What investment books are worth reading today? You may be surprised to discover that financial pros recommend a mix of both old and new titles to add to your reading list.
“What happened yesterday still holds a grain of truth today, especially in the world of finance,” says Lily Kim, Global Manager Research for Wells Fargo Investment Institute. “Things are always cyclical—there’s always a pattern of boom and bust, high and low.”
Boris Valentinov, Investment Research Analyst at Wells Fargo Investment Institute, adds that reading about investing should be a regular habit. “Financial education is super important for anyone hoping to pick the right investments and the right way to manage their money,” Valentinov says.
Here, Kim and Valentinov share what’s on their must-read list of investment books.
Common Stocks and Uncommon Profits and Other Writings
Author: Philip A. Fisher
Why it’s worth reading: “This is a common-sense book that’s accessible to every reader,” Valentinov says. The book was originally published in 1958, and Valentinov says the gist is that one of the most effective ways to pick investments is to use the “scuttlebutt method”—a phrase Fisher coined in the book—by researching a business from many different angles. That includes talking to current or former employees, customers, vendors, trade associations, and competitors to learn as much as you can about how the company works.
Range: Why Generalists Triumph in a Specialized World
Author: David Epstein
Why it’s worth reading: ” While the main objective of this book is to highlight the importance of “range” as defined as more diverse experience across multiple fields, this book also indirectly shows the importance of being able to draw upon multiple sources of insight and inspiration and bring them together when weighing choices in order to help you make smarter decisions,” Kim says. “Think of it this way: From a financial standpoint, it reminds you that you don’t have to be an expert on every subject relating to money, which can admittedly be daunting and overwhelming. You can still be an impactful investor by having the ability to tap into and call upon a range of investment advisors, including those at Wells Fargo Advisors, and leverage their collective talents across various domains to help obtain the key insights and additional specialized expertise you may need.”
Kim adds that the book, published in 2019, underscores the importance of prizing diversity of thought, learning to appreciate both your own and others’ skills and strengths, and understanding how to draw upon personal and peers’ abilities to better tackle complex challenges such as building a diversified investment portfolio.
The Warren Buffett Portfolio
Author: By Robert G. Hagstrom
Why it’s worth reading: Valentinov says this book, published in 1999, provides a simple mathematical formula for helping you put together a winning portfolio, concentrated on about a dozen companies that you expect to do well in the future. The book argues that you want to weigh investments based on your level of conviction. It provides a basic equation for translating your degree of certainty in each of the firms’ future prospects into specific portfolio allocation percentages. “It’s a strategy we see a lot of professional portfolio managers using today themselves,” he says.
Thinking, Fast and Slow
Author: Daniel Kahneman
Why it’s worth reading: “A fascinating read that addresses the different approaches to thinking that people typically tend to take—and the unconscious biases that often impact our decision-making processes,” Kim says.
The book, published in 2011, helps to better identify and understand different situations like how you, as an investor, may think you’re learning a great deal of helpful information just by paying attention to real-world news coverage of a company and its products. “But because they seem to be more confident and vocal in their opinions, you may assign a greater level of expertise than they deserve when it comes to investment advice,” she says. “You’d be surprised how much bias can color our thought process. It’s another reason to discuss investment ideas with your financial advisor—so you’re getting input and a different perspective from a trustworthy investing resource.”