Finance book recommendations

Sunday. February 10, 2019 - 4 mins cosmin

If you’ve read my previous posts, you probably saw that I usually write after my gym session. Today is no exception. I want to share some books that helped me understand more the finance world and gave me an impulse to start investing on my own, not through some suit-wearing persons that sell expensive random investment advice.

Note! Don’t take all of this as investment advice, you are the only one responsible for your investments, and be prepared to lose all the money you put into the market.

Surprisingly, I’ve read quite a few books in the last few months, given the fact that I was not into reading at all. In fact, I skipped most of the mandatory books in high school, but still scored high on the baccalaureate exam (I guess this is another proof that the system is really broken, lol).

In this article, I’ll share only the finance books that I’ve read in the past. The motivation to read finance books came to me after a business course at EPFL Innovation Park. Our startup idea was about investing, so I had to at least understand the basics. I always wanted to understand what the financial world looks like, so I thought this would be the best opportunity to learn something new.

I’ll start with them in the order I’ve read (this might not be the best order, tough).

A Random Walk Down Wall Street by Burton Gordon Malkiel - a Princeton economist

This book was suggested to me by a friend who makes active investments in Romanian and US stock market. The whole book is structured more like a thesis where the author basically tried to argue the following statement: The guys on Wall Street picking stocks do no better than a monkey throwing darts at the stock pages in a newspaper. I love that! The book covers all the most common investment methods and topics, so it’s a good one to start with.

One thing that I found a little bit weird with this book is that the author had an interesting bias towards health and insurance. For example, he suggested that the probability to beat the market is basically so low that it would not make sense to even try, but then he suggests to get the best insurance on the market, even tho if you are young, your health is in good shape and you can pay in full amount whenever you need medical services.

The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko

This was the most interesting book I’ve read about people’s behavior with money. Basically, this book is a research on the population of the self-made US millionaires (having at least $1M in assets). It answers questions like “How much money do they spend on clothes, cars, homes?”, “How do they invest?”, “How much time do they allocate to budgeting?”, “What is their occupation?”. It’s basically a bunch of aggregation of such data and comments on their behavior. Spoiler alert: the answers might surprise you, and their life might not be what you see on the Instagram of famous people.

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor by Bogle, John C.

This is the most complex and the longest of all, it has more than 600 pages and it’s again, more like a thesis than a book. John Bogle is the founder of Vanguard and he basically shares the ideas of Burton Gordon in A Random Walk Down Wall Street, but he focuses deeply on the Mutual Funds industry. Key takeaways from the book, in my opinion, are this: never invest in mutual funds, always invest in low-cost (meaning low fees) index funds. He basically argues about these two golden rules of investing using previous data analysis.

The Great Depression: A Diary by Roth Benjamin

This book was also very interesting because it’s basically a compilation of the diary entries of Roth Benjamin - who was a lawyer in the US when the great depression crisis happened. It’s crazy to see how everybody did not have money, and how the ones who had, could buy everything at spare change. Stocks drop from tens or thousands of dollars to single-digit prices. I think a book like this is very important for an investor because it teaches you the lesson of liquidity. In times of crisis, cash is king, so one should be prepared to take opportunity even in high-risk situations like a crisis.

The next one that is in my reading list is:

Devil Take the Hindmost: A History of Financial Speculation Paperback by Edward Chancellor

This is basically the opposite of The Great Depression. How people react in very bullish periods, and how to take advantage of such periods. Basically, you live in either of these two times, so you gotta be smart about both of them!

I’m always looking for new good books about this fields, so feel free to drop a comment, or send me an email on your recommandations! If you like my posts, there’s a subscribe from below, and I’ll notify you on all of my upcoming posts.

That’s all,

Cosmin

Cosmin-Ionuț Rusu

A simple action-taker who likes to just do stuff