As to my reading diet: If you want to think long-term, you can’t spend all day reading things that train your brain to twitch. When I’m not interviewing portfolio managers or other investors, I like to read the latest research in cognitive and social psychology, behavioral finance, neuroscience, financial economics, evolutionary biology and animal behavior, and financial history. (As a journalist, I get new-article alerts and press access from hundreds of academic journals. If you’re not a member of the Fourth Estate, you should closely follow the science coverage in a good newspaper like The Wall Street Journal or The New York Times.) Here, I’m looking for new findings about old truths – evidence that’s timely about aspects of human nature that are timeless.
Online, I like the blogs Farnam Street and BrainPickings, Morgan Housel at The Motley Fool and Matt Levine at Bloomberg View, Bob Seawright’s “Above the Market,” Tom Brakke’s “the research puzzle,” anything that Bill Bernstein writes, the Fama/French Forum. In my day job, I can’t utterly ignore what’s going on in the short term, so I follow The Big Picture, The Reformed Broker and The Epicurean Dealmaker, who will have short, sharp takes on whatever turns out to matter. This list isn’t complete, and I’ve just offended a lot of my friends by leaving out their names because I’m on deadline today.
Every investor worthy of the name must read Where Are the Customers’ Yachts? by Fred Schwed, The Money Game by ‘Adam Smith,’ Against the Gods by Peter Bernstein, the Buffett biographies by Alice Schroeder and Roger Lowenstein, A Random Walk Down Wall Street by Burton Malkiel and The Intelligent Investor by Benjamin Graham (disclosure: I am the editor of the latest revised edition and receive a royalty on its sales, although you don’t have to read that edition). These books aren’t optional; they’re mandatory. Reading seven books is a much cheaper form of tuition than the mistakes you will make if you don’t read them.
When I’m not at work, I make a special point of reading nothing that is investment-related. I read fiction that has stood the test of time; history and historical biographies; books on science; books on art.
The “non-investing” books that every investor should read are:
- at least one of the Richard Feynman oral biographies (any one will do; I like Surely You’re Joking, Mr. Feynman and What Do You Care What Other People Think?)
- Darrell Huff’s How to Lie With Statistics
- Bertrand Russell’s Skeptical Essays (if not all of his non-technical books)
- Montaigne’s Essays
- Daniel Kahneman’s Thinking, Fast and Slow (disclosure: I helped Dr. Kahneman research, write and edit the book, but I don’t receive any royalties from it)
- an introduction to David Hume’s philosophy and preferably the original work (e.g., An Enquiry Concerning Human Understanding)
Learning how to think is a lifelong struggle, no matter how intelligent or educated you may be. Books like these will help. The chapter on time in St. Augustine’s Confessions, for instance, which I read 35 years ago, still guides me in understanding why past performance doesn’t predict future success.
