An informed investor is a better investor, as knowledge is the best defense against emotional and knee-jerk reactions to market volatility. Do you want to know the secret of Warren Buffett’s success? claims to spend 80% of the day reading:
Read 500 pages like this every day. this is how knowledge works. accumulates, like compound interest.
You are reading: Best investing books 2018
Need a last minute gift for the bookworm on your list? Although not as attractive as a car with a bow in the driveway, the right book can prove to be a more valuable gift in the long run.
As 2018 draws to a close, I’d like to share my personal list of the top seven books on money and investing that were published or republished this year:
Inverted: How Warren Buffett and Charlie Munger Taught Me to Master My Mind, Emotions, and Money (With a Little Help from My Dad) by danielle town & phil town
Danielle Town is a millennial attorney with minimal interest in personal finance or investing. Her father, Phil Town, is a hedge fund manager and investment educator who has written best-selling investment books.
This book, written primarily by danielle with a few sidenotes by phil, is an entertaining entry point into the world of investing. Danielle’s personal story and journey to overcome her fears of investing are familiar and enjoyable, and there is plenty of good information for investors of all ages.
This book would appeal to someone who doesn’t like numbers and cringes at the thought of reading a book on personal finance and investing. The book is constructed as a 12-month plan based on value investing and the wisdom of Buffett and Munger, with each chapter concluding with valuable action steps and exercises.
big mistakes: the best investors and their worst investments by michael batnick
michael batnick is the director of research for ritholtz wealth management and co-hosts one of the best investing podcasts, “animal spirits,” with ben carlson.
batnick writes: “The difference between normal people and the best investors is that the great ones learn and grow from their mistakes, while normal people are hurt by them.”
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Each chapter of the book is devoted to the blunders of the world’s most famous investors: Warren Buffett, Benjamin Graham, Jack Bogle, and even Mark Twain. some of the mistakes are so disastrous that one wonders how some of these famous investors ever recovered from them or how they are still held in such high regard.
One of the most dangerous mistakes an investor can make is succumbing to cognitive biases and falling prey to the “illusion of control.” Succeeding on your first trade can make an investor overconfident in your abilities and lead to much larger losses in the long run.
batnick talks about his own mistakes (like spending $12,000 in commissions in a single year as a day trader) in the poignant final chapter, “Looking in the Mirror.” he’s not shy about acknowledging his failures, which is refreshing in an industry where many of his colleagues relentlessly brag about his successes.
Unbreakable: Your Financial Freedom Handbook by Tony Robbins with Peter Mallouk
when i interviewed tony robbins about his book, published this year in an updated paperback, he told me his main goal was to write “something people could read in a weekend to prepare for the next bear market” .
interviewed some of the biggest financial minds and created an action plan for investors to follow, written as if robbins were speaking directly to you.
Some of the most valuable sections come from his co-author Peter Mallouk, President and Chief Investment Officer of Creative Planning. Mallouk’s Appendix on Estate Planning contains some of the best and most important information available on the subject.
mastering the market cycle: having the odds on your side by howard marks
howard marks is co-founder and co-chairman of oaktree capital management, a hedge fund with $120 billion of assets under management. Marks has been sending legendary memos to investors from him since the 1990s, many of which were collected and published as top lit (which I recommended above).
by mastering the market cycle, mark exposes one of his “most important things”: studying market cycles and learning how to spot the next trend. refers to psychology and behavior in relation to greed versus fear. as he writes, “an investor has to learn to recognize cycles, evaluate them, look for the instructions they imply, and do what they are told to do.”
marks proves once again that it is capable of elucidating complex issues in very readable and informative financial writing. however, his comment may be esoteric, so I would recommend this book to a more advanced investor interested in engaging more with what brands refer to as “second level thinking.”
intelligent women end up enriched, enlarged and updated by david bach
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To celebrate his 20th anniversary, David Bach published an updated edition of this classic book. I interviewed him earlier this year about how everyone, regardless of age or gender, can end up rich.
Bach writes in an easy-to-understand style and uses the investment lessons he learned from his grandmother to make the subject more relatable. Bach has far exceeded its original goal of helping one million women become smarter with their money.
In the preface to this new edition, she tells of a publisher who told her that “women don’t buy investment books.” This book, which launched Bach’s “Finish Rich” series of books, has sold over a million copies.
Financial Independence (Getting to Point X): A Comprehensive Guide to Tax-Smart Wealth Management 2nd Edition by john j. wind
This book is certainly comprehensive and, at nearly 500 pages, can serve as an effective doorstop (read it first). vento guides him through everything he needs to achieve financial independence, or what he calls “getting to point x.” covers every financial topic you can think of, from estate planning to business taxes to life insurance.
The book has been updated to include the latest information on the Tax Cuts and Jobs Act. Vento’s greatest strength is clearly explaining the importance of maximizing your tax efficiency through a process he calls “alpha tax to the second power.”
vento has a knack for taking a dry subject and making it engaging, and doesn’t skimp on the little things. an appendix at the end of the book lists 101 ways to save $20 a week, and there’s an entire chapter on committing to living within your means.
Derisking Black Swans: Using Investment Science to Capture Returns with Less Volatility, 2018 Edition by larry swedroe & kevin grogan
“Black Swans” are unpredictable events that cause market turbulence, such as 9/11 or the market crash of October 1987. Swedroe, a prolific writer and director of research at Buckingham Strategic Wealth, details how an investor You can build a portfolio using alternative investments (such as reinsurance or alternative loans) to protect yourself from unforeseen calamities.
I found the final chapter to be the most significant. it is simply called “enough”. Swedroe and Grogan discuss the marginal utility of wealth: Put simply, how much money do you really need to be happy? I was surprised to find this at the end of a portfolio management book, but I loved it.
As an added bonus, I’ll be including a book coming out in the first week of 2019: Swedroe & Grogan’s Newest Book Your Complete Guide to Success & secure retirement, which swedroe considers his magnum opus (I recently interviewed him and will publish it shortly). Like Vento Financial Independence, it contains comprehensive strategies to ensure not only a successful but a meaningful retirement.
make a new year’s resolution to become a smarter investor. while everyone else packs the gym during the first few weeks of January, cozy up by the fireplace with a good book that will help improve your financial future. By reading some or all of these books, you will be heeding the wisdom of the Oracle of Omaha, accumulating knowledge such as compound interest.
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