Required reading for the budding investor

Tip: this post is really just a long [50-ish items] book list for the aspiring investor

SpreZZaturian’s guide to becoming an investor

You want to work in finance, become a finance mogul?! You want to know the truth? You think you’re entitled to? 

required reading for the budding investor

You can’t handle the truth!

You will not get rich working in finance

Unless you went to the right school, hardly any firm will look twice at your application (more on how to write one here)

Job opportunities in finance are shrinking, and it will get much worse. If hired at all, prepare to be fired soon.

Before being fired, expect long and meaningless hours as a general “resource” (at best collecting data and preparing power point presentations, at worst working as a caterer).

The skill set for getting in has hardly anything to do with the skill set needed to invest. Consequently, if hired at all, you will waste a lot of time collecting and serving instead of learning, understanding and practicing.

You won’t learn much useful on the sell-side (analyst) either. And it will take forever before you make any money on the buy-side (founding partners and seniors will take it all, and you, my friend, are replaceable). Joining a new fund won’t make much difference, since any outfit that would consider you will be sub-scale, potentially forever.

 

DIY investing is a better way

But if you really want to be an investor anyway, do it yourself.

Apart from HFT/algo and bonds, you won’t need any fancy math, high up-front investments in infrastructure or complicated strategies. Investing in stocks (and some other asset classes) is mostly about psychology (not least patience).

You don’t need to get coffee for bosses to learn about investing. You don’t need to prepare giant spreadsheets or power points during the weekends to understand the basics. You need to read good books, and take risk with your own money.

If you are good enough and can prove your results, who knows, maybe after a little while, some hotshot will hire you or buy your operation. If you still want to by then.

You’ll get all the fun of investing, of being your own man, and at least the potential of making serious money sooner or later.

If you are not good enough, how did you ever expect to make money in the finance industry?

Do you want some reading tips for becoming a better investor? Can you handle the required reading list? Here goes…

 

Required reading

To become an investor you need a little bit of money, some basic accounting skills (being able to read an annual report), patience and a bit of luck. And most important of all, you need the right frame of mind, stability and being aware that investing is mostly about psychology, not math and accounting.

Not least you need a frame of reference and perspective.

The following are my best book recommendations for reading up on (mainly the psychology of) investing. And some for historical references and perspective in case you just started investing (less than 15 years ago) and don’t have good sources of long term financial records.

Plus some books to avoid.

First, the ten truly required reads:

 

Margin Of Safety – Seth Klarman (great summary for free here)

It’s really all you need to become aware of the most important pitfalls and opportunities in investing. This one is truly required reading; many times over.

Reminiscences of a stock operator – Edwin Lefevre

This book covers one of the greatest traders/investors ever, from his humble beginnings as a quotation boy to becoming one of the richest people in the world and a stand off against the U.S. government. His mistakes, luck and success imprint the reader with the foundations of investing psychology, technical analysis, macro/micro and sound, productive, investment.

Remember that “technical analysis” isn’t all about drawing arbitrary patterns in a stock chart, it’s about trying to infer the psychology that drives human herd behavior and stock prices.

Technical analysis has been a dirty word since my first finance classes in college, but prices still do hold some information.

Exactly what and how to use it is another story. I don’t think it’s black or white but a lot of shades of grey between macro, micro and technicals.

The Most Important Thing – Howard Marks

Everything you need to know about risk. Marks is a master of breaking down “risk” in components of risk, which clarifies the concept, and educates the reader on how to manage risk. You might think risk is just (historical) price volatility, or earnings volatility, VaR or something similar.

Nope. Marks will teach you about dozens of different risks that will make you see investing in a whole different light. 

Hedgehogging – Barton Biggs

Biggs’ story of how he started a hedge fund, managed setbacks in funding as well as investing (not least in oil). It’s entertaining and very useful. I learned more reading that book, than in my previous 10+ years in the market (I said something similar in an Amazon review way back).

You will literally feel Barton’s angst as he struggles with whether to cut his losses, or hold on to sinking assets that might be about to bounce or turn around. Better him than you.

Fooling some of the people all of the time – Einhorn

The perils of shorting, of being right but early and alone – and drawing fire from the authorities. If you are at all enticed by the dark side of shorting, you need to read this.

The Black Swan – Taleb

More about hidden risks and how to take them into account. Taleb’s epic book about the unknown unknowns that risk undoing everything unless you manage the fat tails of (im)probable outcomes.

BULL! – Maggie Mahar

The breathtaking story of the worst stock market mania ever in the late 1990s. Read and compare the IT bubble 1995-2000 with the central bank bubble of 2010-2015.

The great crash – Galbraith

The only objective recount of the markets and the economy in the early 1930’s. Did investors actually commit suicide? Didn’t anybody warn before. What responsibility did the Federal reserve have? Back then, the world’s greatest economist right before the crash claimed stock prices had reached a permanently high plateau. Should celebrity pundits like that be trusted?

How an economy grows and why it crashes – Peter Schiff

It’s about macro, I know, but it’s also about the foundations of entrepreneurship, investment, productivity and wealth creation. It’s the best book on economics ever written. It’s required reading on every book list. Here, it might just keep you a little more level headed when feeling the urge to buy into the Snapchat or Uber IPOs.

The death of money – James Rickards

What might happen to fiat money when the current money printing era draws to an end. Also, why you might want to buy gold instead of most stocks. Perhaps a bit dystopian and scary for a young investor, but nevertheless a good reminder that stocks are not all about stocks…

The Retarded Hedge Fund manager – Karl-Mikael Syding

My own honest tale about taking risk, and the importance of realizing the difference between luck and skill and avoiding hubris.

 

Very useful and readable, but perhaps not required per se

Thinking Fast And Slow – Kahneman (About the limitations of the human mind. Economic psychology and behavioral finance 101. You’ve already read it all if you have a masters degree in finance, but it’s a good summary nevertheless)

The user illusion – Norretranders (insightful and important regarding the interplay between the conscious and the subconscious; the real self and the narrating I). Learn to trust your intuition (which is the 1m times faster subconscious way of trying to communicate important things to your slow I) and be fascinated to learn that your “I” actually live half a second in the past, which is how long it takes the self to filter and sort and communicate the info (as well as make a fake time stamp -0.5s).

The Logic of Life – Tim Harford (a new slant on homo economicus, how superficially illogical decisions actually are super rational. It can help explain why some unlikely companies prosper and some ‘sure things’ fail)

Abundance – Diamandis & Kotler (about the wonderful future of technology and mankind [not sci fi; very concrete actual technologies]. Great for insulating yourself against doomsayers and perhaps understanding which new new things are more likely than others, and what kind of competition they will soon face)

Tomorrow’s gold – Marc Faber (Macro. Power centers and currencies you thought would last forever didn’t. None. The dollar and the U.S. won’t either, and definitely not the euro. Please note though that the time scale is in the hundreds or thousands of years, not next Monday)

Lords of finance – Ahamed (important lessons from central banking’s early days, not least the quick-step dance between currencies, real estate, stocks and bonds required to protect your savings during the Weimar hyperinflation)

Manias, panics and crashes – Kindleberger (everything you ever needed to know about the history and dynamics of manias and panics. The book is unfortunately a bit of a slow read, but the information is important and useful to gain perspective on what a bubble is, how it forms, the psychology behind its build-up and its bursting, what parts are fundamental and what parts are irrational feed back loops, how long to ride a bubble and how to trust a strong advance actually isn’t a bubble at all)

Endgame – Mauldin (not as good as I had hoped, but interesting macro take on the future for various [all] geographies. China, Japan, Russia… here is a prescient look into the future of geopolitical risk)

Irrational exuberance – Shiller (bubble theory from the man behind the Shiller cyclically adjusted price earnings ratio: CAPE)

Holy grail of macroeconomics – Koo (what really happened in Japan, and what was done about it, albeit not updated for the last few years’ insanity)

Animal Spirits – Akerlof/Shiller (the micro behind the macro of recoveries and bubbles)

The return of depression economics – Krugman (believe it or not, it was actually quite good – I read it in 2001 but he’s released an update including both crashes since then)

The great reflation – Boeckh (perhaps it’s over now, but here Boeckh shows the opportunities created by reflating the world after a trough. For next time, perhaps.)

 

Esoteric

Gödel Escher Bach – Hofstadter (A heavy and dificult tome about recursivity, reflexivity, self reference and feed back loops. No market talk at all, but a very important book about the limitations of math, where consciousness comes from, and related to the circular issue of central banks basing their decisions on variables that are affected by earlier CB decisions).

 

 

More fun than important, but still offer some psychological insights into markets and its participants

Cityboy – the ugly truth about financial analysts (you’ll never trust a recommendation again)

Wall Street Meat – A great book for understanding the immoral machinations that underpinned the IT mania (good IPOs go to insiders, bad go to you)

Liar’s Poker – Early days of the stock market’s comeback from the dead in the 1980’s. My guess is we could very well end up in a “death of markets” situation again in a few years; the early 2020’s?

The new new thing – Lewis’ story about the IT mania in the end of the 1990’s

Trading with the enemy – Jim Cramer’s colleague recounts Cramer’s borderline illegal antics at his hedge fund’s office and in the stock market

 

These you can do without:

The Intelligent Investor – Graham (Boring, dated, methods still works though but it’s way too long for saying keep stocks and bonds in your portfolio, buy more of whatever falls in proportion to the other)

Market Wizards – Schwager (Wtf?! Utter junk. Some fun stories, but nothing actionable – just hundreds of recounts of gut feeling and luck)

Wealth, War and Wisdom – Barton Biggs (I learned a few things about WWII, but the market stuff is borderline ridiculous – almost religious)

 

I haven’t read the following myself but they are probably worthwhile:

Antifragile (what is actually new here vs. The Black Swan?)

The little book of sideways markets (expect sideways markets for decades, with huge swings… this book might come in handy) 

Flash boys (Lewis is always entertaining and educational, here in a scary tale about HFT front running and rigging. Do you really want to invest in that environment?)

When genius failed (interesting tale about the Nobel prize winners that almost broke the financial system, by miscalculating the thickness of financial tails)

The big short (Lewis’ narrative of the house price boom and bust, its main characters and companies)

 

School text books I’ve kept but you easily can do without

Statistics – Newbold (way too much formulas for most, albeit some important lessons on which statistics to trust and which not to) 

Basic Econometrics – Gujarati (some regression analysis techniques can be useful, but mechanistic investing on this level is useless anyway)

Futures and Options – Hull (skip this one and take market prices for granted. You won’t be doing any option arbitrages anytime soon, or ever)

Principles of Corporate Finance – Brealey & Myers (here’s what you’ll learn: companies take on debt, and issue equity. Some proportions are expensive and/or risky. Sometimes companies acquire each other. Sometimes too dearly)

Valuation – Copeland (not completely useless, but do you seriously think you’ll forecast cash flows 20-50 years out and discount them with some arbitrary factor? And then invest your own money based on what comes out of the model? I don’t think so)

Macroeconomics -Dornbusch and Fischer (among all the laughable [EMH] charts and graphs there are some insights into economics, but you’ll learn so much more in Schiff’s book)

 

Online resources

Memos from Howard Marks (quarterly write-ups from the master of risk)

Ray Dalio’s principles (a very long list of guiding principles in life as well as on the markets)

Hussman weekly (weekly updates on market risk tolerance/aversion and valuation)

Contrarian edge (Vitaliy Katsenelson’s somewhat philosophical musings on the market, companies and products)

Wall Street Week (interviews with financial moguls)

Financial Orbit (Chris Bailey’s market updates)

HORAN (useful market charts -and thoughts)

Zerohedge (fast, frequent, news comments – unfortunately with a paranoid and bearish bias that seldom has any bearing on current events, even if it might hold true in the long run)

GMO (Legendary investor Jeremy Grantham has researched bubbles, all bubbles, defined them and followed their conclusion (all crash). Register for free and read his quarterly letters, including his past ones). Please note that he doesn’t quite think that we’re in a stock market bubble (yet).

Gloom Boom Doom by Marc Faber (“there is always an opportunity somewhere, perhaps in Vietnam”)

The high tech strategist monthly newsletter by Fred Hickey (originally a letter about high tech companies, sales and earnings developments and investment opportunities, but lately more and more about central bank shenanigans and opportunities in gold)

 

Other

You probably should read up on marketing and accounting too, even if I think it’s a bit overkill. I suck at marketing, always have, and it didn’t hurt my investing.

I’m not particularly good at accounting either, but you won’t learn the necessary skills in school anyway – just some shallow mechanics.

Actually, accounting is one of few areas where sell side analysts are good to have around. They know a lot about accounting tricks and valuable key ratios.

Anyway, you’ll get pretty far by following, albeit somewhat blindly, my 50-step formula presented in an earlier post (called The magical 2-step formula).

And here is more on how to screen for stocks to invest in.

In a future post, I’ll add a beginner’s guide to stock screening (i.e., how to go from thousands of available stocks to just a few dozen relevant to choose from).

 

Summary

Start investing. If you can’t get a boss (a job) in finance, do it yourself. 

Read, read a lot, re-read. Start with Margin Of Safety, at least two times. Then the other 9 required reads.

Sign up for newsletters and updates from Grantham (GMO), Howard Marks, Contrarian Edge (Katsenelson) and check in on Hussman Weekly every Monday. Read their historical production as well. Just keep reading backwards in time.

Trade/invest with real money. Start with a little. Increase your stakes slowly.

Make a check list of what to consider before pouncing, and what you need to cut a holding. Follow that plan. When in doubt get out. Then restart. That goes for the upside as well; don’t be afraid to take a profit and a pause.

Keep a log of exactly what you do and why – in particular your feelings. You’ll want to get back to those notes when in trouble.

Read more; read Hedgehogging by Biggs… and my book The Retarded Hedge Fund Manager (subscribe to get it for free)

Most important of all: There is no rush whatsoever to invest. Markets will be there tomorrow too. Do not make an investment or hold on to it unless you know what you are doing. Keep a margin of safety.

Study, Wait, Pounce.

Margin of Safety

Avoid market losses, and death, by understanding change

Change is good

-Yes, for the Greek too

Research of all kinds shows living an ever-changing “lateral life” improves happiness, general health, keeps brain diseases at bay, increases longevity, not to mention makes you smarter, better at learning (higher brain plasticity potential) and more experienced and skillful with the ability to connect the dots between diverse knowledge areas.

In short, change is good.

Keep changing preemptively and purposefully. You will anyway, just not in a beneficial way without some nudging (albeit not by the state).

 

This post is mirrored at the Swedish site for financial information, TradeVenue

 

Break out of homeostasis

In addition, change happens all around you. And, changing willfully primes you for identifying and embracing that change – makes it easier to break out of all sorts of homeostasis, rather than be broken down by it, as Ludvig at SGM might put it.

SGM

 

School induced homeostasis in me at an early age

The worst thing school did to me, apart from generally waste my time, was to fool me into believing in constant truths (not least in physics).

I learned that a planet was a planet, not just by a temporary definition. I learned that the four forces were just that, always were, always will be – rather than a temporary convention to describe certain phenomena within a quite wide but still limited range. I learned time flowed forward and more or less constantly, except for in relativistic experiments.

Not least I learned time in itself was indivisible and continuous, though possibly with a lower limit of Planck time (5*10^-44s). It was never proposed that time might be something else altogether that we only approximate with something called time, and that it was just convenient in our current paradigm to treat time as, … well the time as we know it today. It was quite preposterous really, to assume and teach that the approximately just 75-year old view of time was correct and would stay constant forever! 

It has taken me forever to relearn that everything changes, not just scientific paradigms – everything. Earth’s rotation changes (the leap second), the moon’s distance to earth changes, the discovery of dark matter and dark energy might in retrospect be just one small of thousands of discoveries over the coming thousand millennia and forward.

Moral and ethics change, maybe even the rules of logic (!).

You and I change – faster than you think, but we are protected by the narrative “I” that always claim everything is coherent and as it should be, and not least constant going forward. The “I” is lying. Actually, the I doesn’t even know the “me”, but more about that some other time (or read Nörretrander’s amazing book yourself. I recommend it highly!).

 

TED radio hour chimes in on time, change and happiness

time

The other day, I was listening to the (recommended) TED Radio hour’s pod cast on time (Shifting Time, 19 june 2015). As always several TED talks and aspects of change and time were discussed, but one topic regarding aging, personality change and happiness struck me particularly:

Almost all people have the experience of having grown into their real self.

We all [almost all – no spam or trolling please!] think we are finally the real me. We know we changed a lot growing up and aging, perhaps can hardly even stand for some of our earlier opinions and actions, but now finally have reached a stable self plateau.

And yet, research shows that we keep changing, morphing into somebody else over the course of 10 years, over and over again. It seems we know we could change in either direction along an infinite number of parameters (extroversion, e.g.) but since the potential changes even out, we instinctively expect status quo to reign. It’s like approaching a T-crossing expecting to stay there :)

 

So, expect change, and manage it

-That’s really all I’m saying.

That goes for companies and stocks too.

stocks change on the exchange

The current stock price will change, the price trend will change, sales and profits will change, valuation multiples of those fundamentals will change, competition will change, client preferences and demand will change, costs will change. All mentioned factors for the company’s peers/competitors will change.

If Apple could emerge from the grave and crush Nokia, Apple too can be Appled. Facebook, which crushed MySpace to oblivion, can be Facebooked. And Tesla can…, well Tesla hasn’t actually done anything yet, not at a profit anyway. Remember Kodak? Or when Dell, HP or IBM was all the rage?

My distillation of best practices in the market boils down to just two things to consider:

Distillation of best practices on the stock market SpreZZaturian

1. How is it now?

2. What will or must change? (fundamentals, perception…)

 

Expecto patronum! Or, rather, happiness

If that HP reference flew right over your head, never mind. It’s not important.

-You can expect time to save you, to make you happy (unless you get sick)

Research shows a trough in perceived well-being around the age of 50 (coincidentally not far from my age; 43), followed by a strong trend of improvement, leading to new all time highs just 20 years later. The risk of depression follows a similar (inverted) path.

One theory of why is that older people get happier with age because they are relieved of the burden of thinking about the future; relieved of change (despite the fact that they are facing the biggest change of them all… -on the other hand into a state of absolute stasis)

What about lateral living and homeostasis – is it good to become older and happier, or is that actually dying? I’m inclined to think the latter.

So keep changing and keep living – hopefully long enough to live forever (AI, genetics, nanotechnology, stem cells, robotics and all that. Huge changes are coming sooner than you think [WaitButWhy]).

Charts of happiness (and depression risk) show a trough around my age and then ever improving numbers into old age.

I’m thus more or less at my worst now, although I’ve never had it better, I think.

Either I’m just born that way, thinking every year is better than the last. Or, just maybe, my instinctive focus on incremental change and growth (just one more, always be investing etc.) rather than a point target (becoming financially independent, rich, the best, buying a particular item or any such thing) is key. 

happiness and depression happiness

 

Conclusion and summary

Just take this with you, no new practices, no new habits:

Be prepared for change, never status quo

Embrace it. Manage it. Master it. Don’t just sit on your favorite stock because it has done well. Analyze it; imagine things changing. Don’t hold on to your job or partner for dear life or by complacency. Proactively manage for change. Expect it. Perhaps even prevent undesired change by changing something else.

This post, and all my articles going forward, will be posted in parallel at the Swedish site for financial information TradeVenue

 

Why you should never read a classic book

Read Books 

Generals, Investment bankers, Presidents, Kings…

What’s the one recurring (good) advice you get from the rich and powerful (and from me too)?

-Read great books. Read slowly and thoughtfully. Never rush; never, ever ‘speed read’. Then read them again.

 

-That’s it. This article doesn’t need to be any longer than that – Sprezzaturian making hard look easy all the time (BTW, my two top picks are Post-Human and How an Economy Grows and Why It Crashesbut more about that further down)

post-human

Sciff's masterpiece: How An Economy Grows

Schiff’s masterpiece: How An Economy Grows

 

The trouble, however, lies in identifying great books and avoiding reading crap. Unfortunately, you can find a hundred “hundred classic reads” lists on the internet in a heartbeat:

Here are a few from Time, Telegraph, Guardian, Modern Library and some other guy. Some of the books on these lists are worthwhile, but most are obsolete relics that have stayed on these lists for all the wrong reasons. They are boring, slow-paced, irrelevant, don’t teach you anything valuable and they don’t at all resemble the tight information sources you are used to in social media, or reflect the present in a relevant manner. The “classics” were meant for a different generation.

It’s okay for a book to be tough, just like pasta that should be al dente, but at all times a book must still be mesmerizing and magnetic. If a book doesn’t call out to you and draw you in, but rather feels like a chore, then put it away. Except for stuff you are forced to read by someone with real power over your life (like a teacher or employer), never finish books that don’t interest you.

Reading is like exercising; you should start fun and easy, and before you know it you want more of a challenge – and that is what by then is enjoyable and exciting.  Don’t try to force it or speed read; it’s unnecessary and counterproductive. You won’t remember or learn as much and you’ll dislike reading. On the other hand, if you start easy, the more you read, the more your taste and personal style will develop.

So don’t cram “classics” down your throat in a desperate attempt to be something you aren’t. It won’t work (and won’t be any fun either)

 

Top 100 lists -yuck

Going through various top-100 lists, I noticed some really good reads, some that was once useful and others that are simply slow and dull and not meant as literature for a modern human being. Here are a couple of spontaneous thoughts about a few of the items on popular top-100 lists:

 

TIMES Top 100:

The Animal Farm has one important thing to say about politics, but you could get a much better understanding, faster and more entertaining, on blogs and even on Facebook or Twitter.

I personally enjoyed Catch-22 and remember laughing out loud many times, it’s a fun and absurd criticism of war but nothing you have to read. Watch an episode of South Park if you don’t feel for this ‘classic’.

A Clockwork Orange? Really? A must read? Maybe if you’ve grown tired of watching Dumb and Dumber over and over again, but not before then. Try American Psycho instead for at least a semi-modern work on ultra-violence. Why not watch “Seven” or “Saw I”…?

Lolita – WOW, an older man and a 12 year old! Shocking. Love is all you need. End of story.

Lord of the flies – Oh, so young boys can grow feral and become super bullies when left to their own devices?! Have you seen the TV show Survivor? One episode and you’ve learned that lesson.

The Lord of the rings a top 100 classic? That must be because it was one of the first with orchs in it. The book is fine for a young teenager and the movies are great craftsmanship, but you can read exactly anything that entertains you and get exactly the same value from it. LOTR in a nutshell is war, good people, bad people, confused people, and power corrupts, live ecologically. Full stop.

Neuromancer – I would include it on my top 100. It’s one of the first great novels about virtual reality and strong AI. To me it was an amazing experience to read, not to mention the epic hair raising ending. Do read it. There might even be some lessons in there about humanity and racism if you look closely, but why is it here on a top 100 classic list by TIME? David Simpson’s Post-Human is so much better and updated regarding newtech like virtual reality, artificial intelligence, the Singularity etc.

Slaughterhouse five – I can see why this one found it’s way in here. I loved it, but why should everybody be recommended reading about a guy “unstuck in time”, jumping between making love under a glass dome observed by aliens and world war II (or was it I?). Read directly about the wars of the 1900s instead if that interests you more, or play a shoot’em up about WWII. Just because I and TIME liked it doesn’t make it a must read classic.

Snow crash – one of my top 100 books, no question about it, but it’s really just a cool sci-fi story about a VR virus that feeds back death to the human agents. Read it if you like stuff like that. Put it away if you don’t feel it. There is nothing “must” about this one, not more than watching the movie Matrix is a must. On second thought, watching Matrix is a must. By the way, why read “firsts” when many modern books are so much better, not to mention updated. Go for Reamde by the same author, if you want to learn something, as well as get a good story about virtual worlds.

The spy who came in from the cold, The sun also rises, To kill a mockingbird, Tropic of cancer (!) – give me a break! Stop brainwashing kids into thinking these are classics they have to read to learn about the world. Some like them, some don’t and there is nothing particularly good, interesting or important about these books.

 

At least the Telegraph’s list includes Hitchhiker’s guide to the galaxy, which is a work of genius. It’s funny and much smarter than most people realize. I’ve read it twenty times! But you really could just check out Stephen Hawking’s books instead or watch a science show with Brian Cox. Or even visit xkcd.com or WaitButWhy for some dry scientificky humor.

Telegraph unfortunately then fucks up immediately with Thousand and one nights – a pointless collection of short stories. Sure, The trial by Kafka is interesting but read Hayek instead if you want real information about communism and bureaucracy. Gulliver’s travels, Huckleberry Finn and The hound of Baskervilles – allow me to laugh. HA HA HA.

Frankenstein, War of the worlds, Don Quixote, Moby Dick and to really top it all off, the utterly unreadable In search of lost time – the list of absurd recommendations goes on and on.

These were special works, “firsts”, had some interesting ingredients or ideas as foundation, but they are too slow for a modern person, they have too little to teach per page of reading.

They are like reading the Bible which has nothing more than this to say: “God is mysterious and erratic but believe and repent – oh, and love your enemy – and all will be well in the next life” (yes, I’ve read it, it’s right at the bottom of my list of things I forced myself to finish, before learning not to do that)

 

The guardian top 100:

Robinson Crusoe: It was a great novel when it came out, but we all know the story and its lessons. To add insult to injury, the movie is just as boring and slow as the book.

The count of Monte Cristo: Oh, God please help me! It’s been touted as one of the greatest adventure books of all time, the ultimate revenge book. There actually are a couple of decent movies based on Monte Cristo, but the book in itself is hopelessly amateurish and just too bloody drawn out with irrelevant side stories.

Alice in Wonderland (a “first”, a it bizarre, children’s lit. that’s it, move on, nothing to see here).

Jekyll and Hyde: I’m sure it was scary and fascinating at the time. but don’t waste time reading it in the 21st century.

The call of the wild: a wonderful children’s book about the love between a dog and his master (and a pack of wolves). I loved it as a small child, but if all those books were to go on “classic 100” lists we would find Biggles there as well.

Modern Library advocates much the same books as the other papers, including Ulysses, but also Invisible man which is just unexplicable.

I’m slightly more impressed by their “Readers’ list” which includes Atlas shrugged, Fountainhead, Anthem, The moon is a harsh mistress, Brave new world, Hitchhiker’s guide, Ender’s game and Garp, but still skeptical as to why these are called the 100 best or most important reads.

 

After all that badmouthing of other people’s lists, here are my own

My 100 essential books

-and other sources of inspiration for riches, happiness, intelligence and brain plasticity

The one book you must read to see the New World Order of politics, currencies and war in a new light – and it’s not Death of Money or Currency Wars; it’s…

How an economy grows and why it crashes by Peter Schiff. It’s extremely easy to read and equally important and informative. It’s part witty and sarcastic cartoon, part economics textbook, packed with insights about cooperation, productivity, wealth and the insidious evil of central bankers just to mention a few things. You can finish the entire book in a few hours, LOL:ing every now and then. Just as Baz Luhrmann adviced everyone to at least wear sunscreen, you should read How an economy… and then tell everybody else. Despite the humor and simplicity, Schiff goes from modelling a 3-person fishing economy to a complex, fully globalized world with inflation, trade and central banks, while still hammering the points of a)productivity and b) sound money

 

Reading is so important to me, that the number one reason for retiring at 42 was being able to read what I want, when I want. As a hedge fund manager and CEO I did a lot of studying, reading and writing but almost none of it anything I liked. To a book-lover that is similar to being a street-hooker (albeit a very expensive one).

Until a few years ago I read exclusively non-fiction, mostly economics and technology but also astrophysics, futurology, psychology, history, politics and human relations. During a vacation a few years ago, I ran out of things to read and just took whatever my girlfriend finished. Thus, I ended up reading The Girl With The Dragon Tattoo trilogy. I didn’t like the first book but read the other two anyway there on the beach.

I used to think made up stories were a waste of time, but reading about the elaborate revenge stirred something in me and suddenly I started reading fiction again. I also all but gave up buying physical books and bought a Kindle Paperwhite instead, to make sure I never ran out of books on vacation again.

There are so many lists of what to read and why, so many books nobody has the time to read, so many different tastes that you never can trust a recommendation anyway. E.g., is it a good sign that many has read and reviewed a particular book or is it just another carbon copy murder story of a Swedish writer like Läckberg, Mankell, Kallentoft, Larsson, Kepler, Nesser, Sjöwall, Eriksson, Marklund, Jansson, Tursten and others?

Many books, many lists… these are the most important ones
To make the recommendations below easier to understand, I’ve created several overlapping lists, such as my personal all-time favorites, books I think everybody should read, and genre-based lists. First, my all time favorites that I recommend to everybody.

drexler rand morris hofstadter norretranders schiffblackswanBill_bryson_a_short_historytomorrows goldhow-to-create-a-mindabundancebrief history of timeRoad_to_SerfdomThe-Singularity-Is-Nearpost-human

 

My 15 all-time favorite books (in no particular order):

  1. How an economy grows and why it crashes
    1. (easy read, important, micro and macroeconomy, part cartoon – the best book on economics ever written)
  2. The Singularity Is Near: When Humans Transcend Biology
    1. (easy read, predicts technological evolution, important long-term)
  3. The user illusion – Cutting consciousness down to size
    1. (psychology, difference between me and I, the conscious self and the subconscious, an eye-opener on the human condition)
  4. Gödel Escher Bach
    1. (a very difficult and heavy book, challenging but rewarding, it took me a full year to read and understand this Pulitzer-winning tome; about self reference, consciousness, art, music, mathematics and artificial intelligence illustrated by ant hills. Terry Pratchett invokes GEB in his Discworld series)
  5. The Naked Ape: A Zoologist’s Study of the Human Animal
    1. (entertaining, easy about the human condition, bonding, psychology, physiology etc)
  6. Atlas Shrugged
    1. One of only two fiction book on my list. (A bit hard to get into but once you do it’s amazing. On the surface an addictive political thriller set in a time similar to the one of Rockefeller, Ford, Edison etc. In reality a comment on the dangers and evils of socialism and communism). It’s long and it’s fiction but the average person needs to get these lessons hammered into them over and over again over 1000 pages to get it.
  7. Engines of creation
    1. (The book that popularized the promises and dangers of nanotechnology some 25-30 years after Richard Feynman’s talk about Plenty Of Room)
  8. The Road to Serfdom
    1. Hayek’s readable and scary version of Mises’ more dense work on communism
  9. A Brief History of Time
    1. The original Hawking book about the universe, now updated several times and illustrated in The Universe in a Nutshell (which is the one you really should read)
  10. Abundance: The Future Is Better Than You Think
    1. An optimistic run-through of available or near-available technology that promises to solve the five big challenges of water, energy, hunger, pollution and death. Yes, death.
  11. How to Create a Mind: The Secret of Human Thought Revealed
    1. Kurzweil’s thought provoking work on brain structure and the roadmap to strong general artificial intelligence and the logical next step to a run-away technological singularity that seeds and wakens up the entire universe with intelligence
  12. Tomorrow’s Gold
    1. A much needed perspective of empires, hegemonies, leaders, cities, currencies and countries that come and go over the course of human history. It would be very unusual for the US dollar, New York and the U.S. to remain global leaders for an other hundred years.
  13. A Short History of Nearly Everything
    1. An entertaining and inspiring book about more or less everything, from the big bang to present day, including the origin of species and why the moon is so important. This is one of very few books that should be mandatory in school – if anything should be mandatory.
  14. The Black Swan: The Impact of the Highly Improbable
    1. Taleb’s classic that reveals the dangers of sloppy statistical analysis and cognitive biases. You’ll never view your investments or brokers in the same way after this masterpiece
  15. Post-Human by David Simpson: A super high paced story in 5 (so far) installments about a future society populated by enhanced humans, artificial intelligences. Simpson’s imagination knows no limits and neither do his characters (that keep changing from friend to villain and back again)

 

7 Additional good and useful reads:

  1. Lords of Finance: 1929, The Great Depression – and the Bankers Who Broke the World
  2. The Real Crash: America’s Coming Bankruptcy—How to Save Yourself and Your Country
  3. Intelligent Universe: AI, ET, and the Emerging Mind of the Cosmos
  4. The Most Important Thing: Uncommon Sense for the Thoughtful Investor
  5. Dog Sense: How the New Science of Dog Behavior Can Make You A Better Friend to Your Pet
  6. The Fountainhead: Easier than Atlas shrugged but almost as strong in its message that every man is an island
  7. The great crash: The one and only objective description of what actually happened in the US in 1929-1932
  8. Thinking fast and slow: You may have read all of this at college (economic psychology classes) but TFAS provides an entertaining and much needed rehearsal of the lessons about how poor our minds are at some things
 

These books (most of them are included above) have had the largest impact on me

  1. Atlas Shrugged turned my view on right and wrong, fair and unfair upside down
  2. Gödel Escher Bach took me a year to finish but instilled a dramatically different perspective on math, symbol language, self-reference, consciousness and artificial intelligence. The ant hill analogy to the human brain and consciousness is brilliant (and is a recurring feature of Terry Pratchett’s Discworld magicians)
  3. The User Illusion shows very convincingly (with references to scientific experiments) how small and deceitful the mind is and how powerful and capable the subconscious is
  4. Engines Of Creation explains why a super high tech future is inevitable. Whatever can be done will be done, and it starts with nanotechnoogy
  5. The Singularity Is Near shows step by step how technology evolves from punch cards (and actually far before that), via vacuum tubes to semiconductor based super computers and possibly mechanical nanocomputers, to strong artificial intelligences that self-evolves to billion times more intelligent than a human being
  6. Your Competent Child is a testament to the wonders of children’s minds, and how robustly the will evolve to independent grown-ups with a strong self-esteem, as long as you basically stay out of their way, act as a witness, an inspiration and a role model, rather than a hindrance, a punisher or a nanny.

 

I think everybody should read these – for themselves (as well as for the good of society, i.e., indirectly for my sake). Most are included above:

  1. How An Economy Grows And Why It Crashes – to understand money and the economy
  2. A Short History Of Nearly Everything – Everything you need to know about history. Forget Caesar, Hitler, the US civil war and the stone age. This is the history that made us what we are.
  3. Abundance – this is where the world is heading in 2040. make sure you and your children are change resistant
  4. Your Competent Child – don’t spoil or ruin your child. We all have the capacity for strong self-esteem, brilliance, love and independence as long as our parents stop messing things up by being overprotecting, judging or just mean 
  5. The Road To Serfdom – a true economic horror story about why communism failed and why it still lingers behind every altruistic corner

 

Technology, nanotech and artificial intelligence
  1. Engines Of Creation – the original book about the risks and promises of nanotechnology
  2. Abundance – an update of how close humanity is to solving the problems with poverty, starvation, illnesses, pollution and death
  3. The Singularity Is Near – Ray Kurzweil, futurist extraordinaire, demonstrates the inevitable path to artiicial superintelligence and our merging with computers
  4. How To Create A Mind – Pattern recognition lies behind human intelligence. This is how it works
  5. Physics Of The Future – Popular and accessible science; tells you what there already is and what most likely will be available in 10, 20, 50 and 100 years
 
Knowledge, communication, science theory, intelligence
  1. Gödel Escher Bach
  2. A Short History Of Nearly Everything
  3. The User Illusion

 

The origins of the universe, astrophysics

  1. The Universe In A Nutshell
  2. (A Brief History Of Time – a bit dated now, however)
  3. (The Grand Design – an update to nr 1 and 2, but quite unnecessary after “nutshell”)

 

The economy and financial markets

  1. How An Economy Grows And Why It Crashes – The best book on economics. Illustrated, funny, entertaining and incredibly pedagogic and smart
  2. The Black Swan – About the risks we are ignorant of
  3. Tomorrow’s Gold – Don’t think the US hegemony will last forever
  4. The Road To Serfdom – How socialism leads to slavery
  5. The Most Important Thing – Down to earth rules of thumb and thoughts about investing by one of the best
  6. Bull! – The epic tale about the IT mania, the stock bubble and the consequent crash
     
People (remember that dogs and apes are people too)
  1. The Naked Ape – A zoologist’s take on human customs, culture and drives
  2. Ditt Kompetenta Barn – Why and how you should witness your child growing up, not raise it
  3. Men are from Mars, women are from venus – Yes, men and women are different
  4. Dog Sense – what science actually says about dogs and wolves. This is how you should socialize with your dog, not master it.

 

Fictional books that I think have important things to teach about the political system:

  1. Withûr Wé – An epic space adventure in libertarian spirit
  2. Atlas Shrugged – A fantastic and yet believable tale about a free economy spiraling into communism
  3. The Moon is a harsh mistress – The colony on the moon is just as unhappy about things as the US was under British rule

 

And finally just a couple of good reads with no purpose or message:

  1. Prey – Prey (nanotech gone wrong; a very well researched book by Crichton)
  2. Neuromancer – AI and digital agents, one of the first and still highly relevant
  3. Post-Human – Ultra-modern sci-fi, fast-paced multifaceted story about hard core nanotech and AI. Three out of five books (so far) are fantastic, two are “just” very good. All are extremely entertaining page turners. Beware, many, many have claimed to skip several nights of sleep once they got hold of Simpson’s books
  4. The Diamond Age – Inspiring and well written about a nanotech book raising a little girl
  5. Reamde – computer viruses, virtual world crimes and some other stuff
  6. The Hydrogen Sonata – a space epos
  7. Marooned In Real Time – oldie but goldie about a conceivable form of time travel
  8. The Hitchhiker’s Guide to the Galaxy (all five) – so fun, so smart!
  9. Nexus/Crux – Hard core tech books
  10. Discworld – just fun fantasy; not all the 40 books but several of the first ten are …magical – not least “Mort”
  11. Ender’s game – the book has an incredibly strong message about revenge that is almost totally overlooked in the movie. I can’t remember ever feeling so engaged and alive reading a book as I did during some specific scenes in Ender’s. Unfortunately the author dropped the ball after the follow-up (Speaker for the dead – which I also recommend reading)
  12. Atopia and Dystopia – Cultural clashes between the nanotechnological and virtual reality seasteading paradise and the rest of humanity

 

Podcasts

  1. NPR TED Radio hour
  2. Brain Science
  3. Discovery
  4. Nature
  5. Freakonomics
  6. Science talk
  7. 60-seconds science

 

Websites and blogs

  1. Zerohedge – counterweight to the polyannish financial commercial media
  2. Hussman – weekly objective comments on the stock markets by one of the best asset managers
  3. Contrarian edge – market philosophy by Vitaliy Katsenelson
  4. Financial Orbit
  5. http://disciplinedinvesting.blogspot.co.uk/
  6. KurzweilAI – technological progress
  7. Singularity Hub – technology watch
  8. Science News – technology watch
  9. Clarifying concepts – science explained
  10. Kelly Starrett – mobility
  11. Wait But Why – a lot of fun and perspective
  12. xkcd – satirical and sciency cartoons
  13. SMBC – satirical cartoon
  14. Dilbert – satirical cartoon about the drudgery in a large company cubicle landscape

 

Popular books I think you should skip:

  1. The count of Monte-Cristo – don’t get me started! This is not the adventure it promises to be. Read a synopsis or see one of the recent movies instead
  2. The bible – long, boring, poorly written, paradoxical and with exactly zero value as an inspiration, guide, entertainment or whatever you can think of. Simply a collection of garbage
  3. What’s wrong with right now – I am all for mindfulness, but this one was just awful
  4. Choose yourself – I just didn’t get what was so great. It’s fine, sure, and probably inspires a lot of people, but I didn’t get one single impulse from it
  5. The foundation (it was a good adventure story back in the days, but everything else is so much better these days. Read David Simpson, Robert Heinlein, Neal Stephenson or Iain Banks for epic sci fi instead)
  6. Rama (utterly pointless and slow-moving B-movie drama sci-fi)
  7. Micro by Crichton/Preston (see Rama above)

 

I constantly add books to my Amazon wish list, most of which I will never read, but I like to keep a list to choose from whenever I run out of things to read. Anyway here is the very short version of what’s going on my virtual nightstand soon:

Books on my to read list:

  1. Surely you’re joking, Mr. Feynman (February 2015, Done! Very Inspiring)
  2. Post human 6,7, … (still waiting)
  3. The Preferred Observer (still waiting)
  4. How to win friends and influence people (May 2015, Done! A bit inspiring. See my thorough review and summary here)

 

I agree with pundits and power brokers of all time. Read. Read thoughtfully and slowly. Then re-read.

However, I disagree with all those advocating “the classics”. There is absolutely nothing inherently good in reading something just because it’s old or was the first of its kind, or was revered 50 or 100 or 150 years ago. Read a lot, but read for excitement and enjoyment, not to impress. Most likely, what excites you will more and more turn out to be useful, albeit somewhat al dente, books that teach you important things – like the best book of them all, the one book to rule them all:

 

How An Economy Grows And Why It Crashes, by Peter Schiff

Read it!

And then order the Post-Human series. You’ll thank me afterward, just like the reader and frequent commentator Zoloo did the other day