Top 10 Must-Read Books for Finance Professionals
The world of finance has provided the backdrop for many dramas, from mergers and acquisitions and Wall Street shenanigans to Tulip Mania, and lets not forget about the financial crisis. Finance obviously has no lack of gripping topics for authors to write about. For finance professionals who want to better understand the history of their industry and better grasp the fundamentals underlying its various dramas, here are 10 suggestions. Most of these books have stood the test of time and are all worth reading.
"Barbarians At the Gate"
Interested in leveraged buyouts and junk bonds? In 1989, Bryan Burrough and John Helyar wrote the definitive history of these financing types when they recounted the struggle involving the leveraged buyout of RJR Nabisco, a now-defunct food and cigarette conglomerate. The writers originally covered the story as reporters for the "Wall Street Journal." (For more, see:Understanding Leveraged Buyouts .)
Benjamin Graham and David Dodd wrote the "bible" of fundamental equity investing in this classic, first published in 1934. If you're interested in the techniques of value investing, an approach favored by Warren Buffett (who was a student of Graham’s at Columbia University), you're certain to benefit from this book.
"The Intelligent Investor"
Benjamin Graham also wrote this guide to long-term investing approaches. First published in 1949, "The Intelligent Investor" has been updated repeatedly over the past 65 years, including most recently by the financial writer Jason Zweig, as Graham died in 1976. Graham uses his book to map out and advocate for his preferred value approach to investing. (For more on Graham, see:The Intelligent Investor: Benjamin Graham .)
"Common Sense on Mutual Funds"
John Bogle, founder of the Vanguard Group mutual fund company, came out with his guide for mutual fund investors in 1999. Bogle makes the case for the value of index-based investing, and his book is full of common-sense financial advice, such as noting that the less that you pay someone to manage your investments, the more of your money you'll keep.
"A Random Walk Down Wall Street"
First published in 1973, Princeton economist Burton Malkiel's book advises readers on various types of investments. Whether you're just kicking off your financial professional career, or if you're looking for advice on managing your 401(k) or if you're an established professional who wants to expand your investment profile, Malkiel's tome, which has gone through 11 editions since publication, remains a great source for market fundamentals.
"Extraordinary Popular Delusions and
the Madness of Crowds"
One constant of financial markets is that they suffer periods of collective greed and fear, which has resulted in such catastrophes as Britain's South Sea Bubble and the Netherlands' Tulip Mania of the 1630s. The British journalist Charles Mackay explored these and other crises in his 1841 classic. Don't believe that Mackay's book has no relevance to contemporary times, as the manias he documents provide keen insight into recent events like the dot-com boom and bust of the 1990s and early 2000s.
Michael Lewis used his experience as a bond salesman in the heyday of Salomon Brothers for this legendary 1989 book. He chronicles his own work experiences and also offers a big-picture take on Wall Street during a boom time when the mortgage-backed security market caught fire. A loose sequel of sorts was Lewis' “The Big Short," in which he described the role Wall Street played in the 2000s housing market downturn.
Are you interested in learning how the world really works? This 2005 book by economist Steven D. Levitt and journalist Stephen Dubner looks beneath the surface of various everyday (and not so everyday) situations and breaks down how things work. For instance, do you believe you're getting the best deal if you're a homeowner who hires a real-estate agent to sell your house? You might be surprised. The book also explores the economics of the worlds of drug dealing and Sumo wrestling, among a wide array of topics.
In this 1980 book, Harvard Business School professor Michael Porter looks at what creates competitive advantage in a particular industry. Since many financial professionals spend their days analyzing companies, industries and their strategies, Porter's book provides an ideal starting point.
"Manias, Panics, and Crashes: A History of Financial Crises"
Charles Kindleberger, a former MIT economics professor, explored the nature of financial crises in this 1978 book. Its most recently updated edition, from 2011 (revised by Robert Aliber, as Kindleberger died in 2003), delves into the causes of the 2007-2008 financial crisis that ignited the global economic downturn. (For more on the latter, see:The 2007-2008 Financial Crisis In Review .)
The Bottom Line
The world of finance is a source of endless material for writers and has resulted in fascinating stories. If you're a finance professional who wants to hone your dealmaking skills or if you're an investor looking to improve your strategies, consider spending time with some of these books.