The best books on investing from a money manager

Martin S. Fridson Author Of Investment Illusions: A Savvy Wall Street Pro Explores Popular Misconceptions About the Markets
By Martin S. Fridson

Who am I?

I’m a money manager for high-net-worth individuals. During my Wall Street years, I was ranked number one in my category in the Institutional Investor All America Research Survey for nine consecutive years. The CFA Society New York presented me its Ben Graham Award in 2017. I’ve served as a governor of the CFA Institute and consultant to the Federal Reserve Board of Governors. My writings have appeared in the Wall Street Journal, Barron’s, the Financial Times, and various scholarly journals. I live in New York City with my wife, musicologist Elaine Sisman. We have two children and five grandchildren.


I wrote...

Investment Illusions: A Savvy Wall Street Pro Explores Popular Misconceptions About the Markets

By Martin S. Fridson,

Book cover of Investment Illusions: A Savvy Wall Street Pro Explores Popular Misconceptions About the Markets

What is my book about?

I set out to help investors succeed by separating illusion from reality. Investment Illusions exposes the fallacies of reflexive contrarianism, putting faith in “hot” stock pickers, and trying to beat the market by predicting the economy’s direction. The book also alerts readers to a variety of scams, some of which operate legally and in plain sight without being widely recognized as flimflams.

In addition, I highlight certain shortcomings of corporate communications with investors, audited financial statements, mutual fund performance rankings, financial journalism—and books about investing. Along the way, Investment Illusions explains why market curmudgeons’ favorite story of out-of-control speculation, the Tulipmania incident, is almost universally misunderstood. When it comes to financial markets, avoiding avoidable mistakes can pay off more richly than obtaining unique insights.

The books I picked & why

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Unconventional Success: A Fundamental Approach to Personal Investment

By David F. Swensen,

Book cover of Unconventional Success: A Fundamental Approach to Personal Investment

Why this book?

As head of the Yale University endowment fund, the late David Swensen was one of the foremost innovators and most successful practitioners of institutional investing. Remarkably, he also wrote one of the best books ever for individual investors. Unconventional Success shows why on average, mutual fund investors significantly underperform the funds they own: They trade excessively, buying at the highs and selling at the lows, creating tax inefficiencies in the process. Swensen also valuably details hazards to avoid in fund selection. 


Winning the Loser's Game: Timeless Strategies for Successful Investing

By Charles Ellis,

Book cover of Winning the Loser's Game: Timeless Strategies for Successful Investing

Why this book?

This classic, now in its eighth edition, delivers a needed antidote to the broker- and media-promulgated delusion of easy and obvious paths to index-beating results. Ellis emphasizes less sexy methods that genuinely enhance performance. They include focusing on long-term wealth-building, holding down costs, and paying attention to tax consequences. He supports it all with up-to-date research findings.


The Most Important Thing: Uncommon Sense for the Thoughtful Investor

By Howard Marks,

Book cover of The Most Important Thing: Uncommon Sense for the Thoughtful Investor

Why this book?

Forget bromides such as buying a stock because your experience with the company’s product has been good. The hugely successful money manager Howard Marks makes the essential point that the goal is not to find good companies but to make good purchases. “It’s not what you buy,” he says, “it’s what you pay for it.”  Investors who are interested in good outcomes rather than thrills will find many more sound principles in this book.


Think Twice: Harnessing the Power of Counterintuition

By Michael J. Mauboussin,

Book cover of Think Twice: Harnessing the Power of Counterintuition

Why this book?

Investment manager Michael Mauboussin illuminates mental errors that impede investment success with excellent real-life examples. The good news is that these errors are avoidable. Relying on expert opinion is useful in some cases but not in others. Mauboussin also deflates the “great company” myth, citing research that finds the stocks of companies hailed as champions by business magazines subsequently underperform the stocks of companies derided by the same periodicals.


Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich

By Jason Zweig,

Book cover of Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich

Why this book?

Financial journalist Jason Zweig shows how the young field of neuroeconomics explains the biological factors underlying smart people’s irrational investment decisions. For example, brain scans show that the fear center lights up when investors consider putting money into foreign stocks, despite the demonstrated value of international diversification. Also to their detriment, investors perceive patterns of returns where none exist. It’s imperative to understand these cognitive errors to get proper control over investments.   


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