Investing takes experience and expertise. If you are passionate about finance, the books on this list will help you build the skill base needed to approach the world of investing. From personal finance books to more technical manuals, these nine financial literature classics – suggested by our CEO and co-founder, Giovanni Daprà – will cover all levels of expertise and expand the knowledge you need to invest successfully.
1. A Random Walk Down Wall Street, Burton G. Malkiel
In a world where alleged gurus and experts increasingly offer recipes to build a fortune the easy way, Malkiel’s personal finance classic remains a milestone for all those willing to approach investments. A Random Walk Down Wall Street is a handbook that explains the key concepts of finance, helping the reader familiarise with its jargon. The book also explains the steps to follow to set up an easily applicable and effective long-term investment strategy.
Drawing on his wealth of experience as an economist, financial advisor and successful investor, Malkiel explains why building a well-diversified investment portfolio and maintaining it over the long term is the best way to generate returns that can outperform even expensive portfolios chosen by professionals with sophisticated analytical techniques.
2. The Little Book of Common Sense Investing, John C. Bogle
With this book John C. Bogle, legendary founder of the Vanguard Group, creator of the first ETF and recognised by Fortune magazine as one of the great four “Investment Giants” of the twentieth century, explains the principles of the investment philosophy that led him to innovate and revolutionise the financial industry by making index investing accessible to thousands of investors around the world.
In The Little Book of Common Sense Investing, Bogle draws from his experience to offer practical advice to all investors on how to apply his proven investment strategy to their portfolios. It is an unmissable classic for anyone wishing to approach the world of investments and portfolio management.
3. Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, Nassim Nicholas Taleb
Anyone who feels overconfident in life or in investing should read this book. The theme of the book is to belie the ability to control all events and their consequences, in life as in finance. The author brings together probabilistic thinking and behavioural science to suggest a realistic approach to risk management. The book offers practical references and examples extrapolated from the world of finance and trading.
If you fail to understand the role of chance, you can run the risk of overestimating your abilities, mistaking luck for skill due to excessive self-confidence. Reading this book is within everyone’s reach and every reader will be able to connect Taleb’s text with his or her own daily experience, drawing a useful lesson from it.
4. Principles: Life and Work, Ray Dalio
Ray Dalio is an American entrepreneur, one of the 100 richest men in the world. In 1975, he founded Bridgewater Associates in his New York apartment. Today Bridgewater Associates is one of the largest privately held companies in both the United States and the world. In his book Principles, Ray Dalio wanted to put on paper the ideas that are the foundation of his career as an investor and entrepreneur.
The book starts retelling Dalio’s experience in Bridgewater, also explaining how he started his business from a small apartment in New York. Throughout the narration, Dalio details the trajectory of his decades-long career and the pitfalls encountered in the various stages of his ascent. Dividing his book into three sections (“personal life”, “life principles” and “work principles”), he recounts his personal approach to success by sharing the lessons (many of them unconventional) that he has learned over the last 40 years. And, in the same way that these principles have been fundamental to the development of Bridgewater, Ray believes that anyone can use them to achieve better results for their business or personal life.
It is a very useful book full of valuable ideas and practical advice that can be applied in business and private contexts.
5. Thinking, Fast and Slow – David Kehneman
There are few books that have the gift of retelling an epochal revolution through the voice of those who first set it in motion. Daniel Khaneman and Amos Treves are the two Nobel Prize winners for economics and are the fathers of the behavioural science revolution. In over 50 years of career, they have studied all the distortions, prejudices, and biases that guide our way of making decisions, creating an alternative point of view that has forever changed many aspects of our society, including investments.
The book meticulously dissects the functioning of our mind and undermines certainties about how we make decisions. This process of analysis and understanding of decisions is a mandatory step for anyone wishing to try their hand at the world of investments: a crucial book for assuming the right discipline in making choices and fully understanding the limits of our mind.
The book alternates anecdotes and concrete examples that accompany the reader through the fundamental stages of the behavioural scientific revolution that has taken shape in the last 20/30 years, allowing to shed light on some of its fundamental principles.
6. Expected Returns, An Investor’s Guide to Harvesting Market Rewards- Antti Ilmanen
This book is considered a fundamental text for the theory of asset allocation or the construction of investment portfolios. It offers a comprehensive toolkit for generating positive returns from a broad range of investments. Written by two world-renowned industry experts, the text discusses all the techniques that can be used to predict the returns of an asset based on different parameters. The expected returns of the main asset classes, the investment strategies and the effects of the underlying risk factors such as growth, inflation, liquidity are also explained.
To evaluate expected returns it is necessary to balance historical returns with theoretical considerations and current market conditions. Expected Returns complements its theoretical analysis by providing extensive empirical evidence, investigations into behavioural and risk-based theories, as well as many practical insights.
7. The Intelligent Investor, Benjamin Graham
If you were to ask Warren Buffett who is the greatest investor of all time, he would probably mention his former teacher, Benjamin Graham. Graham was an investor and investment mentor generally considered to be the father of the value investing philosophy. The Intelligent Investor (1949) is probably his most famous book and it is also the text intended for the dissemination of his theory. In it, the author outlines a series of principles underlying the philosophy of value investing (buying undervalued shares and reselling it when they appreciate) outlining a method that is still valid today and which should be the basis of the strategy of every investor with long-term (and not merely speculative) goals.
8. Liar’s Poker, Michael Lewis
An autobiography that chronicles the reckless culture of the investment banking world throughout the ‘80s. Michael Lewis, the book’s author, was fresh out of Princeton and before landing his first job at Salomon Brothers, one of Wall Street’s leading investment firms. Over the next three years, Lewis worked his way up from inexperienced intern to bond salesman. This book tells the story of those frenetic years and gives the reader the opportunity to see behind the scenes of the American financial industry.
9. The House of Morgan, Ron Chernow
What lies behind the most powerful dynasties that have shaped the American banking sector? This book draws the story of four generations of Morgans and the formation of their financial empire: JP Morgan, from obscure beginnings in Victorian London to the financial crisis of 1987. Chernow paints a compelling picture of the Morgan family and the world of the American elite they inhabited and the Brits that moved around them. An essential book that traces the lines of the major historical financial events of the last 150 years.
*As with all investing, financial instruments involve inherent risks, including loss of capital, market fluctuations and liquidity risk. Past performance is no guarantee of future results. It is important to consider your risk tolerance and investment objectives before proceeding.
