(In no particular order)
1. One Up On Wall Street : How To Use What You Already Know To Make Money In The Market
Peter Lynch is an investing legend, and this book is an excellent introduction into the world of stock investing. He clearly illustrates with humor and straight talk the ways in which individual investors are not at a disadvantage to those on Wall Street, and how we can use our experience to find the next great company. This book will not take you toward technical proficiency in trading, but if you are willing to buy a stock and hold it for extended periods of time, this book will give you the tools to profit.
2. A Bull in China: Investing Profitably in the World’s Greatest Market
This book deserves recognition for three reasons:
1) The way in which Jim Rogers identifies profitable sectors according to the overwhelming socio-economic developmental needs and capitalist expansion of China, whether it be in the underdeveloped health sector, the lack of drinkable water, the lack of arable land, bustling tourism, or the fact that less than ten percent of Chinese own cars. I have lived in China for 5 years now and this book clearly categorizes the monstrous changes occurring here, as well as how to profit from them.
2) It does what most good books on investing do; it shows you how to think about these things yourself and make educated decisions that suit your ideals.
3) It contains an exhaustive explanation of how and where Chinese stocks are traded, recent developments, and the likely shifts in policy toward less regulation and greater transparency. The differences between A and B shares, B shares being the only shares currently available for foreign purchase from the shanghai stock exchange.
Factors leading Rogers to his unwavering belief that the 21st century belongs to China and that now is the time to own a piece of its growth include (From book sleeve):
• The Chinese economy’s growth rate has averaged 9 percent since the start of the 1980s.
• China’s savings rate is over 35 percent (in America, it’s 2 percent).
• 40 percent of China’s output goes to exports (so there’s no crippling foreign debt).
• $60 billion a year in direct foreign investment, combined with a trade surplus, has brought Beijing’s foreign currency reserves to over $1 trillion.
• China’s fixed assets-ports, bridges, and roads-double every two and a half years.
I am currently living in China and traveling with this book. Roger’s analysis is as always very clear and insightful. I think it will be an indispensable reference for the coming investment climate.
3. Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market
This is the book that got me hooked on commodities trading. Rogers was one of the few to predict what is now amounting to be the largest commodities bull run in history. In this book Rogers explains what commodities are and how they’re traded, and why, more now than ever, we ought to take them seriously. A few of the book’s major assertions include: China and India are big, and never in world history have we seen such a strain on natural resources do to the rapid urbanization and industrialization under way. This comes at a time when world production of most natural resources is suffering from under investment and under production. Commodities are the best way to profit from the economic explosion taking place in the largest countries in the world. He analyzes several commodities at the end of the book, coffee, sugar, gold, oil, and lead to name a few, demonstrating the relationship of price to the fundamental laws of supply and demand, and showing how anyone with knowledge of these factors can invest profitably. All of his predictions, with the exception of Coffee’s impending price explosion have come to pass within 2 years of the books release, but they serve as excellent examples of fundamental analysis and in my opinion support Rogers’s long-term approach to investing. Rogers is a Hobo inspiration, a world traveler who knows how to live life and make money at the same time. Having retired at 36, traveled the world three times passing through more than 180 countries, and having been at the ticket window as many developing markets were in infancy, he’s a man to be carefully watched.
4. Commodity Trader’s Almanac 2008 (Almanac Investor Series)
I wish I had come across this book much sooner, as it would have saved me a great deal of money. As with many economic and investment products, commodities have cycles. They have large and long-term cycles defined by over and under production, and they have short term, year on year cycles defined by crop or livestock cycles. When new product is available prices generally fall, and when production slows prices generally rise. This concept is extremely simple, and yet very few investors take this information seriously. This book is a goldmine of seasonal commodities information, as well as historical charts and probabilities of day-to-day price moves. As a long-term trader I don’t head the day on day probability charts, but the seasonal charts and graphs are by far the most concise and convenient I’ve seen. This book is worth its price many times over. In many cases one could trade exclusively off of these seasonal charts, and with proper money management would probably come away with impressive profits.
5. A. Elder Books
All of Alexander Elder’s books are worth a read, but Trading for a Living: Psychology, Trading Tactics, Money Management
6. Market Wizards: Interviews with Top Traders
In this book the author takes you through a serious of interviews with the world’s best traders just after the market crash of 1987. It’s inspiring and sobering to read the successes and failures they have all had on their paths to success. This book is essential reading for anyone playing the markets, and it’s a great read. The down side from a Hobo’s perspective is that all of these traders were addicted to their work, and while they are very inspiring, their lives were lived for work. From a work standpoint this is as good as things get, but if one doesn’t love the markets and simply wants to earn a living, their systems may require a great deal of time and commitment. Some of the recurring themes through this book include
• Wait patiently for the right trade to come along
• Cut your losses quickly and let your winning trades run
• Plan carefully and trade that plan diligently
• Know your limits and define your risk
• Losing is part of winning
7. How I Made One Million Dollars … Last Year … Trading Commodities
Ok, um…Larry Williams, considered a genius by some, a charlatan quack by others, and a pretty intriguing trader by myself. This book contains every piece of valuable information I believe is true about the markets. It also contains several theories and methods that are completely insane, like trading silver futures based on full moon cycles. I’m not one to knock the moon, but I don’t know if trading the most highly leveraged asset class based on how shiny it is today is going to get you anywhere. That said, his discussion of Commercial Trading is on point and not given nearly as much credence as it should by most traders. Following commercial positions has made me more money than any other trading strategy. He developed an oscillator referred to as %R which is a useful tool in determining whether a bullish market has corrected far enough (oversold) to re-enter safely on the long side. He also discusses moving averages as indicators and weekly versus daily charts to set up longer term trades. All in all I highly recommend this book, but use it as a supplement.
8. How I Made $2,000,000 In The Stock Market
This is a great book, and if you’re anything like me you’ll read it and not give it a second thought for a few years. When you come back to it you’ll realize how insightful it is. Darvas’s method was very simple. There were two clues to a stocks potential run up; the first is one or two days within the last several months with very high volume, indicating accumulation of the stock (presumably on no news, indicating insider knowledge), the second one is a stocks ability to break out from a range, making a new high. Like most traders, as opposed to investors, he would buy high and sell low. If the stock made a new high, he would buy in but keep the stock on a very tight leash, selling his position of the price fell back into the range from which it broke out. His principles are similar to most: trade with the trend, pyramid your position, adding contracts with profits from the current trade, cut losses quickly, never buy on tips or advice, and never try to pick the top or bottom (follow your position with a stop loss and let the market tell you when its done moving). Darvas deserves Hobo praise for managing this feet on very part time stock analysis (receiving wires from his broker while he was traveling abroad, scanning the price ranges, and wiring back an order), and living his passion of dance while traveling the world.
Kiyosaki’s unique investment approach evolved from contrasting educations he received from his two fathers, his own and his best friend’s father. His own father was a highly educated socialist academic who despite his wealth of knowledge, struggled throughout life to make ends meet. His friend’s father was an 8th grade dropout who built an empire in Hawaii and mentored Kiyosaki for much of his life. If you are starting from scratch, or still struggling for a grasp of investment, this book will be a great help. Kiyosaki, like all good teachers, works from basic principles to specific examples. Some of the principles he explores are the concepts of leverage (Using other peoples money and other peoples time) in business and investment, and the differences between assets and liabilities (assets feed you, liabilities bleed you), and how owning one and not the other is the path to financial freedom, how working for free is the path to wealth, and how time is the most overlooked factor in making money. This book will probably change the way you think about work forever.
10. The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich
This book is at present one of a kind. Ferris explains how anyone working a white-collar job that doesn’t make them happy can break free of the office environment, outsource ones work, and create a company, all the while living a life of mini-retirements and tearing apart the conventional view of work hard and play later in life. This book is a manual smart money and a rich lifestyle. It’s a manual for the young at heart, one that finds fault with the current structure of work and life. He compiles companies that can manage every aspect of your business for you, from production to administration to keeping the wife happy. This book embodies hobophilosophy and hobolifestyle better than most, as it focuses on efficiency and productivity as defined by a completed product, and not by hours spent in a cubicle. It encourages all of us to reconsider our time sacrifices for money, and rework our values. The best part is it gives us the tools to do it. This book will change the way you think about the relationship of time (work) to money forever.
A small note: This book, while a novel guidebook for freedom, speaks primarily to the middle and upper class, or white-collar workers. While I can appreciate the irony of ‘work sucks, give it to someone else’, it’s a sad fact of life that at present, someone must do the work. It’s a happy fact of life however that that someone need not be you. Before taking action we probably ought to at least give a few moments of thought to this ethical dilemma: is what’s wrong for me ok to ask of someone else?
3 responses so far ↓
1 Commodities » Top Ten Hobofinance Recommended Books to Boost Your Financial Literacy: // Apr 26, 2008 at 4:45 am
[...] Toro’s Running of the Bulls Market Blog wrote an interesting post today onHere’s a quick excerpt (In no particular order) 1. One up on Wall Street Peter Lynch is an investing legend, and this book is an excellent introduction into the world of stock investing. He clearly illustrates with humor and straight talk the ways in which individual investors are not at a disadvantage to those on Wall Street, and how we can use our experience to find the next great company. This book will not take you toward technical proficiency in trading, but if you are willing to buy a stock and hold [...]
2 Mark // May 3, 2008 at 3:14 pm
I would propose most lists should start with The Intelligent Investor by Benjamin Graham.
Additionally Warren Buffetts shareholder letters are available free online, and provide a very solid base for how to view investments.
3 nomadfin // May 4, 2008 at 4:30 am
Mark,
Thank you for your post. I wholeheartedly recommend reading both of sources you mentioned. The reasons I’ve left them out of the top ten here should be more clear as this site develops. His notions of ‘margin of safety’ and ‘intrinsic value’ influence every futures trade I make, though not exactly in the way he intended via stock investing. The most important reason I left out Graham from this list, is I believe his methods, while as sounds as the come, require more time investment (and a highly sophisticated knowledge of business) than most hoboes would like to accept.
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