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INVESTING & TRADING BOOKS
You can learn many of the most powerful ideas from these books quickly here:
Trading and Investing Strategies
Page 1 lists fifteen books which influenced Deepak the most.
See also Fifteen Books
Page 2 lists another fifteen books which are among the most recommended and popular titles on the subject.
Page 3 onward are several other informative books on markets, loosely ordered by subject and author.
Note: When you buy a book by clicking the links provided, we receive fees from Amazon which go towards site maintenance costs. Your buying price remains unaffected.
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Alchemy of Finance
By George Soros
Markets, Trading
The legendary billionaire investor and philanthropist George Soros needs no introducation.
Soros is known as "The Man Who Broke the Bank of England" because of his short sale of US$10 billion worth of pounds sterling, which made him a profit of $1 billion during the 1992 Black Wednesday UK currency crisis. Based on his early studies of philosophy, Soros formulated an application of Karl Popper's General Theory of Reflexivity to capital markets, which he claims renders a clear picture of asset bubbles and fundamental/market value of securities, as well as value discrepancies used for shorting and swapping stocks. (Wikipedia)
The Alchemy of Finance talks about this theory of reflexivity, as well as his own investments and perception of how markets work.
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A Man for All Markets
By Edward O. Thorp
Markets, Story, Trading
Edward O. Thorp is an American mathematics professor, author, hedge fund manager, and blackjack researcher. He is the author of Beat the Dealer, which mathematically proved that the house advantage in blackjack could be overcome by card counting. He also developed and applied effective hedge fund techniques in the financial markets, and collaborated with Claude Shannon in creating the first wearable computer. Thorp received his Ph.D. in mathematics from the University of California, Los Angeles in 1958, and worked at MIT from 1959 to 1961. (Wikipedia)
A man for all markets is an autobiographical work in which he describes how being the first with a system and having a statistical edge can lead to extraordinary returns in the market.
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Extraordinary Popular Delusions and the Madness of Crowds
By Charles Mackay
Story, Markets, Psychology
Extraordinary Popular Delusions and the Madness of Crowds is an early study of crowd psychology by Scottish journalist Charles Mackay, first published in 1841 under the title Memoirs of Extraordinary Popular Delusions. The book was published in three volumes: "National Delusions", "Peculiar Follies", and "Philosophical Delusions". Mackay was an accomplished teller of stories, though he wrote in a journalistic and somewhat sensational style. (Wikipedia)
A must read for those who enjoy reading historical accounts of markets written at the time the events unfolded.
Wikipedia : Extraordinary Popular Delusions and the Madness of Crowds
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The Little Book That Still Beats the Market
By Joel Greenblatt
Investing, Value Investing
Joel Greenblatt is an American academic, hedge fund manager, investor, and writer. He is a value investor, alumnus of the Wharton School of the University of Pennsylvania, and adjunct professor at the Columbia University Graduate School of Business. He runs Gotham Funds with his partner, Robert Goldstein. He is the founder of the New York Securities Auction Corporation. (Wikipedia)
The Little Book that Still Beats the Market is a 2010 update on Greenblatt's 2005 best-selling classic The Little Book that Beats the Market and includes the financial crisis of 2008.
These books introduced an investment strategy of magic formula investing, which is a method for determining which stocks to buy: "cheap and good companies" with a high earnings yield and a high return on invested capital.
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The Clash of the Cultures: Investment vs. Speculation
By John C. Bogle
Investing, Trading
Jack Bogle was an American investor, business magnate, and philanthropist. He was the founder and chief executive of The Vanguard Group, and is credited with creating the first index fund. The ideal investment vehicle for Bogle was a low cost index fund held over a period of a lifetime with the reinvestment of dividends and dollar cost averaging. (Wikipedia)
In this book, Bogle presents evidence that index funds represent true investment, while managed funds are "speculative", and therefore are more likely to underperfrom in the long run.
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Value Investing: From Graham to Buffett and Beyond
By Bruce Greenwald, Judd Kahn, Paul Sonkin and Michael van Biema
Investing
Bruce Greenwald is a professor at Columbia University's Graduate School of Business and an advisor at First Eagle Investment Management. He is, among others, the author of the books Value Investing: from Graham to Buffett and Beyond and Competition Demystified: A Radically Simplified Approach to Business Strategy. He has been referred to by The New York Times as "a guru to Wall Street's gurus" and is a recognized authority on value investing, along with additional expertise in productivity and the economics of information.
The book is considered to be an essential read for value investors, and more modern in its approach.
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Berkshire Hathaway Letters to Shareholders, 1965-2019
By Warren Buffet (author) and Max Olson (editor)
Investing, Story
As the title suggests, the book is a compilation of Buffett's letters to shareholders over the years. The same information is also published on Berkshire Hathaway's website, so it is really for those who prefer to read books to the web.
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Damodaran on Valuation
By Aswath Damodaran
Investing, Value Investing
Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University (Kerschner Family Chair in Finance Education), where he teaches corporate finance and equity valuation.
Known as "the Dean of Valuation" due to his expertise in that subject, Damodaran is best known as author of several widely used academic and practitioner texts on Valuation, Corporate Finance and Investment Management; he is widely quoted on the subject of valuation, with "a great reputation as a teacher and authority". He has written several books on equity valuation, as well on corporate finance and investments. He is widely published in leading journals of finance, including The Journal of Financial and Quantitative Analysis, The Journal of Finance, The Journal of Financial Economics and the Review of Financial Studies. He is also known as being a resource on valuation and analysis to investment banks on Wall Street.
This book is considered to be essential reading for serious students of valuation, as it covers several valuation models replete with real world examples.
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Hedge Fund Secrets: An Introduction to Quantitative Portfolio Management
By Philip J. Romero and Tucker Balch
Portfolio Analysis, Software
This may not be a very well-known book, but its an excellent reference for finding formulae and methods related to portfolio and market theories, actually used by many hedge funds. One the co-authors - Tucker Balch - conducts courses on these subjects on Udacity. This book puts together many of the concepts he covers there.
This book would be specifically useful to readers seeking quantitative techniques and programmable concepts.
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Trading Systems: A new approach to system development and portfolio optimisation
By Emilio Tomasini and Urban Jaekle
Portfolio Analysis, Trading
Emilio Tomasini is an Italian Financial analyst, quantitative trader, contributor to the field of technical analysis and the developer of many successful quantitative trading systems. He has been publishing since 1997 the daily newsletter Rendimento Borsa which provides technical and fundamental analysis of the financial markets. He is a financial advisor as far as quantitative trading is concerned for many major European banks and money management firms. (Wikipedia)
This book explains the development of a trading system from scratch, and builds it up to the point where it can be coded. There is considerable attention to detail.
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The Handbook of Portfolio Mathematics
By Ralph Vince
Trading
Ralph Vince had worked with Bruce Babcock and then Larry Williams, and has developed the the optimal f money management formula. The optimal f system is in turn based on the Kelly criterion. Basically, the optimal f tells the trader what fraction (f) of his capital should be invested in the next trade.
Vince has written several books on the subject, and The Handbook of Portfolio Mathematics is a more recent one (2007) and combines the concepts and examples used in earlier books. In addition, there are sections on statistical methods which can be useful in the way traders can view the market.
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Quantitative Trading: How to Build Your Own Algorithmic Trading Business
By Ernie Chan
Portfolio Analysis, Trading, Software
This book takes up the process of building algorithm trading processes from start to finish. Besides explaining all the necessary theory, it dwells into programming as well - using MATLAB.
All concepts are well explained, and can even be understood by beginners.
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Building Winning Algorithmic Trading Systems
By Kevin Davey
Software, Trading
The author - Kevin Davey - is an engineer who started off trading disastrously, but went on to win The World Cup Trading Championships in 2006, and finish second in 2005 and 2007. This is the contest which Larry Williams had famously won in 1987 (and his daughter - the actress Michelle Williams - 10 years later).
This book chronicles his own story - first the losses, then the contests, and finally how he sets up his trading systems. It also provides detailed and sound descriptions of how the reader can set up algorithmic trading systems and test them.
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Systematic Trading: A Unique New Method for Designing Trading and Investing Systems
By Robert Carver
Portfolio Analysis, Trading, Investing
Robert Carver, a former hedge-fund manager, has nicely explained strategies based on back-testing and portfolio optimisation for traders and investors in this book.
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Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment
By David F. Swensen
Investing, Portfolio Analysis
David F. Swensen is an American investor, endowment fund manager, and philanthropist. He has been the chief investment officer at Yale University since 1985. His investment success with the Yale Endowment has attracted the notice of Wall Street portfolio managers and other universities. “He’s right up there with John Bogle, Peter Lynch, [Benjamin] Graham, and [David] Dodd as a major force in investment management,” says Byron Wien, a longtime Wall Street strategist. (Wikipedia)
He systematically explains his steps towards investing in this book - including diversification across multiple asset classes with a higher weightage for equity, and portfolio re-balancing among others - as also his strong opposition to market timing.
