The Relationship of Investing and Trading
Way of the Turtle, The Secret Methods that Turned Ordinary People into Legendary Traders, by Curtis M. Faith (McGraw-
Hill 2007). The “secret” of the ETF-Discipline is the application of trading concepts to longer-term fund investing. I was
pleased that concepts expressed in this recently book strongly coincide with the thinking that gave rise to the ETF-Discipline.
Market Wizards by Jack D Schwager (Harper & Row 1990). Many of the key rules I have adopted came from this book, which
tells how successful traders operate.
How to Make Money in Stocks by William J. O’Neil (2nd Edition, McGraw-Hill 1988). To the best of my knowledge, this is the
most comprehensive system for trading stocks, aimed at the average person. Advice makes imminent sense to me, chart-
reading tips are excellent, and I use the system, although not for trading funds. O’Neill devotes one chapter to mutual funds,
but I disagree with that advice. He also publishes Investors Business Daily, an excellent source of market information.
Reminiscences of a Stock Operator by Edwin Lefevre (Traders Press, George H. Doran Company 1923),. A fictionalized
biography of Jesse Livermore, one of the great commodity traders of all time. Filled with the key principles used by successful
traders through time.
It’s When You Sell That Counts by Donald L. Cassidy (2nd Edition, McGraw Hill 1997). One of the few books that focuses on
the issues surrounding selling. Has insightful commentary on the impact of emotions and excuses for not following your plan.
Investment Blunders of the Rich and Famous by John R. Nofsinger (Financial Times-Prentice Hall 2002). An entertaining
review of how investment professionals make the same basic mistakes as individuals, and how to avoid them. (I disagree with
his conclusions.)
Trading On Volume, The Key to Identifying and Profiting from Stock Price Reversal by Donald L. Cassidy (McGraw-Hill
2002). Discusses how volume affects price movements, and how investors can take advantage.
Beating the Dow, A High-Return, Low-Risk method for Investing in the Dow Jones Industrial Stocks with as Little as $5000,
by Michael O’Higgins (Harper Perennial 1992). A good example of a simplistic strategy that sells books, but is discredited (See
Investment Blunders).
The Nature of Markets
The (Mis)behavior of Markets, a Fractal View of Risk, Ruin, and Reward, by Benoit Mandelbrot (Basic Books 2004).
Mandelbrot throws a gauntlet in front of “modern portfolio theorists,” who propound “buy and hold” theories. He shows that
the markets are not random, they exhibit trends, and that risk of a large loss is much higher than most financial advisers
portray.
Fooled by Randomness, the Hidden Role of Chance in the Markets and In Life by Nassim Nicholas Taleb (Tesere 2001). This
popular, easily-read book tells stories of risk and the not-so-rare rare events that confound overconfident investors.
A Random Walk Down Wall Street by Burton G. Malkiel (5th Edition, W.W. Norton & Company 1990). This is the best book I
have read on the overall stock market. Malkiel describes market psychology, discusses various investment strategies makes
the case for index funds.
The Internet Bubble: the Inside Story on Why It Burst--and What You Can Do to Profit Now by Anthony B. Perkins, Michael
C. Perkins (Harper Business 2001). The first edition of this book predicted the Internet crash by pointing out that earnings
could never increase sufficiently to justify price levels in 1999.
The Great Crash, 1929 by John Kenneth Galbraith (Mariner Books, Houghton Mifflin, first published 1955). In 1929, the
markets went out of control and panic ensued. While such a disaster is much less likely to happen now, we have seen enough
since 1929 to know that panic selling can still wipe out your retirement.
Behavioral Investing
Investment Madness, How Psychology Affects your Investing…and What to Do About It by John R. Nofsinger (Prentice Hall
2001). Describes different investor reactions to emotions.
About Funds
Mutual Funds for Dummies (3rd Edition, Hungry Minds 2001). This is probably the most useful reference available on mutual
funds. Tyson is refreshingly critical of many publications on funds and costly practices of fund companies. I note in the X-
Discipline the areas where I disagree with his views.
“Three Odysseys—The Long Adventurous Journeys of the Stock Market, the Mutual Fund Industry, and Vanguard.” Remarks
by John C. Bogle, Founder and Former Chairman, The Vanguard Group, The Wisemen, New York City, New York November
15, 2001. (Mr. Bogle thinks you should just buy and hold his index funds. The S&P 500 and his Vanguard 500 required seven
years to regain their 2000 highs.
Exchange-Traded Funds, An Insider’s Guide to Buying the Market by Jim Wiandt, Will McClatchy (John Wiley & Sons 2002).
Explains how ETF’s work and their use in a variety of strategies.
Financial Planning
You’re Fifty—Now What? Investing for the Second Half of Your Life by Charles Schwab (Crown Business 2001). This book is
aimed at people who have suddenly discovered they should have been investing. It makes the case for investing in stocks. You
should read it in your thirties.
The Savage Truth on Money by Terry Savage (John Wiley & Sons 1999). A comprehensive review of financial planning.
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