Most important books on finance and why you should read them

March 6, 2018 0 Ankit Shrivastav

Introduction:

Books have always been a vital source of learning. For past hundreds of years, books have changed lives of millions of people around the world, helping them in achieving their dreams.

In the age of digital media, books have evolved over a period of time, from a hard bind, to digital form, but the valuable lessons provided have not changed.

The world of finance is full of valuable books written by some of the most successful investors and fund managers, who have put their lifes work and learnings in these books. Out of hundreds of these books, we have carefully selected some of the best ones for you that would provide in depth understanding of the world of finance and psychology of money.

The Essays of Warren Buffett By Lawrence A Cunningham:

Taking excerpts and learnings from Warren Buffets letter to shareholders, Lawrence Cunnigham, the author of the book has compiled the book in a compelling way. The book contains everything Warren Buffett ever is, whether it his business philosophy, investment psychology, and life lessons. The Warren Buffett used it in making wise and profitable investment decisions. The book is a short 270 page read, a concise version of more than 700 pages of Warrens letters. The book is meant for believers of Warren Buffets investment strategy, and for serious, long term investors, looking to create a strong passive source of income by investing in stock market.

Extraordinary Popular Delusions and the Madness of Crowds By Charles Mackay:

Published way back in 1841, Written by Charles Mackay, a Scottish Journalist the book is a classic work on how common man despite being rational, falls prey to the follies that defy common-sense which leads to making stupid and irrational decision making. The books is more about investment psychology and how history keeps repeating itself and how people keep falling in the same trap again and again. The subject of Mackays debunking myths and lies includes economic bubbles, market crashes and manipulations. The book is a must read for investors who want to dig deep into psychology of investing.

Irrational Exuberance By Robert J Shiller:

I wish I had read this earlier, this book deals with all the psychological aspects of investing, and what could go wrong while investing in the market, an eye opener to the fact that investing in stocks is all about probabilities and the only way to master the market is by respecting and embracing its unpredictability. The book presents ample evidence on how to predict the market may see a correction or even a crash in the future. A book that is equally important and useful for economic analysts and investors.

The Dhando Investor By Mohnish Pabrai:

Written by Mohnish Pabrai, an investor businessman and philanthropist, who manages his family fund under name Pabrai investment Fund. he manages more than $500 million in his fund.

The book takes a lot of ideas from The Intelligent Investor, but puts the in a more straightforward manner. The book explains groundbreaking principles of value investing expounded by Benjamin Graham, Warren Buffett, and Charlie Munger and a detailed treatise on using the Kelly Formula to invest in undervalued stocks. Investors looking to understand the basic principles of value investing in a simple straightforward manner should definitely give this book a try. A must read for long term investors.

Quality of earnings By Thornton L. Oglove:

Published in 1987, the book is a classic on forensic accounting and serves as a dissection on the financial statements of corporate companies. Oglove, having rich experience in forensic accounting shows in a simple laymans language on how to unmask inflated earnings that may seem great to an average investor but the truth lies when you read the fine lines. Intended as a practical guide to learners, accountant and investors, the book is a must read with meaningful insights and advice to complex world of corporate reporting.

How to Make Money in Stocks By William O Neil:

William O Neil, a person famous for giving us CAN SLIM technique of investing which claims that you can make money from good markets as well as bad. For those who do not know, the CAN SLIM method put together by the author consists of 7 steps which are aimed at maximising profits. This book imparts valuable information about the times when one needs to cut a loss and the times when one needs to invest and make a profit. The CAN SLIM method highlighted in this book was formulated by the author after analysing stock market patterns over the last 100 years.

The book does not remain confined to analyzing stocks, the method discussed in the book can also be used to analyze mutual funds and ETF (Exchange Traded Funds). Many successful traders and stock advisors use this method to trade in stock market.