Investment Books for the Ages
As a self-taught investor, I’m often asked for recommendations of good investment reading. Two books that largely influenced me were Jack Schwager’s Market Wizards series and Van Tharp’s Trade Your Way to Financial Freedom. While both books discuss successful investors and investment strategies, the real value I found was in their exploration of the personalities and emotional aspects that go into being a successful money manager.
Although many general examples are cited, Tharp’s book isn’t for someone looking for specific trading strategies. This book is a thought provoking introduction on how defining systems for investment selection and risk management can shield investors from their own psychological shortcomings. He teaches process as a way to avoid emotion and build conviction into one’s investing. His focus revolves more around risk management than actual investment selection and he drives home the point that a bad trader with good risk management will be more successful than a good trader with poor risk management. The lessons in the book are extremely valuable to all investors and I wish I had found the book earlier in my career.
I consider Schwager’s Market Wizard’s series an absolute must read, not only for those professionally managing money, but anybody who enjoys reading incredibly interesting stories about really smart, successful people. I enjoyed these books so much due to the fact they are candid success stories about real people…not theories. The reader gets an opportunity to learn and sponge information from the best of the best. Schwager is an industry veteran and knew how to ask the right questions. The stories are truly inspirational and offer unique insights into the investment world over the past 60 years. The interviews and anecdotes in these books are timeless. I find myself re-reading many of them annually and always come away with valuable information I didn’t pick up on previously.
I came away from these books recognizing that there are literally hundreds of different ways to make money in markets. The major takeaway however is that you cannot be successful investing unless you find a style that best suits your personality and objectives. Just because a certain strategy made millions for a famous hedge fund manager, doesn’t mean that strategy will make millions for anybody else. Investing is more about recognizing and managing emotions than anything else. Know yourself. Have a process and stay discipline.