For those who want to further their learning, these are selected books and papers I have read and consider valuable in developing a fuller understanding of finance and investments. I started reading these books right out of business school and never stopped, as I find one spurs me on to the next and so on. Out of the list, if you want something readable and not too math heavy, these five are a good start:
Expected Returns (Antti Ilmanen, 2011) - Antti is a Principal at AQR Capital Management, former central bank portfolio manager in Finland and has advised the Norway Government Pension Fund. For those that want a deeper dive into the sources of return the market provides investors. I found this to be one of the best resources for understanding how to derive expected returns across all asset classes. Based on empirical evidence, this one is technical, but still accessible. Not a personal finance book.
Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least (Antti Ilmanen, 2022) - A timely sequel to his original, emphasizing many of the challenges we are experiencing today – particularly in a world of rising bond yields, not falling.
Pioneering Portfolio Management (David F. Swensen, 2000) - From the late CIO of the Yale Endowment. Highlights the “magic” of the Yale Endowment, through the very grounded and realistic insights from Swensen. He pointed out, early and often, the virtues of passive investment in the most competitive areas of the market, and how Yale’s private asset strategies would be unlikely to be successful in the future once they were widely copied. He was right. I find this one is a good mix of readable and technical.
A Random Walk Down Wall Street (Burton G. Malkiel, Professor of Economics at Princeton University, 1973) - A timeless classic takedown of the active management industry. Malkiel lays out the arguments for index investment against the backdrop of market efficiency. I now reflect on how this book influenced me to read so much more on these topics. Technical concepts are explained in readable terms.
Capital Ideas: The Improbable Origins of Modern Wall Street (Peter L. Bernstein, 1992) - I think this is a great historical overview of the important academics who shaped our understanding of financial theory. It helps the reader understand the foundations and evolution of finance.
Against the Gods: The Remarkable Story of Risk (Peter L. Bernstein, 1996) - A full history of the human understanding of risk and how we attempt to manage it. I liked that it touched on the psychology of risk.
Investment Valuation: Tools and Techniques for Determining the Value of Any Asset ( Aswath Damodaran, Professor of Finance at NYU, 1995) - This is a go-to reference for any time I want to remember various valuation techniques for any kind of financial instrument. Technical. This is not a beach read.
Corporate Finance (Ehrhardt and Brigham, 2003) - It is a finance textbook in every sense, and strangely, got me hooked on this type of content. One of the first books I read on the subject. Corporate Finance focuses on business valuation concepts. Technical, not beach reading.
Don’t Count on It (John Bogle, Founder of Vanguard, 2010) - Another classic from Bogle, and I love how he pulls no punches on exposing the investment management industry. From the person who made index investment available to everyday investors. Easy read.
The Fama Portfolio (Eugene F. Fama, Professor of Finance, University of Chicago, Nobel Prize Winner, 2017) - This is a collection of Fama’s academic papers, a central one being his work on the efficient market hypothesis. I loved exploring Fama’s papers because they are so foundational to how we now understand markets. This is dense stuff, not personal finance.
Investors and Markets: Portfolio Choices, Asset Prices, and Investing Advice (William F. Sharpe, Professor of Finance, Emeritus, Standford University, Nobel Prize Winner, 2007) - It discusses asset pricing and portfolio choices, and I really liked that he uses interesting hypothetical examples.
The Arithmetic of Active Management (William F. Sharpe, Professor of Finance, Emeritus, Standford University, Nobel Prize Winner, 1991) - This famous 1991 paper succinctly sums up the sobering mathematical reality that active managers are up against in attempting to beat “the market.” It is clear-eyed, and irrefutable. When I read this for the first time, I thought, “Sharpe has said it all, in about two pages.” If you read one thing on the passive vs active debate, this should be it.
The Four Pillars of Investing (William J. Bernstein, 2002) - I find this one to be a super helpful book in terms of giving the reader a plan of action, with investment advice geared for everyday readers. Just technical enough in spots to give you a fuller understanding, but still accessible enough to serve as a great guide for those wanting a solid foundation in the most important concepts.
Thinking, Fast and Slow (Daniel Kahneman, Nobel Prize Winner, 2011) - Fascinating book on modes of thinking and how they influence choices and decisions. The work outlined in this book, among others, contributed to the field of Behavioral Economics. I loved learning the innate differences between fast (reactive) and slow (analytical) thinking, and how we struggle to pivot between the two in various circumstances.
Fooled by Randomness (Nassim Taleb, 2001) - A fantastic read on the nature of luck and chance, and how we frequently fall prey to perceiving outcomes as related to skill, when we were really just fooled by randomness. I love the distinction between “skill” and luck, and this book explains how to think about randomness in that context.
The Theory and Practice of Investment Management: Asset Allocation, Valuation, Portfolio Construction and Strategies (Frank J. Fabozzi, Professor of Practice at John Hopkins University and Harry Markowitz, PhD University of Chicago, Nobel Prize Winner, 2002) - Dense and technical read that bridges the gap from finance theory to implementing portfolio construction.
The Intelligent Investor (Benjamin Graham, 1949) - This is a classic on what we now call “value investing.” Timeless, and Graham’s teachings have influenced many, including one of his students, Warren Buffett. This was one of the first investing books I read, and it set my curiosity off right away.
Never Bullshit the Client (Richard Ennis, 2019) - From an early founder of the institutional investment consultant industry. A very readable walkthrough of Richard’s life and career that offers up how to maintain integrity and character when everything is tugging the other way. Richard is on a mission to shed light on and clean up the wasteful practices in pension and endowment investment. I’ve read many of his research papers and find them very important in exposing some hard truths about the investment industry. You can find them on his personal website, or on SSRN.
Lies, Damn Lies and Benchmarks: An Injunction for Trustees (Richard Ennis, 2023) - This one is a follow up based on his research paper, Cost, Performance, and Benchmark Bias of Public Pension Funds in the United States: An Unflattering Portrait. Both should be mandatory reading for trustees, staff, and investment officers. When I first read these, I knew I was reading something especially valuable for driving much needed change.
Naked Statistics: Stripping the Dread from the Data (Charles Wheelan, 2012) - An accessible and sometimes funny read on statistical concepts. I think it is a good introduction to a difficult topic and helps develop a broad understanding of the foundational concepts.
Adaptive Markets: Financial Evolution at the Speed of Thought (Andrew W. Lo, Professor of Finance at MIT, 2017) - This book is about Lo’s Adaptive Markets Hypothesis, which attempts to bridge the differing viewpoints of behavioral economics and efficient markets purists. I think it is an interesting take on a long-held debate and provides a unique perspective on how to reconcile certain differences.
Devil Take the Hindmost: A History of Financial Speculation (Edward Chancellor, 1999) - Takes the reader through a history of financial speculation, all the spectacular manias and crashes. This is a great read to provide a vivid reminder of what has happened, and will happen again, and again.
Mathematical Finance (M.J. Alhabeeb, Professor of Resource Economics, University of Massachusetts, Amherst, 2012) - A good reference for finance-related mathematics. Not a beach read.
Mathematics and Statistics for Financial Risk Management (Michael B. Miller, 2012) - The name says it all. This is all about risk management in finance, and the math and statistical tools necessary to understand and solve these problems. I read it to better understand statistical concepts in risk management as they pertain to finance specifically. Dense, not a beach read.
A Crisis of Beliefs: Investor Psychology and Financial Fragility (Nicola Gennaioli and Andrei Shleifer, 2018) - A post global financial crisis examination of how investor psychology and beliefs shape financial markets – and their risk. Readable and interesting.
Pension Finance (M. Barton Waring, 2011) - This book serves as a clear roadmap for understanding the insane nature of defined benefit pension actuarial accounting, and its implications. Waring helps us see, with clarity, how pension liabilities ought to be accounted for, and how doing so would solve much of the persistent underfunding present in our pension systems. I view this as a one-off reference and must-read for anyone in the defined benefit pension world – trustees or staff.
Modern Portfolio Theory and Investment Analysis (Elton, Gruber, Brown, Goetzmann, 1980) - This is another finance text, and the name says it all. Worth reading for understanding modern portfolio theory and how it applies to portfolio construction.
The Myth of Private Equity: An Inside Look at Wall Street’s Transformative Investments (Jeffrey C. Hooke, Senior Lecturer in Finance, Johns Hopkins University, 2021) - This is a readable takedown of the private equity industry in the clearest terms. A must-read for anyone wanting to understand, in plain English, the nature of the private equity industry, and I found it very clearheaded and insightful.
Private Equity Laid Bare (Ludovic Phalippou, Professor of Financial Economics, University of Oxford, 2017) Another takedown of the private equity industry. Readable, but can be technical in places and includes real world examples to illustrate his points.
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