Readers occasionally ask me what I think the best investing books are, or what I recommend reading.
The truth is, while I’ve read a lot of investing books and there are tons of good ones, the most powerful resources I’ve found are online.
Compared to other things I’ve read, the free writings of billionaire investors have been the most useful. Who better to learn from than the people who have done it the best?
However, reading collections of online publications can be kind of tedious, especially since it’s hard to know which pieces are timeless and which ones are specific, since they often write on timely events.
Fortunately, some of those writings have been compiled into books. Those, I guess, are what I consider the best investing books to read. 🙂
#1: The Most Important Thing, By Howard Marks
Howard Marks is the billionaire co-founder and co-chairman of Oaktree Capital.
Marks and his team have generated market-beating returns for decades, mainly by value investing in distressed debt and controlling risks. He has written famous memos since 1990, which are complied online here.
In addition, he has turned some of those memos into books, and I think The Most Important Thing is the best one. Warren Buffett asked him to write it.
Marks often found himself in a client’s office saying, “the most important thing is to manage risk.” And then as the conversation would continue he would say, “the most important thing is knowing where we are in the cycle.”
He humorously kept finding himself saying, “the most important thing is…” because the truth is, there are so many important things to get right when investing.
Each chapter in this book is one of those most important things, as a collection of separate lessons. It’s useful for investors in all asset classes; stocks, bonds, real estate, etc. The strategies are timeless and broadly applicable.
The reason I recommend it to everyone is that it’s accessible, short, qualitative rather than numbers-driven, and deeply insightful.
#2: Warren Buffett’s Shareholder Letters
Warren Buffett became the world’s richest person in the world by investing in simple businesses at bargain prices.
Every year, he writes a shareholder letter to investors of his company, Berkshire Hathaway. These are widely considered some of the best lessons for any investor. You can find all of them for free here.
An inexpensive book compiled these letters from 1965-2017 into an easily-readable format:
Reading decades of shareholder letters takes a long time, which is why I don’t recommend it quite as broadly as reading the book from Howard Marks. However, for hands-on investors, the accumulated lessons from Buffett is more than worth the time.
#3: Big Debt Crises, by Ray Dalio
Ray Dalio co-founded the world’s largest hedge fund, Bridgewater Associates.
Him and his team publish research observations, which you can find here.
His book Principles for Navigating Big Debt Crises is an important read for investors that want to protect themselves from or benefit from recessions and other financial crises.
The first 60 pages or so of his book serve as a highly-accessible summary of how debt crises tend to play out, based on statistics of dozens of instances from the past.
Then, the rest of the book drills down into detail on specific crises as examples. Will a recession be inflationary or deflationary? What policies are likely to resolve it? Dalio shows the historical answers to those questions based on the type of crisis it is.
I also recommend checking out his film for his view of how debt cycles play out over and over again:
Other Great Reads
Beyond learning from some of the best investors of all-time, there are some specific books that I think cover key topics very well.
The Little Book That Still Beats the Market
Joel Greenblatt is one of the highest-performing value investors around, and this simple book gives an accessible outline of his formula.
This later edition of the book updates it and adds the word “still” to the title to separate it from the original edition.
If there’s one short read I’d recommend to stock pickers, it’s The Little Book That Still Beats the Market.
Andrew Hallam is a school teacher that became a millionaire in his 30’s by living simply and investing in index funds.
He compiled his lessons into his book, Millionaire Teacher.
It’s a really good gift for a recent graduate from high school or college in my opinion.
The Millionaire Next Door
This popular book is more about building wealth in general than investing specifically.
The Millionaire Next Door gives a summary of how most millionaires run their lives.
Stocks for the Long Run
Jeremy Siegel is a distinguished professor of finance at the University of Pennsylvania Wharton Business School, and his well-known book is Stocks for the Long Run.
He keeps updating it to stay relevant, currently in its fifth edition:
Overall, there’s no substitute for investing experience and time in the markets, but good books can broaden your knowledge. If I had to recommend just one book, it would be The Most Important Thing.