B O O K S
from Danielle DiMartino Booth
A Federal Reserve insider pulls back the curtain on the secretive institution that controls America’s economy
“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 cigarette conglomerate. The writers originally covered the story as reporters for the “Wall Street Journal.”
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.
“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. (For more on Graham, see: The Intelligent Investor: Benjamin Graham.)
“Common Sense on Mutual Funds”
John Bogle, 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, and his book is full of common-sense financial advice, such as noting that the less that you pay someone to manage your investments, the more of your money you’ll keep.
“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 financial professional career, or if you’re looking for advice on managing your 401(k) or if 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.
“Extraordinary Popular Delusions and the Madness of Crowds”
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’ Tulip Mania of the 1630s. The British journalist Charles Mackay explored these and other crises in his 1841 classic. Don’t believe that Mackay’s book has no relevance to contemporary times, as the manias he documents provide keen insight into recent events like the dot-com boom and bust of the 1990s and early 2000s.
“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 financial world. In his book, ‘The Alchemy of Finance’, Soros explains his theory of comprehensive reflexivity and innovative investment practices of how to make the market work for you.
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’ “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 everyday (and not so everyday) 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 topics.
In this 1980 book, Harvard Business School professor Michael Porter looks at what creates competitive advantage in a particular industry. Since many financial professionals spend their days analyzing companies, industries and their strategies, Porter’s book provides an ideal starting point.
“Manias, Panics, and Crashes: A History of Financial Crises”
Charles Kindleberger, a former MIT economics professor, explored the nature of financial crises in this 1978 book. Its most recently updated 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. (For more on the latter, see: The 2007-2008 Financial Crisis In Review.)
The wealth of nations – Adam Smith (1776) – The book offers one of the world’s first collected descriptions of what builds nations’ wealth, and is today a fundamental work in classical economics.
M O V I E S
IMDb: Margin Call / Follows the key people at an investment bank, over a 24-hour period, during the early stages of the 2008 financial crisis. http://www.imdb.com/title/tt1615147/?ref_=ext_shr_eml_tt (Links to an external site.)
IMDb: Too Big to Fail / Chronicles the financial meltdown of 2008 and centers on Treasury Secretary Henry Paulson. http://www.imdb.com/title/tt1742683/?ref_=ext_shr_eml_tt (Links to an external site.)
IMDb: The Big Short / Four denizens in the world of high-finance predict the credit and housing bubble collapse of the mid-2000s, and decide to take on the big banks for their greed and lack of foresight. http://www.imdb.com/title/tt1596363/?ref_=ext_shr_eml_tt (Links to an external site.)