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http://blogs.wsj.com/totalreturn/2014/11/25/best-books-for-investors-a-short-shelf/?mod=e2fb[11/26/2014 4:49:50 PM]
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Two books about Warren Buffett are on our columnists list of the top books to read about investing.
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Im often asked,especially as the holiday gift-giving season approaches, whichbooks I

recommend for investors.
I havent kept exact count, of course, but over the past quarter-century I have surely read
(or tried to read) a couplethousand books on investing. Nearly all of themwere a
tragicwaste of good trees. Most werentworth reading even a few pages of.
So I feel strongly that the usual article on best investing bookshas way too many
entriesand ends up suggestinggood books you might read, rather than
recommendinggreat books you must read.
Heres a list that I would still be comfortable withdecades from now. Every book below
has stood the test of time and, Im confident, will remain usefulforgenerationsto come.
You will quickly note that some arent even about investing. But they all will help teach
you how to think more clearly, which is the only way to become a wiser and better
investor. Ive listed them alphabetically by author.
Gary Belsky and Thomas Gilovich,Why Smart People Make Big Money Mistakes and
How to Correct Them
In clear, simple prose, Belsky and Gilovich explain some of the most common quirks
that cause people to make foolish financial decisions. If you read this book, you
should be able to recognize most of them in yourself and havea fighting chance of
counteractingsome of them. Otherwise,you will end up learning about your
cognitive shortcomings the hard way: atthe Wall Street campus of theSchool of
Hard Knocks.
Peter L. Bernstein,Against the Gods: The Remarkable Story of Risk
The late polymath Peter Bernsteinpoured a long lifetime of erudition and insight
into this intellectual history of risk, luck, probability and the problems of trying to
forecast what the future holds. Combining a stupendous depthof research with some
of the most elegant prose ever written about finance, Bernstein chronicles the halting
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human march toward a better understanding of riskand reminds us that, after

centuries of progress, we still have a long way to go.
John C. Bogle, Common Sense on Mutual Funds
The founder of the Vanguard Group and father of the index-fund industry
methodically sorts fact from fiction. Following his logical arguments can benefit you
even if you never invest in a mutual fund, since Bogle touches on just about every
crucial aspect of investing, including taxes, trading costs, diversification,
performance measurement and the power of patience.
Elroy Dimson, Paul Marsh and Mike Staunton,Triumph of the Optimists
Neitherlight reading nor cheap (its hard to find online for less than about $75), this
book is the most thoughtful and objective analysis of the long-term returns on stocks,
bonds, cash and inflation available anywhere, purged ofthe pom-pom waving and
statistical biases that contaminate other books on the subject. The sober conclusion
here: Stocks are likely, althoughnot certain, to be the highest-performing asset over
the long run. Butif you overpay at the top of a bull market, your future returns on
stocks will probably be poor.
Richard Feynman,Surely Youre Joking, Mr. Feynman!orWhat Do You Care What
Other People Think?
These captivating oral histories of the great Nobel Prize-winning physicist ostensibly
have nothing to do with investing.In my view, however, the three qualities an
investor needs above all others are independence, skepticism and emotional selfcontrol. Reading Feynmans recollections of his career of intellectual discovery, youll
see how hard he worked at honing his skepticism and learning to think for himself.
Youll also be inspired to try emulating him in your own way.
Benjamin Graham,The Intelligent Investor
Originally published in 1949, called by Warren Buffett by far the best book on
investing ever written, this handbook covers far more than just how to determine
how much a companys stock is worth. Graham discusses how to allocate your
capital across stocks and bonds, how to analyze mutual funds, how to take inflation
into account, how to think wisely about risk and, especially, how to understand
yourself as an investor. After all, as Graham wrote, the investors chief problem
and even his worst enemyis likely to be himself. (Disclosure: I editedthe 2003
revised edition and receive a royalty on its sales.)Advanced readers can move on to
Benjamin Graham and David Dodd,Security Analysis,the much longermasterpiece
upon whichThe Intelligent Investoris based.
Darrell Huff,How to Lie with Statistics
This puckish riff on howmath can be manipulated is only 142 pages;most people
could read it on a train ride or two, or in an afternoon at the beach. As light as the
book is, however, it is nevertheless profound. In one short takeafter another, Huff
picks apart the ways in which marketers use statistics, charts, graphics and other
ways of presenting numbers to baffle and trickthe public. Thechapter How to Talk
Back to a Statistic is a brilliantstep-by-step guide to figuring outhow someone is
trying to deceiveyou with data.
Daniel Kahneman,Thinking, Fast and Slow
Successful investing isnt about outsmarting the next guy, but rather about minimizing
your own stupidity. Psychologist Daniel Kahneman, who shared the Nobel Prize in
Economics in 2oo2, probably understands how the human mind works better than
anyone else alive. This book canmake you think more deeply about how you think
than you ever thought possible. As Kahneman would be the first to say, that cant
inoculate you completely against your own flaws. But it cant hurt, and it might well
help. (Disclosure: I helped Kahneman research, write and edit the book, although I
dont earn any royalties from it.)
Charles P. Kindleberger,Manias, Panics, and Crashes
In this classic, first published in 1978, the late financial economist Charles
Kindleberger looks back at the South Sea Bubble, Ponzi schemes, banking crises
and other mass disturbances of purportedly efficient markets. He explores the
common features of market disruptionsas they build and burst. If you remember
nothing from the book other than Kindlebergers quip, There is nothing so disturbing
to ones well-being and judgment as to see a friend get rich, you are ahead of the
game.
Roger Lowenstein,Buffett: The Making of an American Capitalist
This book remains the most comprehensive and illuminating studyof Warren Buffetts
investing and analytical methods, covering his career in remarkable detail up until
the mid-1990s. If you read itin conjunction with Alice SchroedersThe Snowball,you
will have a fuller grasp on what makes the worlds greatest investor tick.
Burton G. Malkiel, A Random Walk Down Wall Street
In this encyclopedic and lively book, Malkiel, a finance professor at Princeton
University,bases his judgments on rigorous and objective analysis of long-term data.
The first edition, published in 1973, is widely credited with helping foster the adoption
of index funds.The latest edition casts a skeptical eye on technical analysis, smart
beta and other market fashions.
Bertrand Russell,Sceptical EssaysorThe Scientific Outlook
Russell is Buffetts favorite philosopher, and theseshort essay collections show why.
Russell wrote beautifully and thought with crystalline clarity. Immersing yourself in
his ideas willsharpenyour own skepticism. My favorite passage: When a man tells
you that he knows the exact truth about anything, you are safe in inferring that he is
an inexact man. It is an odd fact that subjective certainty is inversely proportional
to objective certainty. The less reason a man has to suppose himself in the right, the
more vehemently he asserts that there is no doubt whatever that he is exactly right.
Think aboutthatthe next time a financial adviser begins a sentence with the words
Studies have proven that.
Alice Schroeder,The Snowball: Warren Buffett and the Business of Life
With unprecedented access to Buffett, Schroeder crafted a sensitive, personal and
insightful profile, focusing even more on him as a person than as an investorand
detailingthe remarkable sacrifices he made along the way. If you read it
alongside LowensteinsBuffett,you will have an even deeperunderstanding of the
master.
Fred Schwed,Where Are the Customers Yachts?
First published in 1940, this is the funniest book ever written about investingand
one of the wisest. Schwed, a veteran of Wall Street who survived the Crash of 1929,
knew exactly how the marketsworked back then. Nothing has changed. Turningto
any page at random, you will find gleefully sarcastic observations that ring at least as
true today as they did three-quarters of a century ago. My favorite: At the end of the
day [fund managers] take all the money and throw it up in the air. Everything that
sticks to the ceiling belongs to the clients.
Adam Smith,The Money Game
In the late 1960s, the stock market was dominated by fast-talking, fast-trading young
whizzes. The former money managerGeorge J.W. Goodman, who wrote under
the pen name Adam Smith,christened them gunslingers. In this marvelously
entertaining book, Goodman skewers the pretensions, guesswork and sheer
hogwashof professional money management. Reading his mockery can help
sharpen your own skepticism toward the next great new investing ideawhich
almost certainly will turn out to be neither great nor new.
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12:11 pm November 26, 2014
Asher wrote:
Taleb, Fooled by Randomness
9:49 am November 26, 2014
William Bahlke wrote:

The Investors manifesto is the only book you need
Packard wrote:
Superb list. A great primer. I might also add Jeremy Siegals's "Stocks for the Long Run" and
Burton Malkiel's "Random Walk Down Wall Street."
Good stuff!
Erica P. wrote:
This is very Comprehensive. Thank you Very Much. The only book missing is: How Money Buys
Time. I think it is an interesting area to consider. For example, if you work full time, how does
one buy Time? Is there a Strategy for that? It's just something to consider; it would take a lot of
free time to read even a sliver of this list. So, Time is Luxury. But, it shouldn't be.
The Practical Economist wrote:

It's pretty stunning that you didn't include "The Investment Answer."
It's the single best book for the true layperson.
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