Last year I tried something new, reading a stack of books in a single category: biographies and autobiographies.
I enjoyed this focused approach, being extremely intentional about the books you read, because you get to dedicate an entire year to studying just one thing. Pick a broad topic and acquire a broad understanding, or pick a tiny subject and go super deep.
So now I work ahead, choosing categories for upcoming years, and keeping yearly reading lists where I jot down books as I hear about them. I’m finding this approach gives you time to refine the books you’ll read, to only read the best.
And when you think about this, picking a single subject each year for the next say, 50 years, you’ll gain 50 branches of knowledge.
This is what Charlie Munger means when talks about becoming multidisciplinary. When you grasp concepts that span history, mathematics, psychology, biology, and physics, it makes you a better thinker, problem solver, and decision maker.
Anyways, this year I read investing books because I’ve missed some along the way. Here’s the top five I read.
Little Book of Common Sense Investing
The Only Way to Guarantee Your Fair Share of Stock Market Returns
John Bogle, founder of Vanguard, created the world’s first index fund. For most people, building a simple portfolio of low-cost index funds is going to be the best approach to investing for the long term.
And why not hear this directly from Bogle? He backs this method up with in-depth analysis and easy-to-understand charts. Great book for a new index investor.
The Smartest Investment Book You’ll Ever Read
The Proven Way to Beat the “Pros” and Take Control of Your Financial Future
A short book I often recommend to people who want to invest but have absolutely nothing to do with investing. It’s easy to read, without any fluff, and recommends investing for market returns.
Decide on your asset allocation, open an investment account, invest in low-cost index funds according to your asset allocation, and rebalance your portfolio. That’s the book.
Four Pillars of Investing
Lessons for Building a Winning Portfolio
If you’re interested in wading much deeper into investing, and Bernstein is clearly an advocate of indexing and modern portfolio theory, then read this book.
It’s an excellent reference, breaking investing down into four distinct pillars: theory, history, psychology, and the business of investing. My favorite part was the history of speculative bubbles that started in 1689 with companies diving for sunken treasure.
While I’ve read other Bernstein books — The Intelligent Asset Allocator and The Investor’s Manifesto — I recommend this classic over those.
Thinking, Fast and Slow
Kahneman, professor of psychology at Princeton University, won a nobel prize in economics for his work on decision-making with partner Amos Tversky.
This book attempts to explain the two modes of thinking: intuitive and quick-moving, and deliberate and logical. Many times decisions are made irrationally by the first mode, before the second mode can take control.
It touches many broad areas including economics, philosophy, and psychology. Clocking in at 418 pages it’s a bit tiring to work through, but it’s chock full of the cognitive biases and psychological mistakes we’re prone to making when investing.
Poor Charlie’s Almanack
The Wit and Wisdom of Charles T. Munger
Pound-for-pound the best book about business, investing, and life. I think the beginning of the book is too heavy on Munger’s accomplishments, but after all he’s a smart and rich individual.
My favorite parts of the book are his 25 cognitive biases and transcriptions of popular speeches, many of which have been updated and polished for this book. The wisdom in the speeches alone are enough to make anyone wise.
It’s a large, unwieldy, and quirky book, but one that I find myself going back to again and again.