Top 12 best investment books every investor should read

Best investment books on investing, trading, personal finance and investor behavior

Investing is an ongoing learning curve. One of the best ways to learn more about investing is by reading widely on the topic. However, there are thousands of books on the subject. If you search for investment books on Amazon, you will see 30,000 results. Furthermore, some of the best investing books are not nearly about investing, but related topics like personal finance and behavioral finance.

Investment Books
Image Source: Maksim Kabakou / Shutterstock.com

In this post we list what we believe to be the best investing books to help you narrow down the list. This list includes books on investing, trading, personal finance, and investor behavior.

  1. Reminiscences of a Stock Operator by Edwin Lefèvre
  2. One up on Wall Street by Peter Lynch
  3. The Intelligent Investor by Benjamin Graham
  4. Common Stocks and Uncommon Profits by Philip Fisher
  5. The Little Book of Common Sense Investing by John C. Bogle
  6. Fooled by Randomness by Nassim Taleb
  7. A Random Walk Down Wall Street by Burton Malkiel
  8. Thinking Fast and Slow by Daniel Kahneman
  9. The Behavior Gap by Carl Richards
  10. Rich Dad Poor Dad by Robert Kiyosaki
  11. Poor Charlie’s Almanack by Charlie Munger
  12. Market Wizards by Jack D Schwager

1. Reminiscences of a Stock Operator by Edwin Lefèvre

Reminiscences of a Stock Operator / Investment Books
Reminiscences of a Stock Operator

This should be one of the first stock market books any investor or trader should read. While it follows the career of a speculator, there are lessons for anyone involved in any market. The book is set during the early days of the stock market from the 1890s to the 1920s. It is written as if in the first person by Jesse Livermore, regarded by many as the best trader of all time. Although the book is fictional, it is based on real events. Investing in stocks only became popular shortly before the period during which the story takes place.

You will notice that while the mechanics of the market have changed a lot, there is also a lot that hasn’t changed. The story covers the many traps that still catch traders. Jesse Livermore went bankrupt several times, primarily as a result of using too much leverage. The story also covers the way insiders can manipulate stock prices. If you want to learn about the timeless aspects of markets, like bubbles, crowd behavior, speculation, and the value of paper trading, this is one of the best investing books you can read.

2. One up on Wall Street by Peter Lynch

One up on Wall Street
One up on Wall Street

One up on Wall Street: How to use what you already know to make money in the market is one of the most accessible stock investing books around. Peter Lynch managed some of the top performing mutual funds during the 1970s and 1980s. He wrote the book when he retired in 1989. You will find the book on most lists of the best investing books.

During his career, Lynch was highly regarded for his growth investing. In fact, he is credited with coining the terms tenbagger and multibagger stock. When it comes to growth stocks he shows you ways to figure out if a stock is a good investment without getting caught up in the hype.

But the book will also show you how to find overlooked companies that other investors are ignoring. He also explains stock picking techniques to find companies you already encounter on a daily basis. The point being that there are a lot of very profitable companies in corporate America that appear dull and unexciting. Besides rapidly growing and dull companies, the book covers dividend investing and investing in turnaround situations. It also considers what investors should do during a stock market crash.

3. The Intelligent Investor by Benjamin Graham

The Intelligent Investor / Best Investment Books
The Intelligent Investor

Warren Buffett rates The Intelligent Investor as one of his best investing books ever written – if not the best. Benjamin Graham, who is often referred to as the father of value investing, wrote Security Analysis in 1934 and The Intelligent Investor in 1949. The first point that Graham stresses is that investors need to draw a distinction between speculation and investing.

The rest of the book offers practical advice on valuing a company, investing with a margin of safety, and using the irrationality of “Mr. Market” to your advantage. Since it was originally written the book has been updated several times by Jason Zweig a writer at the Wall Street Journal. If you consider yourself a value investor, then this one of the investment books you must read.

4. Common Stocks and Uncommon Profits by Philip Fisher

Common Stocks and Uncommon Profits
Common Stocks and Uncommon Profits

Some of the most valuable investment books offer practical, common sense advice on investing. That is exactly what Common Stocks and Uncommon Profits seeks to do. Philip Fisher was a successful money manager who ran his own firm from 1931 to 1999. First published in 1958, his book is just as relevant today as it was in the 1950s.

The book emphasizes the value of holding stocks for the long term, rather than trying to time the market. It also offers tips on uncovering the information you need to make investment decisions. It also offers 15 criteria to judge a company by, and 10 investment warning signs and reasons to avoid certain stocks. In short, Common Stocks and Uncommon Profits is a great Investing 101 book for anyone interested in investing.

5. The Little Book of Common Sense Investing by John C. Bogle

The Little Book of Common Sense Investing / Best Investment Books
The Little Book of Common Sense Investing

The simplest way to start investing is by investing in exchange traded funds (ETFs). When you get started with ETF investing, the best investing book you can read is The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns. John Bogle founded Vanguard, the company that launched the first index fund. Vanguard is a leading ETF issuer and index investing company.

The book does a particularly good job explaining the advantages of passive investing, diversification, and asset allocation. It also emphasizes the impact management fees and taxes have on long term returns. Bogle’s book is one of the best investment books you can read to learn the fundamentals of investing that are often overlooked.

6. Fooled by Randomness by Nassim Taleb

Fooled by Randomness
Fooled by Randomness

Fooled by Randomness is one of the best investing books that isn’t really about investing. The author, Nassim Taleb popularized the term black swan, in his next book, The Black Swan – but many regard this book as a better book for investors. Fooled by Randomness is all about the role that luck and randomness plays in life. It explains that because of hindsight and survivorship bias, people often attribute success to actions or behaviors when in fact luck played a greater role.

If you consider someone who wins the lottery, and ignore all those who don’t, you could say that to become wealthy all you need to do is buy a lottery ticket. The same principle applies to many aspects of life including careers, innovation, and of course investing. The book also illustrates the way in which people perceive patterns when in fact they are looking at something random. This of course also applies to investing.

7. A Random Walk Down Wall Street by Burton Malkiel

A Random Walk Down Wall Street / Best Investment Books
A Random Walk Down Wall Street

Burton Malkiel wrote this book in 1973 and it remains a classic amongst investment books. In fact, in 2019 the 12th edition of the book was published. A Random Walk Down Wall Street busts popular investing myths by showing that price movements are mostly random.

He suggests that both technical analysis and fundamental analysis are flawed, and result in unnecessary trading costs. In summary, Malkiel believes that few investors will outperform a buy and hold strategy. Although index funds were very new when the book was first written, the book tends to suggest they are best suited to most investors.

8. Thinking Fast and Slow by Daniel Kahneman

Thinking Fast and Slow
Thinking Fast and Slow

If you want to learn about behavioral finance, Thinking Fast and Slow is one of the best investing books you can read. Daniel Kahneman is a leading mind in the field of behavioral economics and decision making. In 2002 he won the Nobel Memorial Prize in Economic Sciences for his work on prospect theory.

The book explores the way the human mind works when it comes to decision making. In particular, Kahneman explains that people use two different cognitive systems to make decisions. The first uses pattern recognition to make automatic or instinctive judgments quickly. The second is more analytical and requires more time and effort.

Very often we assume that the second system is better because it requires more effort – but this isn’t always true. When the outcome of a decision is important, as it is in investing, we need to decide which system is better suited to the decision. The book will help you decide whether you should trust your instincts or use a methodical approach.

9. The Behavior Gap by Carl Richards

The Behavior Gap
The Behavior Gap

The Behavior Gap is both a personal finance book and a book on behavioral finance. Carl Richards is a financial planner and wrote the book to highlight the mistakes people make with their personal finances. While not exactly an investment book, it does a good job of illustrating the way investors sabotage their own investment.

Richards uses the term behavior gap to refer to the gap between investment returns and investor returns. In other words, investors often end up with lower returns than the funds they invest in because of their actions. Fear, greed, and impulsive decision-making result in investors buying and selling funds at exactly the wrong time.

He suggests the best investment strategy is the simplest one, and investors should leave their investment to compound over time. The Behavior Gap is one of the best investing books for first time investors, and for anyone wanting to become an investment advisor.

10. Rich Dad Poor Dad by Robert Kiyosaki

Rich Dad Poor Dad
Rich Dad Poor Dad

Rich Dad Poor Dad is a book about making your money work for you. It’s partly about investing and party about the way we think about money and wealth. Kiyosaki uses the analogy of two people, one rich and one poor, and the way they approach spending, saving, and investing. In the book, Kiyosaki explains that poor people work for money, while wealthy people make money work for them. Rich people also acquire assets, while poor people acquire liabilities.

Compound interest also works both ways – depending whether you are paying or receiving interest. Kiyosaki stresses the importance of creating income streams through real estate and dividend investing. In many ways Rich Dad Poor Dad fits more into the personal finance category than the investment books category – but is still worth a read.

11. Poor Charlie’s Almanack by Charlie Munger

Poor Charlie's Almanack
Poor Charlie’s Almanack

Charlie Munger has been Warren Buffett’s partner at Berkshire Hathaway since 1975. Both men have become well known for the wisdom they impart about investing and life. This book is a collection of 11 speeches that Munger gave over a 30-year period.

Poor Charlie’s Almanack contains hundreds of nuggets of wisdom and cannot possibly be summarized here. However, you will learn a lot about the way great investors think. In short, you need to be objective and look at a situation from every side. You also need to think broadly and learn about lots of different fields. This one of the best investing books you can read to learn about the mindset of a successful long-term investor.

12. Market Wizards by Jack D Schwager

Market Wizards / Best Investment Books
Market Wizards

Jack Schwager has written four Market Wizards books over the last few decades, with a fifth due to be released in November 2020. Each book in the series consists of a set of interviews with a diverse group of fund managers and traders. Schwager has also written several other technical analysis and trading books.

All four of the Market Wizards books are worth reading, but the first, written in 1989, and simply called Market Wizards, stands out amongst trading and investment books. This book includes 16 interviews with investment funds managers and traders. Amongst them are Paul Tudor Jones, Michel Steinhardt, and Richard Dennis.

Market Wizards illustrates the attributes many of the best traders and investors share. At the same time, it shows that each of these successful traders develop their own way of doing things. The approaches vary from fundamental analysis to market timing and trend following. Some participants focus on stocks, bonds, or currencies, while others are happy to make money wherever they can, whether its currencies, the stock market, or the odd gold investment.

This book was written in 1989, so some of the strategies and techniques are a little dated – though many of the more general principles still apply. If you want to read about traders using more advanced investment strategies, you can try the fourth book in the series, Hedge Fund Market Wizards. This book covers quantitative investing, algorithmic trading, portfolio hedging, short selling and other strategies used by hedge funds.

Conclusion – Best investment books

Very often, the best investing books are not about specific investment strategies, but about principles that apply to different investing styles, time frames and asset classes. You will also find investment books that apply to specific approaches to investing – but the books listed here will give you a broad foundation regardless of your approach to investing.

About Richard Bowman
Richard Bowman is a writer at Catana Capital, analyst and investor based in Cape Town, South Africa. He has over 18 years’ experience in asset management, stockbroking, financial media and systematic trading. Richard combines fundamental, quantitative and technical analysis with a dash of common sense.

Be the first to comment

Leave a Reply

Your email address will not be published.


*