Books that Will Make You a Better Investor

When starting your journey into finance and investing, there’s no shortage of resources about the technical side of things that can help you start and maintain a portfolio. These books can help you learn how to buy crypto or how to diversify your assets. However, they rarely help with a broader approach to finance and strategy.

In this article, we’ll suggest a few books that can make anyone a better investor, not by offering practical advice but rather by providing a unique outlook on the industry. Theoretical advice such as this is best combined with practical advice going in depth on how to make a purchase, as found here. 

A Man for All Markets

A Man for All Markets, by Edward O. Thorp, a mathematician and hedge fund manager, is a unique book on how mathematical principles can be used to improve your investment chances. Thorp has stated that the principles outlined in the book can be applied to both gambling and financial decisions.

In terms of genre, the book can be described as a memoir. It outlines Thorp’s academic and professional career and how the scientific discoveries made throughout his work can be used to make informed financial decisions. Even though the subject matter is complex, the book is written in prose everyone can understand and is filled with fascinating examples and anecdotes.

Market Wizards

Market Wizards is a series of interviews conducted by Jack D. Schwager with some of the best minds in the finance world. Successful traders talk about their strategies, their approach to investing, and their overall outlook on the business.

The interviews don’t cover modern financial assets such as crypto, as they were written before they were invented, but they don’t feel outdated at all. The main takeaways from the book are the psychological profiles of traders. Trading in financial assets requires a unique approach to risk-taking, and new investors can learn a lot about it from those who have proven their ability in the field.

The Essays of Warren Buffett

The Essays of Warren Buffett is a collection of Warren Buffett’s letters to Berkshire Hathaway. The letters slowly reveal the philosophy of investing that guides Buffet’s individual decisions. An exciting thing about it is that since the essays cover a long period of time, they change as the markets, industry, and technology do.

Most investors can’t compete with Buffet’s resources at his disposal, but the point of the book isn’t to copy Buffet when making your investment. Instead, it should be taken as a piece of advice on risk-taking in general.

The Misbehavior of Markets: A Fractal View of Financial Turbulence

Benoit B. Mandelbrot, the author of this book, is a French-American mathematician with a unique take on financial markets. The widely accepted approach to financial markets, devised by Burton Malkiel, says that the markets will always find the most efficient way to allocate resources.

Mandelbrot, on the other hand, argues that financial markets exhibit patterns of extreme randomness. The crisis and eccentricities of the market are, therefore, not mistakes; they are the key part of the system. An interesting thing about this theory is that it applies to any market, from stocks to cryptocurrencies.

Common Stocks and Uncommon Profits

Written by Philip A. Fisher, Common Stocks, and Uncommon Profits takes an alternate approach to guess the value of financial assets – quantitative analysis instead of focusing on the numbers alone. The book argues that the most valued tool for investors is information about the asset they plan to buy.

Fisher offers a 15-point checklist that offers useful criteria for assessing the strengths and weaknesses of a stock. The checklist can also be used for assets Fisher couldn’t even anticipate when the book was written, such as NFTs.

Fooled By Randomness

Nassim Nicholas Taleb, a mathematical statistician and former trader, is now most well-known for his role as an influencer on former Twitter, where he gets into arguments and writes long threads. Before all that, Taleb was known for explaining complicated mathematical principles used in investing in terms almost anyone can understand.

Taleb focuses on cognitive biases that all investors face and how they affect their ability to make pragmatic decisions when investing. It’s a book that stays with the reader long after they’ve finished reading it, as it showcases all the mistakes that they’ve made.

A Random Walk Down Wall Street

Burton G. Malkiel, an economist and professor, argues the case for the efficient market hypothesis in this book. The hypothesis is simply that the markets are predictable and that they work to minimize costs and maximize profits. Investors who find ways to notice these patterns in their investments can predict the movements of the market.

The book shares insight into the market for stocks and bonds, but it mostly focuses on diversification and, therefore, can help with the world of crypto as well.

None of the books on our list is market advice for investors, but they provide valuable long-term and birds-eye view insight into the world of investing. They are also very well-written and easy to follow for non-economists.