27 books like Reducing the Risk of Black Swans

Talking about money with people, the subject of rich and wealthy often comes up since people may think that’s what true retirement is.

Questions while developing my book came up like what is wealth and how is wealth created? Is there a difference between wealthy and being rich? How can everyday people use understanding wealth in their own personal financial affairs? Do you really need to be wealthy or rich to retire?

To answer these questions, a brief historical context discussed in this book helps us understand the evolution of wealth from how many sheep or other specialized skills you had, to trade from barter or objects, or to wealth derived from the markets such as today. The origin of wealth is knowledge Beinhocker states. 

In trade and today’s markets that knowledge leads to competition which sets prices in all markets that you find in your retirement plan savings.

We… show more.

When people think of financial planning, their first thought is investing. Their second thought is retirement.

Kaplans explain risk succinctly: “Everything is possible, yet only one thing happens.” People understand risk but don’t really understand how to apply it rationally to investing (market risks) or to retirement (longevity risk).

But first, having an understanding of what risk is and isn’t, and where it comes from is important before you can apply it to what fuels your plans – markets and longevity.

This book helped me formulate the basic planning concepts I use in my book since personal finance is all about taking risks – as are any other decisions and actions you take in life.

Everyone makes mental shortcuts and also have biases. How can we learn to recognize errors in thinking when it comes to our money? How can we make better choices when it comes to saving or spending? Are we normal or irrational?

Behavioral finance began in the 1970s and I found Statman’s discussion fascinating on almost every page. He sums up these biases when applied to our financial choices as well as to the markets.

Normal people have wants and emotions. This contrasts with many books about how people are irrational. Indeed, we are more normal than irrational once we understand that poor choices are actually normal. Statman describes how to make better choices by recognizing choice and biases we have.

These concepts are important if you want to grow your wealth without making someone else wealthy through your spending habits.

This is a wonderful book organized around four main concepts, each valuable in their own right: 1) The Theory of Investing; 2) The History of Investing; 3) The Psychology of Investing; and 3) The Business of Investing. 

The latter, the business section makes it clear the stockbroker is not your friend, even though they’re friendly (by design). Having started my career on the sales side of the business, I quickly learned the agenda is less about the customer and more about product sales, even though I was also a Certified Financial Planner ProfessionalTM. 

I dropped sales licenses and became a fee-only advisor and member of the National Association of Personal Financial Advisors (NAPFA) where the focus is on planning and helping clients achieve their wants and goals.

The principles in Bernstein’s book marry well with those of both Swedroe’s and Statman’s books (above) in the application of growing… show more.

This is a serious scholarly investigation of the origin and eventual triumph of the efficient market hypothesis. Polillo is very smart and the theoretical sophistication high. It combines a thorough history with some extremely interesting ideas about thought, culture, and social processes fleshed out with several different methods of analysis and interpretation.

A “Black Swan” is a highly unlikely event that occurs with massive consequences. Think of 9/11 or the astonishing success of Google or Amazon.

The main issue relative to Black Swans, as explained by Talib, is that after the fact people are drawn to concocting detailed explanations that make them seem less random, and more predictable. In other words, people develop causal explanations that are completely wrong, but sound reasonable, and will then use them to predict the future.

In the words of Nate Silver, they invent a “signal” to explain what is in reality “noise.” These explanations also create a false sense of security about our ability to predict future events. In short, we fool ourselves into thinking that we know more than we actually do.

This book – a copy is free at hathitrust.org – shows how some truths about money are eternal. 

It is the first personal finance guide written for women but its advice is still valid – ‘high interest is another name for bad security’ ‘Do not put all your money into one concern’ ‘the Broker [you employ] should be of high standing and respectability’ ‘place the money…in the bank at interest [or] put it into the Funds’. And it is a model of clear writing. I loved it.

One of my favorite personal finance classics. The core principle to getting rich is the choices you make.

Author Robert Kiyosaki emphasizes the importance of taking control of your finances and investing today to build wealth for tomorrow. Anyone can apply these principles and techniques in their life. The author explains growing up with two Dads – his real father and his best friend’s father. Essentially, his blood father spent all his money. His friend’s father budgeted and invested for his family’s future.

He presents ways to earn income—real estate, stocks, bonds, or businesses. With effort and prudence, you can implement this model. He emphasizes that ‘street smarts’ and common sense must be added to school education. Readers will gain a solid understanding of assets, liabilities, and net worth, which is essential to building wealth. 

This is a practical and comprehensive guide to achieving financial independence and security.

The book offers a step-by-step program that covers everything from understanding your current financial situation to creating a budget, reducing debt, and investing for the future.

What sets this book apart from others in the personal finance genre is Orman's holistic approach to financial planning. She recognizes that money is deeply tied to our emotions and offers strategies for overcoming financial fears and building confidence in our financial decisions.

Overall, The 9 Steps to Financial Freedom is a highly recommended read for anyone looking to improve their financial situation and create a more secure and fulfilling life.

This compendium of authors writing around their specific expertise is a compelling read. However, I chose it specifically for one chapter, the chapter on "Communication Apprehension and Accounting Education."

Two of the authors of this chapter were my professors when I was at university and their novel approach to education and assessment, which was years before its time, laid the foundations for skills and behaviors I have used in both my commercial and academic life. Increasingly I see students and professionals who are not as successful in their career due to a lack of communication skills.

For me, this book provides a practical and thought-provoking approach for those looking to understand a fundamental component of the financial world in the 21st century.