Socrates said: “Employ your time in improving yourself by other people’s writings, so that you shall gain easily what others have labored hard for.” This is true for any area of knowledge, but it is particularly true in finance and economics. One of the things that make this topic so confusing is that different principles can apply to different people. For example: Municipal bonds can be great for someone in a high tax bracket but not if all of their investable assets are in retirement accounts. There are very few rules-of-thumb in personal finance. That being said, I always encourage clients to try and read at least one book per year on the subject. In today’s blog post I thought I would give some examples of my favorite books on finance.
The Number, by Lee Eisenberg
The subtitle of Eisenberg’s book is What do you need for the rest of your life and what will it cost? In this book you will not only learn something, but you will also laugh! The book discusses various obstacles, and mental road blocks many people experience while preparing for retirement. In one of my favorite chapters you’ll read about the author’s “uncertainty principles”. These are just some of the reasons people put off even thinking about retirement. For example: The uncertainty and lack of motivation that comes from not knowing how money works. The book also gets into the philosophy of spending money and debt. This book is a great read for anyone over the age of 30.
Investing: The Last Liberal Art, by Robert Hagstrom
This is actually one of my favorite reads of all time! In this book Robert Hagstrom uses different sciences to draw analogies to investing. From psychology to philosophy and physics to biology, the author does a wonderful job of not only teaching finance but also about other various disciplines. He writes about a lattice work of mental models: “Each discipline entwines with, and in the process strengthens, every other.” In his chapter on Biology, Hagstrom draws some excellent analogies between the evolution of species and of capital markets. “The process of evolution is one of natural selection, seeing the market within an evolutionary framework allows us to observe the law of economic selection.”
Devil Take The Hindmost, by Edward Chancellor
The subtitle of this book is “A History of Financial Speculation”. Mark Twain once said that history seldom repeats itself but very often it rhymes. The best way to identify current trends in financial markets is to study previous ones from the past. In Devil Take The Hindmost, Edward Chancellor recalls some of the most absurd financial bubbles and schemes in history. From the Gilded Age to the Roaring Twenties, from the nineteenth-century railway mania to the crash of 1929, from junk bonds and the Japanese bubble economy to the day-traders of the Information Era, Devil Take the Hindmost tells a fascinating story of human dreams and folly through the ages.