BEST BOOKS ON FINANCIAL MARKETS

PUBLISHED ON DEC. 21, 2019 | 21 MIN READ

Best Books on Financial Markets

What are the best books on financial markets?

 

Best Books on Financial Markets

THE LIST:

1.The Spider Network
2. Stocks for the Long Run
3. Why Wall Street Matters
4. The Financial Crisis and the Free Market Cure
5. Adaptive Markets
6. The Vanishing American Corporation
7. Efficiently Inefficient
8. Extraordinary Popular Delusions and the Madness of Crowds
9. From Wall Street to Bay Street
10. Too Smart For Our Own Good
11. One Up On Wall Street
12. Circle of Friends

1 – The Spider Network | By David Enrich

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You’ll be cynical about this unbelievable true story of a British trader named Tom Hayes, which is told by David Enrich, a financial journalist. It includes Toms involvement in the spider network,” which supported the notorious Libor scandal. This reveals the society of financial market traders and investment bankers. In The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History, David Enrich tells the reality in a financial work environment, giving transparent information about the incentives and entire context that you’ll feel upset for all the greedy bankers. He shows that Tom Hayes, being supported by the trading culture, is now imprisoned and protected his colleagues who never got to jail.

Quotes from the book;

 “Just about everyone…suffered from a version of the same defect: obsessed with numbers and profits, eager to use other people as tools for self-advancement, convinced that anyone on the losing end wasn’t so much a victim as a sucker.”  

“Yes, there had been a spider network. Hayes still didn’t realize that in the end, he’d been the fly.” 

“Read marveled to colleagues about the strategy’s success. ‘Tom needed them [Libor rates] high so our boys sent them out high and it seems people copied them,’ he boasted.” 

“Hayes knew that teaming up with a rival trader to share information and nudge Libor…bordered on collusion. But when he mentioned the arrangement to Pieri, his boss seemed unbothered.” 

“Hayes was so open about, and preoccupied with his strategy that he would change the status on his Facebook page to reflect his daily desires for Libor to move up or down, a self-deprecating poke at his nerdy fixation.” 


2 – Stocks for the Long Run | By Jeremy J. Siegel

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In each passing day, the market shows the true complexity of investing because all kinds of newsflash and incidents, as well as how people behave, can affect the return of investment. This useful book, Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies,  written by Jeremy J. Sigel, which has more than 400 pages inside, will thoroughly guide you to comprehend the perplexing socioeconomic system better and tells how the wisdom you will learn here would upgrade your financial state. This totally deserves to be owned by any industrious investor. It tells each important occurrence that could shape a varied portfolio in the past decades that has taken place.

Quotes from the book;

 “Equities promise their owners nothing – stocks are risky investments, involving a high degree of faith in the future.”

“Standard & Poor’s, as well as Moody’s and other rating agencies…reported that the probability that collateral behind a nationally diversified portfolio of home mortgages would be violated was virtually zero.”

“The superior performance of stocks over the past two centuries might be explained by the growing dominance of nations committed to free market economics.”

“Even including the recent financial crisis, which saw the worst bear market since the 1930s, the longest it has ever taken an investor to recover an original investment in the stock market (including reinvested dividends) was the five-year, eight-month period from August 2000 through April 2006.”

“With no government aid forthcoming, Lehman Brothers, a 150-year-old investment firm that had survived the Great Depression, had no chance” [in 2008].”


3 – Why Wall Street Matters | By William D. Cohan

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This book, Why Wall Street Matters, debates about a straightforward idea: The practical way of suppressing distress in the financial state of Wall Street workers is by enhancing their incentives, not by reinforcing the rules. William D. Cohan encourages the readers to acknowledge Wall Street, which is not a simple thing to do after its failure in 2008. However, Cohan should have provided more information about the ways of funding of Wall Street to upgrade the normal peoples lives. This is interesting and will help you oppose the increasing anti-capitalist texts. Its a question, though, if the incentive enhancement would be effective or not.

Quotes from the book;

 “We need to return Wall Street to its days of prudent risk-taking, where the leaders of the firms are held personally accountable for their bad behavior or foolish risk-taking.” 

“At the time [1934], separating investment banking from commercial banking was more akin to separating yolk from the white; today, it would be like unscrambling an egg.” 

“Easy access to cheap capital created a spate of incredible financial products that seemed to be invented virtually out of thin air.” 

“The culture of Wall Street was forever transformed…into a Darwinian free-for-all, where bankers, traders, and executives were rewarded for taking big risks with other people’s money.”

“The ability of Wall Street to provide capital when and where it is needed at a fair price isn’t a magic trick…It should be celebrated.” 


4 – The Financial Crisis and the Free Market Cure | By John A. Allison

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A lot thought that the financial collapse of Wall Street in 2008 almost shattered the economic system as well as the lives of Americans. John Allison argues with that idea because he thinks that what brought Wall Street to crisis and slow recuperation was the governments ill-judged guidelines. He also said that unrestrained free markets could bring a long-term abundance. This perspective came from the time when he was still the CEO of a huge bank company. For some, his explanations are digressive, but his ideas are on-point that can be appraised to improve markets and banks in The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy’s Only Hope.

Quotes from the book;

“The myth which continues to dominate…is that the recent financial crisis was caused by deregulation of the banking industry and greed on Wall Street.”

“Capitalism is the only economic/political system that allows individuals the freedom to think for themselves and rewards those who create the most productive ideas, products or services as determined by…other productive people in purchasing these ideas, products or services.”

“Greenspan’s constantly printing money to keep the economy from correcting…led many bankers to believe that low-income (subprime) lending was far less risky than it is.”

“Government regulatory policy creates incentives that encourage almost all the financial institutions in the market to make the same mistake.”

“For many years, dating back to the 1930s New Deal, a wide variety of government policies have been enacted to artificially encourage homeownership.”


5 – Adaptive Markets | By Andrew W. Lo

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Theories in financing tell that the prices of stocks already indicate all details and information in the market, which asserts that the market is somehow unbeatable by any investor. However, this kind of idea does not always work in the real world. Professor Andrew Lo presumes a theorem to adjust the market to elucidate deviation in markets in another method. This book, Adaptive Markets: Financial Evolution at the Speed of Thought,  is filled with distributed narrative and guides, but a reader who seeks a meticulous structure to develop the foreseeable paradigm will be crestfallen. However, Lo provides a new outlook to investors who disagree with standard philosophies in marketing.

Quotes from the book;

 “The Adaptive Markets Hypothesis is based on the insight that investors and financial markets behave more like biology than physics.” 

“On many days since the financial crisis began, the collective behavior of financial markets might be better described as the madness of mobs.” 

“A species can become so well adapted to an environment through natural selection that it fails to survive a change to that environment.” 

“Financial evolution proceeds at the speed of thought, where several generations of ideas can come and go within the time span of a productive working lunch.”

“If you believe that people are rational and markets are efficient, this will largely determine your views on…the causes of financial crises (too much government intervention).” 

“Since the beginning of the financial crisis of 2008, hedge fund attrition rates have been twice as high as they had been in the previous 10 years, while hedge fund creation rates have fallen sharply.” 


6 – The Vanishing American Corporation | By Gerald F. Davis

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This book, The Vanishing American Corporation: Navigating the Hazards of a New Economy,  is appropriate for readers who desire a different method of observing at ordinary things and also tests their precursory deduction. The writer, Professor Gerald F. Davis, points out that companies have always been the ruffian in lots of texts, composed of all the filthy acts of greedy people in the business. In this book, Davis advises that you should take precautions in what you desire. With obtaining resources from an outside or foreign supplier, company marauders, the Internet, and platform capitalism,the public company in America is fading away.  His description is so pragmatic that your global perspective would change.

Quotes from the book;

“One person’s status hierarchy is another person’s career ladder…working your way up from the mailroom to the executive suite only makes sense within an organizational hierarchy.”

“We face a set of challenges similar to those at the turn of the last century…But this time, the cause is not the growth of the corporate sector but its collapse.”

“From sneakers to smartphones…to lunch meats, it’s a good bet that the products you buy were never touched by the employees of the company whose name is on the label.”

“The growth of generic manufacturers and distributors and the widespread availability of cloud services mean that barriers to entry have collapsed in many industries.”

“When GM’s CEO told Congress in 1953 that ‘what was good for the country was good for General Motors, and vice versa,’ it was not meant arrogantly or sarcastically.”


7 – Efficiently Inefficient | By Lasse Heje Pedersen

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The effective hypothesis in the market notes that generating money by attempting to perform better than the stock market is not possible since the prices immediately display all available data. However, Lasse Heje Pedersen, who is an asset manager and finance professor, claims that the truth of market dealing is divergent. People who dare to face business peril and spend money would gain profit, but assessing which option can generate assets for you and which payments you should accept is the challenging side of investing. In this book, Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined, Pederson surpasses the archetypal by teaching the methods of profitable people in the business.

Quotes from the book;

“Trading strategies present natural tests of asset pricing theories and, vice versa, asset pricing theories naturally give rise to trading strategies.”

“The larger and more leveraged the position a trader takes, the more important are implementation costs.”

“Prices are pushed away from their fundamental values because of a variety of demand pressures and…are kept in check by intense competition among money managers.”

“When you are looking for new cool trading ideas, think about whether there is information that most investors overlook, new ways to combine various sources of information, a smart way to get the information fast.”

“Risk management is far from always a losing proposition, however. It can save an investor a tremendous amount, as the saying goes: Your first loss is your least loss.”


8 – Extraordinary Popular Delusions and the Madness of Crowds | By Charles Mackay and Joseph de la Vega

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Even though these two agreements on how investors should behave, options dealing, byproducts, and stock fraud began in the 17th and 19th centuries, they still currently take into effect. Charles Mackay, who was a journalist, documented the hysteria of demented investments in the past. He likens it to the tulipomaniaand South-Sea Bubble.If you alter the corporation names, and youll be able to observe how people behave in markets that will lead to a fixed system. De La Vega recalculated the explicit trickery of the stock trading market in Amsterdam. Enjoy reading this book, Extraordinary Popular Delusions and the Madness of Crowds: The Classic Guide to Crowd Psychology, Financial Folly, and Surprising Superstition, as you gain more investing knowledge.

Quotes from the book;

 “An illusory prosperity shone over the land and so dazzled the eyes of the whole nation, that none could see the dark cloud on the horizon announcing the storm that was too rapidly approaching.”

“Law was now at the zenith of his prosperity and the people were rapidly approaching the zenith of their infatuation.”

“The public mind was in a state of unwholesome fermentation. Men were no longer satisfied with the slow but sure profits of cautious industry. The hope of boundless wealth for the morrow made them heedless and extravagant for today.”

“The price of shares sometimes rose 10 or 20% in the course of a few hours and many persons in the humbler walks of life, who had risen poor in the morning, went to bed in affluence.”

“People of every age and sex and condition in life speculated in the rise and fall of the Mississippi bonds.”


9 – From Wall Street to Bay Street | By Joe Martin and Chris Kobrak

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Canada and the United States collaborate more than $12 trillion in global GDPs increase. Riches of these countries are found in the environment of commerce and politics, which is greatly controlled by capitalism and supported by a strong financial society. However, Wall Street and Bay Street depict two different academies of capital market concepts, the function of the ordinance, and market performance. Martin and Kobrak, who are Economic historians, emphasize how financial archetypes in the US and Canada progressed in different aspects that mold their development. In From Wall Street to Bay Street: The Origins and Evolution of American and Candian Finance, readers who are into history, business, and finance will love this well-informed financial assessment.

Quotes from the book;

 “The most recent financial crisis reawakened urgent inquiries into how a society should balance both innovation and stability in its financial system.” 

“[World War I] produced two parallel changes to the two countries’ financial systems: greater reliance on capital markets and the imposition of federal income taxes.” 

“For most of the period from 1945 to 2000, the United States was by far the world’s most important economic and political player, but its macro- and microeconomic performance fluctuated a great deal.” 

“The years between 1870 and 1914 were momentous in the annals of American and Canadian history, but the pace of change in the two countries was not always in sync.” 

“The financial reforms of the Civil War era represented a giant step toward national oversight of banking and currency issued by the government.” 


10 – Too Smart for Our Own Good | By Bruce I. Jacobs

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One might believe that dilemmas in money are statistically improbable happenings; however, they take place in unexpected occurrences. Bruce I. Jacob, who is an author and equity manager, presumes that human behavior about perils, liquid assets, and leverage are mostly unsophisticated because financial experts trade in unreliable methods that lead to defective reasoning about effective markets and logical investors. Regardless of the possibility of reiteration, in Too Smart for Our Own Good: Ingenious Investment Strategies, Illusions of Safety, and Market Crashes, Bruce I. Jacobs provide practical information obtained from his well-specified understanding and learning when it comes to investing in the market. Investors and financial managers will discover the worth in Jacobsstudy of financial catastrophes. 

Quotes from the book;

 “As scientists are beginning to discover, perfect storms are the result not only of God and nature, but of man. The same holds true for financial storms.” 

“It is time to declare that the efficient market hypothesis and the rational investor are dead, inasmuch as they are meant to imply consistently correct market pricing.” 

“Many investors, concerned with elevated stock price levels and anxious to preserve the investment gains already under their belts, turned to portfolio insurance as a safety net.” 

“How could such a small part of the economy create such huge problems for the whole economy? The answer lies in the way in which the risk of mortgage lending…was extended and magnified via novel financial instruments.” 

“A number of ‘flash crashes’ – sudden, sharp and seemingly inexplicable price movements – have been blamed on market manipulation, investor error and computer trading algorithms.” 


11 – One Up on Wall Street | By Peter Lynch and John Rothchild

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This book, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market is a classic for personal investment. Much of the content is pre-bubble 1989 but offers haunting warnings about inflated price-to-earnings ratios on stocks. The authors give warnings to beginning investors. In this book, you’ll learn; never ever invest in a stock because someone tells you it will be the next Microsoft; before buying anything you need to know what type of investor you are; companies fall into six categories, so categorize your investment decisions; don’t invest in stocks, invest in companies; the best way to find good stock is to study the companies. 

Quotes from the book;

“The basic story remains simple and never-ending. Stocks aren’t lottery tickets. There’s a company attached to every share.”

“It’s impossible to distinguish cod from shrimp when your mutual find has lost the equivalent of the GNP of a small, seagoing nation.”

“This book was written to offer encouragement and basic information to the individual investor.”

“By the way, the odds against making a living in the day-trading business are about the same as the odds against making a living at racetracks, blackjack tables or video poker. In fact, I think of day trading as at-home casino care.”

“Whether it’s a 508-point day or a 108-point day, in the end, superior companies will succeed and mediocre companies will fail, and investors in each will be rewarded accordingly.” ”To the list of famous oxymorons – military intelligence, learned professor, deafening silence, and jumbo shrimp – I’d add professional investing.”


12 – Circle of Friends | By Charles Gasparino

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A study about a circle of friendswas conducted in 2007 by Perfect Hedge, one of Americas most substantial insider-trading investigations ever known in history. Its basis was some of the known most admired hedge funds, investment banks, and companies of Fortune 500. Charles Gasparino unveils how the prosecutor revealed a society filled with secrecy and fraudulent acts. However, he also emphasized important questions about the intensity of damage insider trading truly imposes to every investor in comparison to different kinds of financial deceit. This book, Circle of Friends: The Massive Federal Crackdown on Insider Trading – and Why the Markets Always Work Against the Little Guy,  is fit for all kinds of investors to know deeper about groups of people.

Quotes from the book;

 “White-collar law enforcement authorities will tell you that…they have approached insider trading with such zeal…to make the investing world safe for the average investor.”

“Government investigators shared a similar disbelief over the legitimacy of some of the trading at SAC, even as the fund’s legal team maintained it was all in a hard day’s work.” 

“Insider trading is a crime of communication; if you do not know how Rajaratnam is making his communications, how can you properly investigate his activities?” 

“The world’s oldest profession is said to be prostitution, but if you’re looking for the world’s oldest economic crime, insider trading has to be at the top of the list.” 

“Friends share information mostly because friends trust each other, whether it’s because of shared life experiences or because committing illegality creates bonds of its own.”


Final Thoughts

This article was an attempt to consolidate the best books on financial markets. Obviously, the list is not an exhausted list of every book on the subject. However, the ‘best books on financial markets’ list attempt to orchestrate different angles and degrees in financial markets.

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Books Best Books on Financial Markets – Summaries – Quotes