The world of finance has provided the backdrop for many dramas, from mergers and acquisitions to Wall Street shenanigans to Tulipmania. And let's not forget about the many financial crises. Finance obviously has no lack of gripping topics for authors to write about. For finance professionals who want to better understand the history of their industry and potentially improve their practice, here are 20 suggestions.
1. Barbarians at the Gate
Interested in leveraged buyouts and junk bonds? In 1989, Bryan Burrough and John Helyar wrote the definitive history of these financing types when they recounted the struggle involving the leveraged buyout of RJR Nabisco, a now-defunct food and tobacco conglomerate. The writers originally covered the story as reporters for The Wall Street Journal.
2. Security Analysis
Benjamin Graham and David Dodd wrote the "bible" of fundamental equity investing in this classic, first published in 1934. If you're interested in the techniques of value investing, an approach favored by Warren Buffett (who was a student of Graham’s at Columbia University), you're certain to benefit from this book.
3. The Intelligent Investor
Benjamin Graham also wrote this guide to long-term investing approaches. First published in 1949, The Intelligent Investor has been updated repeatedly over the past 65 years, including most recently by the financial writer Jason Zweig, as Graham died in 1976. Graham uses his book to map out and advocate for his preferred value approach to investing.
4. Common Sense on Mutual Funds
John Bogle, the founder of the Vanguard Group mutual fund company, came out with his guide for mutual fund investors in 1999. Bogle makes the case for the value of index-based investing. His book is full of common-sense financial advice, such as noting that the less you pay someone to manage your investments, the more money you'll keep.
5. A Random Walk Down Wall Street
First published in 1973, Princeton economist Burton Malkiel's book advises readers on various types of investments. Whether you're just kicking off your professional financial career or you're an established professional who wants to expand your investment profile, Malkiel's tome, which has gone through 11 editions since publication, remains a great source for market fundamentals.
6. Extraordinary Popular Delusions
One constant of financial markets is that they suffer periods of collective greed and fear, which has resulted in such catastrophes as Britain's South Sea Bubble and the Netherlands' Tulipmania of the 1630s. The British journalist Charles Mackay explored these and other crises in his 1841 classic. Don't underestimate that Mackay's book has relevance to contemporary times, as the manias he documents provide keen insight into recent events like the dotcom boom and bust of the 1990s and early 2000s.
7. The Alchemy of Finance
Famed hedge fund legend, George Soros, is renowned for his theoretical and practical insight on financial trends dating back to 1992 when he accumulated a fortune and subsequently brought the Bank of England to its knees. Crippling Great Britain's monetary system in a single day made him one of the most powerful and profitable money managers in the financial world. In this book, Soros explains his theory of comprehensive reflexivity and innovative investment practices to make the market work for you.
8. Liar’s Poker
Michael Lewis used his experience as a bond salesman in the heyday of Salomon Brothers for this legendary 1989 book. He chronicles his own work experiences and also offers a big-picture take on Wall Street during a boom time when the mortgage-backed security market caught fire. A loose sequel of sorts was Lewis's The Big Short, in which he described the role Wall Street played in the 2000s housing market downturn.
Are you interested in learning how the world really works? This 2005 book by economist Steven D. Levitt and journalist Stephen Dubner looks beneath the surface of various every day (and not so every day) situations and breaks down how things work. For instance, do you believe you're getting the best deal if you're a homeowner who hires a real estate agent to sell your house? You might be surprised. The book also explores the economics of the worlds of drug dealing and Sumo wrestling, among a wide array of other topics.
10. Competitive Strategy
In this 1980 book, Harvard Business School professor Michael Porter looks at what creates a competitive advantage in a particular industry. Since many financial professionals spend their days analyzing companies, industries, and strategies, Porter's book provides an ideal starting point.
Michael Porter is widely acclaimed for his Porter's Five Forces framework, an economic tool that analyzes a business's competition.
11. Manias, Panics, and Crashes
Charles Kindleberger, a former MIT economics professor, explored the nature of financial crises in this 1978 book. Its most recent edition from 2011 (revised by Robert Aliber, as Kindleberger died in 2003) delves into the causes of the 2007–2008 financial crisis that ignited the global economic downturn.
12. The Nature of Investing
The term "investment" applies to more than just money. People are constantly investing their time and energy in the world as citizens, business owners, and consumers. Lately, however, the world of investment has become unnecessarily complicated with the creation of funds, securitization products, and high-frequency trading. In her book, Katherine Collins says what is needed is a transformation of the investment process. She offers examples based on her 20 years of experience in the field of how it’s possible to come up with an investment framework that is simpler and better utilized.
Traction starts with the premise that all entrepreneurs and business people face similar issues, such as slow growth, profit concerns, and personnel conflict. These issues can cause decisions to be put on hold or fail to be properly implemented. In his book, Gino Wickman suggests there is a solution. “The Entrepreneurial Operating System is a practical method for achieving the business success you have always envisioned. More than 2,000 companies have discovered what EOS can do,” he writes.
14. Reducing the Risk of Black Swans
Larry Swedroe and Kevin Grogan, authors of The Only Guide series of investment books and The Only Guide You'll Ever Need for the Right Financial Plan, have joined forces to write Reducing the Risk of Black Swans. The book is geared toward financial advisors and investors looking to expand their technical knowledge of the evidence-based investing world. In it, they look at portfolio construction and offer a roadmap for investors who want to refine their portfolio. They also offer information on what it takes to build a more efficient portfolio, all based on hard data and research.
15. Probable Outcomes
In his book, Ed Easterling uses research from his firm, Crestmont Research, to provide charts and graphs that will aid advisors and investors in forming a rational take on the stock market by identifying irrational behavior. The author uses “investment science” and “investment art” to look at the stock market from a variety of angles and addresses the investing perspectives of a broad range of investors. His analysis can help investors and advisors come up with reasonable expectations and value-added investing ideas as it explores the fundamental principles that drive the stock market.
16. Mastering Market Timing
Many analysts over the years have used the Wyckoff method and Lowry analysis to understand price/volume interactions and the forces of supply and demand. These methods are considered the starting point for all top-down analysis. In Mastering Market Timing, Richard Dickson and Tracy Knudsen discuss how analysts can combine the two methods to provide an objective and quantifiable approach to applying traditional price/volume analysis. Using these techniques should help investors gain insight into technical methodologies and find indications of nascent trends.
17. Investment Leadership
In this book, Jim Ware, Beth Michaels, and Dale Primer provide readers with a guide to investment industry best practices. It offers tools managers can use to be better leaders and ways they can contribute to sustainable growth in their firms. It also offers ways to diagnose a firm's culture and reveals ways to replicate best practices being implemented at leading firms. Investment Leadership also offers practical advice from industry leaders, case studies, and tools to explain why the status quo in the industry isn’t working anymore and ways advisors can achieve long-term success in the investment industry.
18. How to Master the Art of Selling
Sales is about getting people to trust and accept you and to buy a product or an idea. In his book, Tom Hopkins offers hundreds of ideas for improving sales skills based on proven techniques and strategies. Readers will get tips on how to increase their sales and have their common concerns and questions addressed in an easy-to-read fashion. Readers will learn the art of persuasion and how to adapt it to their business.
19. Thinking Fast and Slow
In his book, Daniel Kahneman takes his readers on an exploration of the mind, examining the two types of thought processes that drive the way people think. The first system is a fast, intuitive, and emotional one. The second system is a slower, more deliberate, logical one, he says. Thinking Fast and Slow goes on to evaluate the impact that overconfidence can have on corporate strategies and looks at the difficulties of predicting what makes people happy in the present and the future. He also explores the effect of cognitive biases on behavior as varied as investors playing the stock market to families planning their yearly vacation. Kahneman shows how human thinking can be better understood by knowing how these two systems shape judgment and decision-making.
20. Unique Process Advisors
Over the last 20 years, there have been two important changes in the financial advisory business, according to Dan Sullivan. One is that the majority of advisors have lost much of their entrepreneurial freedom due to bureaucratic and regulatory constraints. At the same time, a minority group of advisors has become more “independent, creative, and valuable in the marketplace,” he says. In Unique Process Advisors, the author engages with some of those advisors to learn about their unique approach to dealing with their clients and growing their business.
The Bottom Line
The world of finance is a source of endless material for writers and has resulted in fascinating stories. Financial professionals would be wise to pick up a few of these recommended books to increase their financial knowledge, improve their sales, management, and business skills, and better serve their clients.