can anyone recommend a good book about the stock market for a smart beginner and layperson?
posted by orange swan to Work & Money (12 answers total)

If she's looking for investment advice, The Bogleheads Guide to Investing.

If she's looking for history and how the stock market (and overall financial system) work, The Ascent of Money.
posted by pie ninja at 7:26 AM on January 17, 2013 [2 favorites]

For a healthy dose of skepticism that should help steer her away from making big mistakes, I recommend The Big Investment Lie.
posted by Dansaman at 7:30 AM on January 17, 2013

Random Walk Down Wall Street and The Intelligent Investor (paired with something like Bogleheads that points them towards passive investing)
posted by JPD at 7:34 AM on January 17, 2013 [4 favorites]

I have been a portfolio manager for 20 years and for a beginner I would recommend first The Little Book that Beats the Market, which was written by a hedge fund manager to educate his children. This is not so much as to endorse his investment strategy, as to firmly root your (sister's) understanding of stocks in company profits.
posted by shothotbot at 7:37 AM on January 17, 2013

No request for stock market books will be complete without a nod to Reminiscences of a Stock Operator. Written almost 100 years ago its still a great read, and even as the market changes the psychology that drives it remains the same.
posted by H. Roark at 7:50 AM on January 17, 2013 [1 favorite]

I highly recommend Naked Economics. It doesn't tout itself as a stock market guide, but it contains an excellent, readable introduction to not only stock markets, but also other markets (and the rest of the economy, which affects the stock market).

I definitely fit the description of "a smart beginner and a layperson." I'm smart and educated, but I know little to nothing about the world of finance and economics. Everything I'd read either made my head hurt by throwing in lots of arcane jargon, or smelled like a confidence game, trying to sell me ideas too good to be true. Naked Economics actually explains itself and presents evidence for its claims (and its claims are not "Here's how to get rich!" but "Here's how this stuff actually works").
posted by snowmentality at 9:15 AM on January 17, 2013

The Four Pillars of Investing by William Bernstein

Most libraries should have a copy available.
posted by 99percentfake at 10:08 AM on January 17, 2013

Investor's Business Daily's Guide to the Markets is a bit dated and doesn't cover newer developments such as ETFs, but the basics of how the markets work has not changed since 1996.
posted by kindall at 10:12 AM on January 17, 2013

Assuming she's in Canada:

Rob Carrick’s Guide to What’s Good, Bad and Downright Awful in Canadian Investments Today is a realistic, accessible book on investing. The Canadian Couch Potato blog is also useful; although it gets technical in places it also has portfolio suggestions for beginner investors.
posted by sheprime at 10:36 AM on January 17, 2013 [1 favorite]

Perhaps the classic is A Random Walk Down Wall Street. First published in 1973, now on its 10th edition, with over 1.5 million copies sold. Written by an eminent financial economist for laypeople, it's accessible and often entertaining while still being intelligent and substantive. It covers history and theory and then finishes up with specific investment advice. The only downside is that because it does cover all those aspects, it's a bit long. (Current edition is listed at 496 pages, but a chunk of that is end material, so it's probably about 400 pages of text.)

Here's a 30-page summary to give you a sense of the substance, but the book itself is a much better read than suggested by the dry summary.
posted by Mr.Know-it-some at 1:05 PM on January 17, 2013

The Wall Street Journal Guide to Money and Investing goes beyond the stock market, and describes all kinds of financial instruments and how they are related. It's brief, illustrated, fun to browse, and dead simple for the layperson. They used to give it out to the incoming analysts at Goldman Sachs.

For the more sophisticated and cynical investor, I recommend "A Random Walk Down Wall Street"

It's always fun (and free) to check out Warren Buffet's annual letter to shareholders.
posted by 0110 at 4:57 PM on January 17, 2013

If you're interested in this because of the recent crash, I've heard good things about "When Genius Failed" (history of the decline and fall of Long Term Capital Management) and "The Black Swan" (some common misapplications of statistics in finance).
posted by d. z. wang at 8:33 PM on January 17, 2013