Trade School

I am asked daily about my favorite financial books by the legions of subscribers who are using my blog to educate themselves about the markets. That is one of my goals. Below are my picks, which are entertaining if not insightful. I have left out books about specific trading systems guaranteeing windfall profits, because they all eventually blow up. The good books on the current financial crisis have yet to be written. The best trading strategies will never be written about, but only whispered of in poorly lit bars after work, the kind where your feet stick to the floor with the foul restrooms. Successful traders are a notoriously secretive bunch who don’t want copycats hanging onto their coattails spoiling their markets. When I do hear about these I pass them on to you through my newsletter. Give yourself an edge and a descent education and foundation by reading the list below.

Security Analysis
by Benjamin Graham and David Dodd
The Bible of security analysis. If you are only going to read one book, make this it.

A Random Walk Down Wall Street
by Burton G. Malkiel
The history of risk analysis on Wall Street.

The Black Swan
by Nassim Nicholas Taleb
An iconoclastic, rock throwing, in your face rebuttal to convention risk analysis theory.

The Snowball: Warren Buffet and the Business of Life
by Alice Schroeder
The biography of the greatest investor of our time.

Extraordinary Popular Delusions and the Madness of Crowds
by Charles MacKay
The history of bubbles, from tulip mania, to the South Sea bubble, to the 1929 crash. Boy, does history ever repeat itself!

The Crash
by John Kenneth Galbraith
A must read history about the big one. You’ll be amazed by the parallels today.

Reminiscences of a Stock Market Operator
by Edwin Lefevre
Biography of one of the most famous speculators of the roaring twenties, who sadly committed suicide in a public bathroom in 1932. You won’t believe what they did in the pre-SEC days.

The Strategic Bond Investor: Strategies and Tools to Unlock the Power of the Bond Market
by Tony Crescenzi
The bond side of the equation. You need to know where interest rates are going and how they will get there

Economics
by Paul Samuelson
What you missed by not going to the Harvard Business School. Your classic education about Keynesian economics that lets you ignore all that fluff in the broker reports. He got a Nobel Prize for this.

Hot Commodities: How Anyone Invests Profitably in the World’s Best Market
by Jim Rogers
The former George Soros partner tells you why you’ve been buying all that copper.

Crash Proof: How to Profit from the Coming Economic Collapse
by Peter Schiff
Nicely outlines the rationale for moving out of the dollar an into foreign stock markets, gold, and silver, although he is a little extreme in his views of the future of the US.

Market Wizards: Interviews With Top Traders
by Jack D. Schwager
How the pros do it.

The Complete Guide to Investing in Commodity Trading and Futures: How to Earn High Rates of Return Safely
by Mary B. Holihan
The abc’s of commodity investing.

When Genius Failed: The Rise and Fall of Long Term Capital Management
by Roger Lowenstein
Why you’re not shorting deep out of the money volatility in big size.

Against the Gods: The Remarkable History of Risk
by Peter L. Bernstein
How ancient trade routes grew into the global financial system we all know and love.

Liars Poker: Rising through the Wreckage on Wall Street
by Peter Lewis
My friend’s first book, what it is like to work at Goldman Sachs,except then it was Salomon Brothers. When it first came out many thought I had written this book with a nom du plume.

Beat the Dealer: A Winning Strategy for the Game of Twenty-One.
by Edwin O. Thorp
How to win at Black Jack by card counting. I put myself through college on this book, and so did Pimco’s Bill Gross. Not so easy now. Every trader at Morgan Stanley was required to read this book. A nice introduction to probability analysis under stress.

The Money Game
by Adam Smith
How Wall Street Works. A peek into the Wall Street I grew up in during the sixties. How little has changed.

The Little Book that Beats the Market
by Joel Greenblatt
The traditional value approach to picking stocks


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