2.  The Psychology of Money, Morgan Housel

While most people start with trying to pick the “right” investments, Housel focuses on the mindset necessary to make, invest and preserve money for the long-haul. Getting your mindset right is just as important, if not more important than building a proper portfolio. Combining the wisdom of Housel and Swensen is a very powerful way to start your investing journey.

      3. The Most Important Thing, Howard Marks

Howard Marks is one of the brightest minds in the investing world and it is not a coincidence that he is the only author with two books on this list. Once you have the fundamentals and the right mindset, there is no one better to guide you into the nuance of thoughtful investing than Marks. He lays out a thoughtful process for going deeper on your investment picks, building a real process and developing early expertise.

      4. Safe Haven, Mark Spitznagel

Investors always look for silver bullets and very few exist. Common wisdom is that asset class diversification is the best way to manage portfolio risk. Spitznagel offers a simpler and different point of view. In this book, he demonstrates how diversification rarely produces better returns in the long-run. Instead, Spitznagel recommends being fully allocated to a broad index like the S&P 500 and allocating a portion of the portfolio to insurance; in this case, options. While Spitznagel is careful not to give away his secret sauce, he is using a combination of the money put options on various instruments that will benefit greatly from a severe downturn. Most of the time, they create a drag on the portfolio, but in extreme downturns they produce staggering returns.

      5. Mastering the Market Cycle, Howard Marks

Spitznagel believes that it is not possible to predict returns and has built a hedging strategy that eliminates the need. In Mastering the Market Cycle, Marks makes his second appearance in our list. Marks believes that economies and markets have cycles and patterns that should be learned and observed. While stopping short of timing the market, Marks argues that there are prudent times for certain types of investments and risks and getting the long-term cycle correct can be beneficial. Understanding Marks’ methodology is well worth the time for new investors and will serve investors for decades to come.

If you are looking to rapidly move up the scale with your investor knowledge, these five books provide an excellent starting point. In addition, we recommend reading them in the order presented for maximum benefit.


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