Book Recommendations for the Thoughtful Investor
April 4, 2010 5:57 AM Subscribe
Can anyone recommend a book about investing? Here's the catch -- I need a book that is written in plain straightforward language, but is also nuanced and well thought out in its arguments. Please, no books fundamentally centered around a particular argument or theory (i.e. omg index fundz only!!) and no I Will Teach You To Be Rich recs.
If it matters, I will be a passive investor and I am a UK resident.
Passive meaning own index funds? Or passive meaning buy and hold? If you plan on buying indexes your only question is allocation. If its buy and hold then there are lots of books worth reading
posted by JPD at 6:00 AM on April 4, 2010
posted by JPD at 6:00 AM on April 4, 2010
Graham and Dodd - Much better for the layperson is "The Intelligent investor"
Christopher Browne wrote a pretty good "Little Book of Value Investing"
Also there are the "Magic Formula" Books (not as schticky as the name implies)
etc etc. You could go on for days here.
posted by JPD at 6:04 AM on April 4, 2010
Christopher Browne wrote a pretty good "Little Book of Value Investing"
Also there are the "Magic Formula" Books (not as schticky as the name implies)
etc etc. You could go on for days here.
posted by JPD at 6:04 AM on April 4, 2010
The other thing to understand is that no investor became a successful one merely by reading a book.
Buy and hold investors either allocate all their money to index funds or else have a unique ability to do fundamental analysis on a company and see value where others do not. Buffett and Templeton are two examples of the latter.
The vast majority of people are better served by sticking their money in a well-diversified portfolio of index funds.
That said, if you really do want to learn how to invest, it's best to start with the basics, by Dodd and Graham et al and work your way from there.
But no single book will be adequate preparation.
posted by dfriedman at 6:06 AM on April 4, 2010
Buy and hold investors either allocate all their money to index funds or else have a unique ability to do fundamental analysis on a company and see value where others do not. Buffett and Templeton are two examples of the latter.
The vast majority of people are better served by sticking their money in a well-diversified portfolio of index funds.
That said, if you really do want to learn how to invest, it's best to start with the basics, by Dodd and Graham et al and work your way from there.
But no single book will be adequate preparation.
posted by dfriedman at 6:06 AM on April 4, 2010
Not exactly what you are talking about, but I think it will be a piece of the solution pie- Jim Cramer's "Confessions of a Street Addict" is a frenetic autobiography about his time as a hedge fund manager. There is a lot of insight in there about how the market operates.
posted by gjc at 6:48 AM on April 4, 2010 [1 favorite]
posted by gjc at 6:48 AM on April 4, 2010 [1 favorite]
I've just read The Elements of Investing, Malkiel and Ellis. It's written in plain straightforward language. They are very strong index fund proponents, but the book is nuanced and well thought out in its arguments.
posted by timeistight at 7:17 AM on April 4, 2010
posted by timeistight at 7:17 AM on April 4, 2010
Malkiel's A Random Walk Down Wall Street.
When I asked a similar question to yours to a sibling working in finance this was the book they sent me in response.
posted by needled at 7:23 AM on April 4, 2010
When I asked a similar question to yours to a sibling working in finance this was the book they sent me in response.
posted by needled at 7:23 AM on April 4, 2010
Malkiel's book is great. It also, I think, demonstrates how complex financial markets are. Hence my previous comment about a single book not being sufficient.
posted by dfriedman at 7:29 AM on April 4, 2010
posted by dfriedman at 7:29 AM on April 4, 2010
I came here to recommend A Random Walk Down Wall Street too.
posted by R. Mutt at 7:34 AM on April 4, 2010
posted by R. Mutt at 7:34 AM on April 4, 2010
I like Andrew Tobias' The Only Investment Guide You'll ever Need.
posted by theora55 at 8:15 AM on April 4, 2010
posted by theora55 at 8:15 AM on April 4, 2010
Not exactly on topic, but there's an interesting recent review of the book, The 100 Best Business Books Of All Time over at Kevin Kelly's CoolTools...
posted by fairmettle at 9:08 AM on April 4, 2010
posted by fairmettle at 9:08 AM on April 4, 2010
Like R. Mutt, and needled, I too came here to recommend a Random Walk Down Wall Street.
My friend has read it and has invested using it and has a diversified portfolio.
Further, he did say it's somewhat technical as well, and if you just read a few pages into it, you will discover the following sayings that have inclined me to read this book in the future
"You must distinguish between your attitude toward and your capacity for risk."
posted by iNfo.Pump at 10:44 AM on April 4, 2010
My friend has read it and has invested using it and has a diversified portfolio.
Further, he did say it's somewhat technical as well, and if you just read a few pages into it, you will discover the following sayings that have inclined me to read this book in the future
"You must distinguish between your attitude toward and your capacity for risk."
posted by iNfo.Pump at 10:44 AM on April 4, 2010
Not sure if this is exactly what you're looking for but The Wealthy Barber is hugely popular with people looking for very basic, understandable information on investing and financial planning.
posted by Jaybo at 11:17 AM on April 4, 2010
posted by Jaybo at 11:17 AM on April 4, 2010
The Little Book That Beats the Market is easy to read, makes intuitive sense has a lot of evidence to back it up.
They also have a website
posted by cmccormick at 11:58 AM on April 4, 2010
They also have a website
posted by cmccormick at 11:58 AM on April 4, 2010
Not a book, but rather a podcast, but Financial Markets gives a nice overview of financial options available. If you skip the guest lectures, it's about 24 hours in length. All the jargon is explained, often with a bit of etymology and history.
It's very light on math; there's perhaps two lectures that deal with math substantially, one to deal with discount rates and interest, and one to deal with risk and probability. The problem sets hidden within Downloads->Course Pages are more mathematical, if you desire. Problem set 3, in particular, references A Random Walk Down Wallstreet, having you come up with formulas to predict historical market data.
posted by pwnguin at 12:23 PM on April 4, 2010 [1 favorite]
It's very light on math; there's perhaps two lectures that deal with math substantially, one to deal with discount rates and interest, and one to deal with risk and probability. The problem sets hidden within Downloads->Course Pages are more mathematical, if you desire. Problem set 3, in particular, references A Random Walk Down Wallstreet, having you come up with formulas to predict historical market data.
posted by pwnguin at 12:23 PM on April 4, 2010 [1 favorite]
Another vote for A Random Walk. It's an oldie, but a goodie.
posted by caddis at 1:27 PM on April 4, 2010
posted by caddis at 1:27 PM on April 4, 2010
N'thing Greenblatt's "The Little Book That Beats the Market." Terrible title, terrific Graham/Dodd-based approach to investing. Also n'thing the Chris Browne book that JPD mentioned (it's from the same series).
It's worth noting that the answers in this thread are either for Graham and his intellectual heirs or efficient market types like Malkiel. Most of us who identify with one of those camps tend to think the other camp is full of shit. And they are.
posted by mullacc at 6:42 PM on April 4, 2010
It's worth noting that the answers in this thread are either for Graham and his intellectual heirs or efficient market types like Malkiel. Most of us who identify with one of those camps tend to think the other camp is full of shit. And they are.
posted by mullacc at 6:42 PM on April 4, 2010
In the Graham/Tweedy vein you can always download their PDF of "What has worked in investing" shockingly the answer is "what we do" but its still a good basic discussion of value investing.
posted by JPD at 7:22 PM on April 4, 2010
posted by JPD at 7:22 PM on April 4, 2010
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posted by dfriedman at 5:59 AM on April 4, 2010