OFF INTO THE WILD WET YONDER How does this...
OK, so you’ve read Rich Dad Poor Dad, and now you feel like you have a (relatively) good grasp on the basics of personal finance. You understand the difference between an asset and a liability. You realize that buying a new car on credit is a liability, while buying a house on credit (caveat: one that you can afford) is a smart way to start building and maintaining an equitable future.
So now what? As with anything, knowing the basics is a great start… but it’s just a start. If you don’t consistently build on the foundation you’ve established it will deteriorate over time.
My own personal financial education also started with Robert Kiyosaki’s Rich Dad Poor Dad. Over simplified at times, it was (and still remains) a great book for beginners, as well as a great story to help wrap one’s head around the concept of “wealth.” Shortly after finishing it, I felt the need to learn more. I wanted to understand how capital markets functioned. I craved to learn more about economics. And I desired to find out what the hell was a “hedge fund.”
It was a journey I started on roughly 15 years ago, and one I continue on to this day. I try to read the best books available (and websites) on the subject, and try to become—and stay—as financially literate as possible. My goal is not to become a billionaire, but merely to avoid becoming a “muppet.”
In any event, here is my rather imperfect (and in no particular order) list of “must read” books on finance and economics for beginners and/or the insufficient. The list is not overly exciting, or even particularly original, but it’s a list I would hand my son (if I had one) and explain that a good foundation begins with advice from others and ends with your ever increasing desire to learn more.
REMINISCENCES OF A STOCK OPERATOR
This book is a classic and is guaranteed to be on every single list of the most important finance books ever written. Although set in the 1920s, it is still amazingly relevant to this day, and even some of the street terminologies like “bucket shops” continue to be important. It’s a fun read and an absolute must if you are planning to brave the world of finance. There’s no better read on market (/herd) mentality out there that I know of. Enter most any hedge fund manager’s office and it’s almost guaranteed you’ll see a copy of this either framed or in a place of prominence. [Amazon]
Another classic, but instead of being set in the stock exchanges of the 1920s, it focuses on writer Michael Lewis’ start as a budding bond sales trader in the raucous 1980s. Why the book is so relevant and revered is that every character and every attitude in the book is perfectly displayed by Lewis’ funny and concise writing style. Anyone who has ever worked in the financial industry can relate to the larger-than-life Wall Street characters in the book, and is left reflecting on someone these characters probably remind them of.
This book was my introduction to the sophisticated world of hedge funds, but it was also my brief introduction to, not only, the “godfather” of hedge funds Alfred Winslow Jones, but to John Maynard Keynes one of the most respected and reviled economists in the world today. The last chapter was entirely dedicated to Keynes and I appreciate the history lesson from writer Barton Biggs. This easy-to-read book is so much more than some fund manager’s raving ego trip about their perfect trade or the one that got away. [Amazon]
From the 30-Second series of books—this book is ideal for the newbie as well as the professional who may have “studied a little economics 20 years ago but forgotten the majority of it.” It’s probably the thinnest economics book ever written, which makes it brilliant and a must have for anyone who doesn’t want to try to dive into Adam Smith’s The Wealth of Nations (not that the book is a substitute for this, but baby steps are definitely advised). [Amazon]
The last book on this list is a biography of sorts. The author, Jack D. Schwager, wanted to discover how some of the top money managers and traders in the 80s and 90s achieved their success. It was one of the first books of its kind, and it helped to inspire wannabe generations later on. Moreover, the timing of this book and the dotcom markets that shortly followed could not have been more perfect. This book is still extremely relevant today, and even if trading isn’t your medium or motivation, it’s written easily enough to keep anyone entertained. You’ll learn a little about fundamental and technical trading, as well as how each trader employs these techniques to maximize their returns. You’ll also learn about how dedicated and disciplined, almost maniacal, these money masters are and soon realize that speculating is not for the weak or easily discouraged. [Amazon]