Best Investing Books; Hint They are not what you think

Best Investing Books

The Best Investing Books

I have yet to read one technical analysis book that I was not inclined to throw into the trash can. Over the years, I looked at many books that covered this topic, and have found nothing of value out there. There are some books, with great pictures but other than that they contain nothing of value.  Almost every author seems to want to go out of his or her way to make the subject look complex. Secondly, half of the studies they mention are useless, and I am being conservative.   Here are some simple examples, Head and shoulders pattern, rising wedge, bull flag, cup and handle, and a host of other nonsense.

Let’s also not forget about the silly omens these books like to brag about, like the almighty useless death cross or the infamous Hindenburg omen, etc.. You would be much better served if you can master the art of drawing a simple trend line.

Mass Psychology

Before we put out a list of the best investing books to read, we think the topic of Mass psychology warrants a mention. Understanding the basics of Mass Psychology could go a long way in improving your investment journey.  Here is a brief excerpt on the topic:

Mass psychology is the study of group behaviour; the mass mindset draws comfort when it does not go against the views held by the majority.  For example, an investor feels comfortable buying biotech stocks because the crowd thinks it’s a good buy.  In other words, they are acting like lemmings; they are following the herd mindset.  In the markets teamwork does not pay; when the masses are euphoric, it is time to head for the exits and vice versa.

The astute investor purchases when the crowd panics and sells when the mob is jumping up with joy. The phrase to keep in mind is the following ” buy when there is blood in the streets and sell when the masses are ecstatic“.  This is the only way you can buy low and sell high with little to no stress. The masses refuse to use history as a guide and in failing to do so they are doomed to repeat it again.

Never follow the Masses

The astute investor follows the masses to see what they are doing and when the emotions hit a boiling point, this investor opts for a position that’s contrary to the position of the masses.  Instead of following the leader, you should opt to become the leader. The ones that lead are the ones that draw all the benefits, while the ones that follow the leaders blindly are the people who take all the risks.  The stock market provides a perfect illustration of this unhealthy relationship. A great example is the boom that started around 1994 and imploded in 2000. continue reading Intro to Mass Psychology

Fear is something every Tactical Investor should Abhor

No matter how many times we try to warn traders about the dangers of giving in to fear, a significant portion of traders give in to it and follow the well-trodden path of failure.   There is not one single trader in the world no matter who he or she is that can pull up a long term chart and prove that the following statements are false.

  • Market crashes equate to fantastic long term buying opportunities
  • Giving in to fear always leads to a negative outcome when it comes to trading.

In a nutshell, one can only win if one conquers the demon of fear; if one does not, it is just a matter of time before that person is separated from their hard-earned money if they are investing in the markets.  Following the mass mindset is very dangerous; the outcome is always negative.  No matter how any expert wants to spin it, there is no way to prove that back-breaking corrections or stock market crashes are nothing but stock buying opportunities over the long run.

If one wants to speed up their retirements, the best tactic would be to build up cash during the last phase of a bull market; the phase where the masses start singing. Additionally one can consider living 1-2 standards below one’s means; this should not be too hard as most individuals live several orders above their means. When the markets crash, use simple sentiment analysis and technical analysis to identify bottoming action and load up on quality companies.

Best Investing Books According To The Tactical Investor

As for what books we would recommend, be prepared to laugh at first because you will assume I am joking; a good healthy dose of laughter is always a good thing

One of the best books for novice traders is “Aesop’s fables”. It contains a plethora of stories that deal with the topic of Mass psychology and in a straightforward format. If traders put half of the concepts discussed in those fables to practice, they would fare much better. For example:

The boy who cried wolf (perfect illustration of today’s experts)

The hare and the turtle (a great illustration of the slow but sure concept)

Preferred Reading list 

  • Aesop’s Fables
  • Michel Montaigne; read the abridged version
  • Herman Hess (this is optional but can prove to be insightful choose a random book by this author)
  • Extraordinary popular delusions
  • The madness of crowds and Psychology of the Crowds by Gustav Le Bon

Other Articles of Interest

Everything You Wanted to Know about Mass Psychology

Random Musings 

Learning Centre 

Winning the Investment Game

Why market crashes are buying opportunities

A clear Illustration of the Mass Mindset In Action

Inductive Versus Deductive reasoning

Mass Psychology Introduction

Stock Market Corrections-Nothing but Buying Opportunities