There are a handful of popular investment books being recommended. Let’s do an inversion today and talk about the lesser-known ones. Books are personal and each of us may need a different set of books to change our lives. Hence, it is necessary to venture beyond the ‘socially approved’ books.
Here are seven to give you some idea where to start. Arranged in alphabetical order.
Adaptive Asset Allocation – Gives a good overview of the risks that can derail a portfolio and how to build a portfolio to minimize them. The book proposes an adaptive asset allocation whereby a group of asset classes are selected based on how they perform during rising/slowing inflation and slowing/accelerating growth economic regime. Next use risk parity to size the positions and only buy those with high momentum.
Capitalism without Capital – Our economy is increasingly driven by intangible assets (services, intellectual properties) rather than tangible assets (machinery, factories). The industrial age is giving way to the digital economy. But our accounting and GDP calculation approaches to value the intangibles have not caught up. As investors we need to adapt on our own.
Laughing at Wall Street – Retail investors can have advantages over finance professionals at times. Not using fundamental or technical analyses but information arbitrage. It is similar to Peter Lynch’s advice of finding out sales spurts before Wall Street does. You get more examples from this book as the author shared the stories how he turned $20,000 into $2m.
Misbehaviour of the Markets – A conceptual book about the nature of the markets. The dominant thought is that markets are random but the book proves that they are not. They are fractal. The implication is that a lot of financial models don’t work at times because they are modelled after randomness. The tail risks are underestimated. Hence the market crashes more often and severe than the models suggest. It is not the market is wrong. The models are. The map is not the territory.
The Hour Between Wolf and Dog – Trading is a harmful activity without us knowing. A trader turned neuroscientist went down the rabbit hole to find out and published his findings in this book. One of the problems is the chronic production of cortisol to deal with sustained stress. Our brains have evolved to deal with sudden stress and not a prolonged one. This could result in hypertension, heart disease, type 2 diabetes, immune disorders and depression. Don’t trade health for wealth.
Happy reading!
