Beginners Books
Economics
Economics in One Lesson
This book by (One time New York Times and The Nation writer) Henry Hazlitt, is widely considered the best intro to free-market economics.
It starts with the simple lesson (from Bastiat
An Introduction to Economic Reasoning
This is a text book, it starts with the simple axiom that humans act and logically concludes economics from there.
Gordon fills the book with humor and easy-to-understand examples, plus, since it's a textbook it comes with many question each chapter to solidify the knowledge learned.
Gene Callahan is one of my favorite thinkers today, this is his intro to Austrian Economics book.
Callahan starts by introducing real economics as an a priori science, one that must deal with real individuals, not aggregates. Then, like Mises & Rothbard, shows how economics logically follows form the action axiom.
I had read a lot of economics books before this one and understood likely outcomes of different situations, but this book is the one that tied it all together logically in my head.
The Politically Incorrect Guide to Capitalism
Bob Murphy is my favorite blogger, and his guide is the best for ending arguments (by winning them).
Like all the books in the PIG series (a couple of which are great, but some are crappy) he goes through the main arguments against his position and then destroys them.
It's great for when you think you found a weakness in the market or can't find a good way to show someone with whom you're arguing why they are wrong.
The Politically Incorrect Guide to American History
I own about 7 Tom Woods books and have read all but one of them - he is my favorite modern author. These two are great introductions to revisionist US history, showing how, in the US times of prosperity have always come from times of little government and much free market.
The Concise Guide to Economics
This book is more of an index, it contains 37 chapters, all economics topics, with 1-3 pages on each and 3-4 book recommendations for each.
I use it whenever I need a quick refresher on a topic.
Sowell has written a litany of good economic books, and has a talent for finding examples for what he is trying to say and making it very easy to understand.
Sowell says economics is a science of scarce resources with alternative resources and show economics in that light. The book is very good, but does have some problems.
What Has Government Done to Our Money? Case for the 100 Percent Gold Dollar
In the best book on money ever written, Murray Rothbard shows that money always starts as a commodity, and that the same laws of supply/demand prevent government from doing any good when money is involved.
Investing
How to Pick Stocks Like Warren Buffett
I've read a lot of books on Warren Buffett, the two here are the best introductory books on how he invests.
I wrote about this book before, that article is a pretty good review of the book.
This book is probably the most read book about Buffett, Hagstrom has written about 7 books about Buffett, Munger and how they invest and use mental models (a couple of which will be in future articles).
In this book, Hagstrom introduces the tenets Buffett uses to evaluate businesses - he looks at the Business, Management, Financials, and Valuation.
The Little Book That Beats the Market
Greenblatt has two books that are in the top ten investing books of all time. This one introduces earnings yield and return on capital, and shows how a screen of these companies returned 30% a year over an 18-year period.
The book serves as a great introduction to value investing and evaluating businesses.
Financial Fine Print
The next two books serve as great introductions to accounting and starting to dig into the footnotes to gain a better understanding of the business and the integrity of those who run it.
Mosaic: Perspectives on Investing
The last book on this list is by, possibly, the best modern thinker in investing - Mohnish Pabrai. I have been to three of his investor's meeting and can attest that they live up to the expectations.
This book is a collection of articles on investing, Pabrai has a lot of unorthodox views, he talks a lot about finding a company's DNA, using a latticework of mental models and using a DCF that has a lot of conservatism built in.
The book starts at $130 on Amazon and is approaching Margin of Safety like prominence, but most of the articles have been archived on the internet and you can find them here.
Conclusion
My public speaking professor showed our class a statistic that claimed humans, on average, retain only about 20% of what they read - so don't get let down if you've read 3-4 of these books and still don't quite 'get it,' I am still not as proficient in economics and investing as I'd like after reading these books and many more, but after each book I read more and more of the whole framework 'clicks' in my head and I not only understand that part, but the rest of what I understand seems to make more sense.
Also, I welcome any and all suggestions of different books that also serve as great introductions to investing and economics.
hi mike
hv u read prof greenwalds book "value investing" and
"competition demystified"?
very useful book in analyzing the competitive moats of the business.
Posted by: Sandesh | July 26, 2009 at 10:41 AM
I've read his first book, but his second is still on my last of thing I need to read.
Mike
Posted by: Mike Price | August 06, 2009 at 10:06 AM