Every month, I am going to suggest 3-5 of the best books that I’ve ever read. To get the suggestions each month, sign up here. Here are the suggestions for April, 2014:
Inside the Investor’s Brain: The Power of Mind Over Money (Wiley Trading) by Richard L. Peterson
This is, by far, the best collection of information on behavioral finance that I have read. Peterson has collected the most interesting examples of how and why we fail as investors, and suggests ways to avoid making dumb mistakes in the future. You’ll learn about evolution, the brain chemistry behind our investing decisions, and the countless traps laid by the market to ruin our performance. My copy is so worn out (from reading, highlighting, and note-taking) that I’ll need to order another one soon.
Drunk Tank Pink: And Other Unexpected Forces that Shape How We Think, Feel, and Behave by Adam Alter
The title refers to a remarkable phenomenon: if you expose men to the color pink for prolonged periods, they get weaker, calmer, and generally more sedated. When the effect was first discovered, the color “drunk tank pink” became a popular tool. Holding cells, for example, were painted pink to calm prisoners. This book is chock full of interesting and useful examples of subconscious behavioral triggers, including several specific to the stock market. You’ll learn how more pronounceable ticker symbols (e.g. OPEN, HOG) result in better IPO performance, and how seeing a yin-yang symbol can affect our investing decisions.
Adapt: Why Success Always Starts with Failure by Tim Harford
“The art of success is to fail productively”
Using excellent examples, Tim Harford explains that to make progress, you must fail often and fail productively. You will finish this book ready to face failure, and excited to experiment in life and business: trying new approaches until you stumble upon something great.
The Tiger: A True Story of Vengeance and Survivalby John Vaillant
One of the most amazing books I’ve read in the last few years. The premise is simple: a hunt for a man-eating tiger in the remote taiga of eastern Russia circa 1997. With this as a backdrop, the author (an amazing writer) explores the human condition, our relationship with nature and with animals. You will learn why the brand name “Viagra” comes from the Sanskrit word for ‘tiger.’
Within every major ecosystem nature has produced, she has evolved a singularly formidable predator to rule over it. In Primorye, the Amur tiger is the latest, most exquisitely lethal manifestation of this creative impulse…
“The most terrifying and important test for a human being is to be in absolute isolation,” he explained. “A human being is a very social creature, and ninety percent of what he does is done only because other people are watching. Alone, with no witnesses, he starts to learn about himself—who is he really? Sometimes, this brings staggering discoveries. Because nobody’s watching, you can easily become an animal: it is not necessary to shave, or to wash, or to keep your winter quarters clean—you can live in shit and no one will see. You can shoot tigers, or choose not to shoot. You can run in fear and nobody will know. You have to have something—some force, which allows and helps you to survive without witnesses…Once you have passed the solitude test,” continued Solkin, “you have absolute confidence in yourself, and there is nothing that can break you afterward.”