Bull markets seem like they should be easier than the alternative but even dealing with gains can be challenging as an investor. Research shows that investors trade more often during bull markets because we don’t know what to do with gains, it’s difficult to hold winners, and there are constant temptations with even bigger winners elsewhere. This piece I wrote for Bloomberg looks at how to deal with big gainers in your portfolio.
“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none,” Charlie Munger, the vice chairman at Berkshire Hathaway, once said.
With that in mind, we’ve highlighted 27 classic works that every Wall Streeter should read.
Many of these books show up time and again in lists of books recommended by the pros themselves.
Topics covered include everything from the most important principles of investing to inside stories of the worst financial crises in modern history.
1. “The Intelligent Investor” by Benjamin Graham
“The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham’s philosophy of “value investing” — which shields investors from substantial error and teaches them to develop long-term strategies — has made The Intelligent Investor the stock market bible ever since its original publication in 1949.”
2. “Common Stocks and Uncommon Profits” by Philip Fisher
“Widely respected and admired, Philip Fisher is among the most influential investors of all time. His investment philosophies, introduced almost forty years ago, are not only studied and applied by today’s financiers and investors, but are also regarded by many as gospel. This book is invaluable reading and has been since it was first published in 1958.”
3. “The Theory of Investment Value” by John Burr Williams
“This book was first printed in 1938, having been written as a Ph.D. thesis at Harvard in 1937. Our good friend, Peter Bernstein mentioned this book several times in his excellent Capital Ideas which was published in 1992. Why the book is interesting today is that it still is important and the most authoritative work on how to value financial assets. As Peter says: ‘Williams combined original theoretical concepts with enlightening and entertaining commentary based on his own experiences in the rough-and-tumble world of investment.’
“Williams’ discovery was to project an estimate that offers intrinsic value and it is called the ‘Dividend Discount Model’ which is still used today by professional investors on the institutional side of markets.”
4. “Irrational Exuberance” by Robert Shiller
“As Robert Shiller’s new 2009 preface to his prescient classic on behavioral economics and market volatility asserts, the irrational exuberance of the stock and housing markets “has been ended by an economic crisis of a magnitude not seen since the Great Depression of the 1930s.
“As we all, ordinary Americans and professional investors alike, crawl from the wreckage of our heedless bubble economy, the shrewd insights and sober warnings, and hard facts that Shiller marshals in this book are more invaluable than ever.”
5. “One Up on Wall Street” by Peter Lynch
“America’s most successful money manager tells how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere. From the supermarket to the workplace, we encounter products and services all day long. By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them. When investors get in early, they can find the ‘tenbaggers,’ the stocks that appreciate tenfold from the initial investment. A few tenbaggers will turn an average stock portfolio into a star performer.”
6. “Against the Gods” by Peter Bernstein
“In this unique exploration of the role of risk in our society, Peter Bernstein argues that the notion of bringing risk under control is one of the central ideas that distinguishes modern times from the distant past. Against the Gods chronicles the remarkable intellectual adventure that liberated humanity from oracles and soothsayers by means of the powerful tools of risk management that are available to us today.”
7. “Reminiscences of a Stock Operator” by Edwin Lefevre
“First published in 1923, Reminiscences of a Stock Operator is the most widely read, highly recommended investment book ever. Generations of readers have found that it has more to teach them about markets and people than years of experience. This is a timeless tale that will enrich your life—and your portfolio.”
8. “The Alchemy of Finance” by George Soros
“George Soros is unquestionably one of the most powerful and profitable investors in the world today. Dubbed by BusinessWeek as “the Man who Moves Markets,” Soros made a fortune competing with the British pound and remains active today in the global financial community.
“Now, in this special edition of the classic investment book, The Alchemy of Finance, Soros presents a theoretical and practical account of current financial trends and a new paradigm by which to understand the financial market today. This edition’s expanded and revised Introduction details Soros’s innovative investment practices along with his views of the world and world order.”
9. “Security Analysis” by Benjamin Graham and David Dodd
“First published in 1934, Security Analysis is one of the most influential financial books ever written. Selling more than one million copies through five editions, it has provided generations of investors with the timeless value investing philosophy and techniques of Benjamin Graham and David L. Dodd.
“As relevant today as when they first appeared nearly 75 years ago, the teachings of Benjamin Graham, “the father of value investing,” have withstood the test of time across a wide diversity of market conditions, countries, and asset classes.”
10. “The Handbook of Fixed Income Securities” by Frank J. Fabozzi
“For decades, The Handbook of Fixed Income Securities has been the most trusted resource in the world for fixed income investing. Since the publication of the last edition, however, the financial markets have experienced major upheavals, introducing dramatic new opportunities and risks.
“This completely revised and expanded eighth edition contains 31 new chapters that bring you up to date on the latest products, analytical tools, methodologies, and strategies for identifying and capitalizing on the potential of the fixed income securities market in order to enhance returns.”
11. “Damodaran on Valuation” by Aswath Damodaran
“In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today’s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You’ll gain an understanding of the vitality of today’s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face.”
12. “Common Sense on Mutual Funds” by John Bogle
“Since the first edition of Common Sense on Mutual Funds was published in 1999, much has changed, and no one is more aware of this than mutual fund pioneer John Bogle. Now, in this completely updated Second Edition, Bogle returns to take another critical look at the mutual fund industry and help investors navigate their way through the staggering array of investment alternatives that are available to them.
“Written in a straightforward and accessible style, this reliable resource examines the fundamentals of mutual fund investing in today’s turbulent market environment and offers timeless advice in building an investment portfolio. Along the way, Bogle shows you how simplicity and common sense invariably trump costly complexity, and how a low cost, broadly diversified portfolio is virtually assured of outperforming the vast majority of Wall Street professionals over the long-term.”
13. “Thinking Fast and Slow” by Daniel Kahneman
“In the international bestseller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical.
“The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation―each of these can be understood only by knowing how the two systems shape our judgments and decisions.”
14. “A Random Walk Down Wall Street” by Burton Malkiel
“Especially in the wake of the financial meltdown, readers will hunger for Burton G. Malkiel’s reassuring, authoritative, gimmick-free, and perennially best-selling guide to investing. With 1.5 million copies sold, A Random Walk Down Wall Street has long been established as the first book to purchase when starting a portfolio. In addition to covering the full range of investment opportunities, the book features new material on the Great Recession and the global credit crisis as well as an increased focus on the long-term potential of emerging markets.
“With a new supplement that tackles the increasingly complex world of derivatives, along with the book’s classic life-cycle guide to investing, A Random Walk Down Wall Street remains the best investment guide money can buy.”
15. “The Essays of Warren Buffett” by Warren Buffett
“By arranging Buffett’s lengthy writings thematically, Cunningham’s classic book makes clear and coherent the principles and logic of Buffett’s philosophy of business, investing and life. When first published in 1997, many knew Buffett’s writings were gems, but this book’s novelty was to lay out exact principles and their relationship to each other.
“The central discovery is that the philosophy pivots around one core concept: the vast difference between price and value. From that core radiate the other themes that the book’s arrangement clarifies. The Essays of Warren Buffett is a unique book that takes the raw material of Buffett’s 700+ pages of letters and renders them into a finely-woven 270-page narrative, fulfilling Buffett’s hope that Cunningham would “popularize” his writings.”
16. “Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay
“This classic survey of crowd psychology takes an illuminating, entertaining look at three historic swindles: “The Mississippi Scheme,” “The South-Sea Bubble,” and “Tulipomania.” Fired by greed and fed by naïveté, these stratagems gone awry offer essential reading for investors as well as students of history, psychology, and human nature.”
17. “Manias, Panics, And Crashes” by Charles P. Kindleberger
“This highly anticipated sixth edition has been revised to include an in-depth analysis of the first global crisis of the twenty-first century. Providing a scholarly and entertaining account of such topics as the history of crises, speculative manias and Lehman Brothers, this book has been hailed as ‘a true classic…both timely and timeless.'”
18. “Barbarians at the Gate” by Bryan Burrough and John Helyar
“The Los Angeles Times calls Barbarians at the Gate, “Superlative.” The Chicago Tribune raves, “It’s hard to imagine a better story…and it’s hard to imagine a better account.”And in an era of spectacular business crashes and federal bailouts, it still stands as a valuable cautionary tale that must be heeded.”
19. “The Courage to Act: A Memoir of a Crisis and its Aftermath” by Ben Bernanke
“Working with two US presidents, and under fire from a fractious Congress and a public incensed by behavior on Wall Street, the Fed ― alongside colleagues in the Treasury Department ― successfully stabilized a teetering financial system. With creativity and decisiveness, they prevented an economic collapse of unimaginable scale and went on to craft the unorthodox programs that would help revive the U.S. economy and become the model for other countries.
“Rich with detail of the decision-making process in Washington and indelible portraits of the major players, The Courage to Act recounts and explains the worst financial crisis and economic slump in America since the Great Depression, providing an insider’s account of the policy response.”
20. “The Little Book of Behavioural Investing” by James Montier
“Bias, emotion, and overconfidence are just three of the many behavioral traits that can lead investors to lose money or achieve lower returns. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle.
“In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making.”
21. “Too Big to Fail” by Andrew Ross Sorkin
“In one of the most gripping financial narratives in decades, Andrew Ross Sorkin — a New York Times columnist and one of the country’s most respected financial reporters — delivers the first definitive blow- by-blow account of the epochal economic crisis that brought the world to the brink.
“Through unprecedented access to the players involved, he re-creates all the drama and turmoil of these turbulent days, revealing never-before-disclosed details and recounting how, motivated as often by ego and greed as by fear and self-preservation, the most powerful men and women in finance and politics decided the fate of the world’s economy.”
22. “When Genius Failed” by Roger Lowenstein
“In this business classic — now with a new Afterword in which the author draws parallels to the recent financial crisis — Roger Lowenstein captures the gripping roller-coaster ride of Long-Term Capital Management. Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein explains not just how the fund made and lost its money but also how the personalities of Long-Term’s partners, the arrogance of their mathematical certainties, and the culture of Wall Street itself contributed to both their rise and their fall.”
23. “Liar’s Poker” by Michael Lewis
“The time was the 1980s. The place was Wall Street. The game was called Liar’s Poker. Michael Lewis was fresh out of Princeton and the London School of Economics when he landed a job at Salomon Brothers, one of Wall Street’s premier investment firms. During the next three years, Lewis rose from callow trainee to bond salesman, raking in millions for the firm and cashing in on a modern-day gold rush. Liar’s Poker is the culmination of those heady, frenzied years—a behind-the-scenes look at a unique and turbulent time in American business.
“From the frat-boy camaraderie of the forty-first-floor trading room to the killer instinct that made ambitious young men gamble everything on a high-stakes game of bluffing and deception, here is Michael Lewis’s knowing and hilarious insider’s account of an unprecedented era of greed, gluttony, and outrageous fortune.”
24. “Stocks For The Long Run” by Jeremy Siegel
“Much has changed since the last edition of Stocks for the Long Run. The financial crisis, the deepest bear market since the Great Depression, and the continued growth of the emerging markets are just some of the contingencies directly affecting every portfolio in the world.
“To help you navigate markets and make the best investment decisions, Jeremy Siegel has updated his bestselling guide to stock market investing.
“This new edition of Stocks for the Long Run answers all the important questions of today: How did the crisis alter the fi nancial markets and the future of stock returns? What are the sources of long-term economic growth? How does the Fed really impact investing decisions? Should you hedge against currency instability?”
25. “Black Swan” by Nassim Nicholas Taleb
“A black swan is an event, positive or negative, that is deemed improbable yet causes massive consequences. In this groundbreaking and prophetic book, Taleb shows in a playful way that Black Swan events explain almost everything about our world, and yet we—especially the experts—are blind to them. In this second edition, Taleb has added a new essay, On Robustness and Fragility, which offers tools to navigate and exploit a Black Swan world.”
26. “Den of Thieves” by James B. Stewart
“A #1 bestseller from coast to coast, Den of Thieves tells the full story of the insider-trading scandal that nearly destroyed Wall Street, the men who pulled it off, and the chase that finally brought them to justice.
“Pulitzer Prize–winner James B. Stewart shows for the first time how four of the eighties’ biggest names on Wall Street—Michael Milken, Ivan Boesky, Martin Siegel, and Dennis Levine —created the greatest insider-trading ring in financial history and almost walked away with billions, until a team of downtrodden detectives triumphed over some of America’s most expensive lawyers to bring this powerful quartet to justice.”
27. “The Fix: How Bankers Lied, Cheated and Colluded to Rig the World’s Most Important Number” by Liam Vaughan and Gavin Finch
“In the midst of the financial crisis, Tom Hayes and his network of traders and brokers from Wall Street’s leading firms set to work engineering the biggest financial conspiracy ever seen. As the rest of the world burned, they came together on secret chat rooms and late night phone calls to hatch an audacious plan to rig Libor, the ‘world’s most important number’ and the basis for $350 trillion of securities from mortgages to loans to derivatives. Without the persistence of a rag-tag team of investigators from the U.S., they would have got away with it.”
This story originally appeared on time.com and is available here.