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Below are a list of books I have read which I think deserve to be read, and will most definitely form your knowledge foundation. They are lucid and accessible.


Bernstein, W. (2002), The Four Pillars of Investing: Lessons For Building A Winning Portfolio, New York: McGraw-Hill. The second book by Dr. Bernstein which is a much more accessible version than his first. A superb book. Although I would not like to draw parallels, since Dr. Bernstein is a lot smarter than I, interestingly we both do not have primary vocations within finance which allows us a level of freedom.


Bogle, J.C. (1999), Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor, New York: John Wiley & Sons Inc. As many would say “Thank God for John Bogle”. He is the founder of The Vanguard Group which were pioneers in the creation of passive investment products, and continue to be leading advocates for low-cost index investing strategies.


Taleb, N. N. (2001), Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life, New York: Texere Publishing Limited. One of my favourites which I have reread on countless occasions. A must read as it will put many irritating life experiences into perspective.


Gibson, R.C. (2000), Asset Allocation: Balancing Financial Risk (3rd Edition), New York: McGraw-Hill. One of the earlier books on asset allocation. A good book that remains relevant today.


Bernstein, W. (2000), The Intelligent Asset Allocator, New York: McGraw-Hill. A good book on asset allocation, but sorry, it is a difficult read for many. Well worth the effort for those that want an in depth knowledge of the subject.


Damodaran, A. (2003), Investment Philosophies: Successful Strategies and the Investors Who Made Them Work, New York: John Wiley & Sons, Inc. A good book for dispelling investment myths. Unfortunately the author is an academic and his writing style is somewhat laborious. More of a reference work than a good armchair book on the subject.


Evensky, H.R. (1997), Wealth Management: The Financial Advisor’s Guide to Investing and Managing Client Assets, New York: McGraw-Hill. Every Financial Planner should have this book in their collection. It still remains very relevant today. This book together with the works from William Bernstein got me started on my voyage of discovery.


Lowenstein, R. (2002), When Genius Failed: The Rise and Fall of Long-Term Capital Management, London: Fourth Estate. This book reads like a thriller. A must read as it will put it all in perspective. Not even Nobel prize winners can outsmart the market. If you are still convinced that hedge funds are the answer after reading this, well then there is no hope.


Malkiel, B.G. (1999), A Random Walk Down Wall Street, New York: W.W. Norton & Co. One of the earlier works on random walk theory. Still relevant today, but there are better books available. This book is still considered an icon.


Michaud, R.O. (1998), Efficient Asset Management: A Practical Guide to Stock Portfolio Optimization and Asset Allocation, Massachusetts: Harvard Business School Press. A really tough read, and unless you really want an advanced peek into the world of constructing forward-looking portfolios, don’t bother. It was the ‘holy grail’ for me which has kept me busy with research ever since. I continue to test new methodologies and sharpen my skills as a result, and am never quite sure I have cracked it.


Ross, R. (2002), The Unbeatable Market: Taking The Indexing Path To Financial Peace of Mind, California: Optimum Press. A gem. Prof. Ross has an easy writing style, and dispenses advice in a very understandable and clear manner. You will enjoy this book.


Bernstein, P.L. (1996), Against the Gods: The Remarkable Story of Risk, John Wiley & Sons Inc. A great book to explain risk. It is somewhat complex, and a large read, but definitely worth putting in your collection.


Swedroe, L. E. (1998), The Only Guide to a Winning Investment Strategy You’ll Ever Need: Index Funds and Beyond – The Way Smart Money Invests Today, Truman Talley Books. A great book that is easy to read, and will get your blood boiling.


Shefrin, H. (2002), Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing, New York: Oxford University Press. No collection should be without a book on investor behaviour, and there is none better than the one from Prof. Shefrin. You will be surprised at the mistakes we all make.


You will note that there aren’t many books from South African authors. This is not because there aren’t any. There are many, just that none of them are revolutionary and they tend to dispense the same old platitudes. Out of the many though there is one, I feel, that provides a lot of really useful information.

Swart, N. (2002), Personal Financial Management 2nd Edition, Cape Town: Juta.

     
 

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