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Learn How to Invest with My Favorite Investing Books

Anyone can learn how to invest and profit, but it requires discipline and focus. My favorite investment books can get you started.

Stack of Books

One of the most frequently asked questions that I get is some version of the following: “I’m a new investor. What are the best investing books I should read to learn how to invest?”

In this article, I’m going to share a series of books that you need to read or re-read if you’ve already read them.

These books are wildly entertaining while also hugely enlightening.

Learn How to Invest Like Market Wizards

Over the past 40 years, Jack Schwager has published a series of books where he interviews top traders and investors from all over the world. Schwager transcribes and shares those conversations for your benefit.

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There have been four books in the series, and I recommend you read them all.

The first book, Market Wizards: Interviews with Top Traders, was published in 1989.

It includes interviews with many of the best trades of all time, including, Bruce Kovner, Paul Tudor Jones, and Michael Steinhardt.

The goal of the interviews is to help readers learn how to invest by gaining an understanding of how unbelievable returns are generated.

The second book, The New Market Wizards, was published in 2009. In it, the author interviewed the next generation of top traders including Stanley Druckenmiller.

Some of my favorite takeaways from this book are:

  1. The importance of cutting your losses.
  2. How there are many ways to win in investing.
  3. Why you should consider taking a break from trading if you “aren’t seeing the ball.”

The third book of the series, Hedge Fund Market Wizards, was published in 2012.

It includes an interview with my favorite investor of all time, Joel Greenblatt (more on Greenblatt below).

One of my favorite interviews in the book is with Jamie Mai of Cornwall Capital, a family office.

Cornwall Capital is most well known due to its profile in The Big Short which identified Cornwall as one of the handful of firms that made many multiples of its investment during the Great Financial Crisis by buying CDS protection on collateralized debt obligations.

I enjoyed the entire interview but especially loved the section where Mai describes his experience investing in South Korea.

“After all this research, we became convinced that the logic for why Korea was cheap was circular. Korea was cheap because it had consistently been cheap. For several years, Korean companies that generated steady and impressive cash flows kept getting cheaper. Investors who had bought Korea earlier as a value trade had gotten burned, even though it seemed like their thesis was sound. By the time we arrived at the scene, there were lots of companies trading at substantial negative enterprise values. [A negative enterprise value implies that the market is assigning a negative value to the company, excluding its cash assets and debts.] There were companies with market caps of $300 million, no debt, and $550 million cash on the balance sheet, which was expected to increase to $650 million in the following year. In this case, there was tremendous asymmetry simply because these companies had nowhere to go but up.”

The final book in the Wizards series was my favorite.

It was published in 2020 and is called Unknown Market Wizards.

It profiles a bunch of investors that nobody has heard of who have generated eye-popping returns.

A few examples

  • One trader turned $2,500 into $50,000,000.
  • Another has generated 337% annual returns over a 13-year time period.

And my personal favorite, a bellhop from the Czech Republic, who has generated 35% annual returns over an 11.5-year period with a max drawdown of only 13.2%.

This last book in the Wizards series is my favorite because it shows that anyone can learn how to invest and generate great investment returns. This is not to say it is not easy. But just that it’s possible if you focus on an attractive niche and have a sound process.

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Rich is a trained economist and Chartered Financial Analyst (CFA). He has researched and invested in stocks for more than 20 years and has become a recognized expert in micro-cap stock investing. He started his career at investment advisory firm Eaton Vance where he covered a wide range of sectors including software and internet, financials, and health care.