Banca surpreendida com negócio do Novo Banco

[olez1]

On topic: Não tenho no portfolio commodities...mas quem sabe no próximo rebalanceamento coloque 10%. Ninguém sabe o futuro.
Provavelmente o mais baratinho europeu:
LYXOR UCITS ETF COMMODITIES THOMSON REUTERS/CORECOMMODITY CRB TR - C-E
(Embora tenha pouca alocação ao ouro: 6%)
Custo: 0,35% / ano

Não relacionado com commodities:

[olez1]

Quando criei o tópico, mais valia ter estado quieto, expliquei quais as razões para a existência de commodities/ouro numa carteira de investimento de longo prazo, portanto vou-me abster de o fazer outra vez.

Graças a deus que não ficaste quieto! Ainda hoje estaria a perder dinheiro com a gestão ativa e com os "gestores profissionais", se não fosses tu! Desde 2012 que tenho uma carteira de etf, simples, fácil de manter e sempre a facturar, com um custo muito baixo.
Obrigado LTCM: mudaste a minha vida em termos de investimento!

(Tenho amigos no trabalho que começaram ao mesmo tempo a investir - 2012 - e hoje estão de volta aos depósitos a prazo graças aos desempenhos miseráveis dos fundos de gestão ativa e gestores profissionais - relembro que estamos em bull market em termos internacionais... tenho pena por eles, espero que um dia voltem e tomem a decisão de ir para ETF/gestão passiva).

[casdio]

Sobre a "guerra" passive vs active:
http://www.ai-cio.com/channel/NEWSMAKERS/The_Best_Thing_for_Active_Managers__Passive_Investors_.html?p=1

“Suppose everyone went 100% passive today: Every investor now holds the same proportion of their portfolio in exactly the same stocks,” Evan-Cook says. “No one does better, no one does worse, and prices do not move to reflect the fortunes of the underlying businesses.”

“Fairly soon, some bright spark will figure out that if he buys extra shares in a company, he will raise its weight in the index, so everyone else will have to buy that stock to match its new position in the index. This will cause its price to spiral upwards. He can then sell those shares at a large profit—causing their price to fall again as everyone copies him—then repeat the same trick with other stocks, turning it all into a highly profitable game of follow the leader.”

While admitting this scenario will never happen, Evan-Cook claims the hypothesis illustrates an “undeniable truth”: Passive investing will one day become so popular that active investors can easily take advantage.

Ainda nem a meio do artigo vou, mas parece interessante. Quanto mais não seja para dar uma outra perspetiva da coisa

[Tridion]

Quando criei o tópico, mais valia ter estado quieto, expliquei quais as razões para a existência de commodities/ouro numa carteira de investimento de longo prazo, portanto vou-me abster de o fazer outra vez.

Como ninguém sabe o que o futuro nos reserva, considerando os resultados históricos, foi determinada uma alocação tipo que reagiria proporcionalmente às possibilidades do ambiente económico variar entre deflação, inflação, rápido crescimento e crescimento lento.
Essa alocação, e estou a repetir de memória, assumia uma posição em commodities/ouro na ordem dos 15%.

O Permanent Portfolio criado pelo Harry Browne estipula uma posição em Ouro/Metais Preciosos de 25%, e não consta que se tenha dado especialmente mal ao longo dos anos.

O Ray Dálio, que sabe 2 ou 3 coisas sobre investimento, também sugere que 7,5% em ouro e 7,5% em outras commodities num portefólio não é descabido.

Sinceramente não sei o que vai resultar no futuro, mas quem constitui uma carteira certamente faz testes, não optimizados, de forma a estar confortável com a alocação que toma como adequada para si. Se não estiver seguro da alocação o investidor, moderado que joga para o empate, pode sempre ir diminuindo/aumentando a exposição através dos reforços periódicos.

Gosto de ler o Barry Ritholtz e geralmente concordo com o que ele escreve, admito que ele tenha razão e que um portefólio sem commodities seja melhor, mas tenho dúvidas que acrescentando commodities a uma carteira não se obtenham igualmente bons resultados.

A minha carteira é 100% o que tu inicialmente ensinaste, por isso para mim ainda bem que não ficaste quieto.

Como ninguém sabe como será o futuro, pessoalmente continua a fazer sentido ter todas a classe de activos.

Mas investimento a longo-prazo é um caminho tortuoso e demorado, onde surgem dúvidas e quando o Barry Ritholtz apresenta alguns argumentos contra commodities, uma pessoa põe-se a pensar. Isso não quer dizer que se vá a correr mudar a carteira, até porque a consistência é sem dúvida uma mais-valia para os investimentos a longo prazo.

A verdade é que nunca vai haver a carteira perfeita, e é como dizes cada um tem que sentir confortável com a carteira que escolheu. Mas dúvidas e hesitações vão sempre surgir no caminho...

[LTCM]

$100,000 Says My Portfolio Will Beat Tony Robbins’
by Barry Ritholtz - December 13th, 2014, 11:00am

viewtopic.php?f=3&t=76243&start=1525#p1162438

Não tinha reparado, mas isso não invalida a minha dúvida existencial se terei demasiado alocado em commodities/ouro...mas também ninguém me deve saber responder como vai ser o futuro. Talvez algum Deus Virtual ou assim

Quando criei o tópico, mais valia ter estado quieto, expliquei quais as razões para a existência de commodities/ouro numa carteira de investimento de longo prazo, portanto vou-me abster de o fazer outra vez.

Como ninguém sabe o que o futuro nos reserva, considerando os resultados históricos, foi determinada uma alocação tipo que reagiria proporcionalmente às possibilidades do ambiente económico variar entre deflação, inflação, rápido crescimento e crescimento lento.
Essa alocação, e estou a repetir de memória, assumia uma posição em commodities/ouro na ordem dos 15%.

O Permanent Portfolio criado pelo Harry Browne estipula uma posição em Ouro/Metais Preciosos de 25%, e não consta que se tenha dado especialmente mal ao longo dos anos.

O Ray Dálio, que sabe 2 ou 3 coisas sobre investimento, também sugere que 7,5% em ouro e 7,5% em outras commodities num portefólio não é descabido.

Sinceramente não sei o que vai resultar no futuro, mas quem constitui uma carteira certamente faz testes, não optimizados, de forma a estar confortável com a alocação que toma como adequada para si. Se não estiver seguro da alocação o investidor, moderado que joga para o empate, pode sempre ir diminuindo/aumentando a exposição através dos reforços periódicos.

Gosto de ler o Barry Ritholtz e geralmente concordo com o que ele escreve, admito que ele tenha razão e que um portefólio sem commodities seja melhor, mas tenho dúvidas que acrescentando commodities a uma carteira não se obtenham igualmente bons resultados.

[O Alquimista]

122 Things Everyone Should Know About Investing and the Economy

A year ago I started writing what I hoped would be a book called 500 Things you Need to know About Investing. I wanted to outline my favorite quotes, stats, and lessons about investing.

I failed. I quickly realized the idea was long on ambition, short on planning.

But I made it to 122, and figured it would be better in article form. Here it is.

http://www.fool.com/investing/general/2014/12/12/122-things-everyone-should-know-about-investing-an.aspx

Como é uma lista demasiado extensa, deixo aqui o link direto

O sempre brilhante Morgan Housel. Alguém teve a feliz ideia de o identificar por estas bandas. Gosto escialmente desta "lição": 120. A money manager's amount of experience doesn't tell you much. You can underperform the market for an entire career. Many have.
A categoria de money manager integra várias espécies, a saber : ... (de preenchimento livre). Depois de ter decidi ficar

[casdio]

122 Things Everyone Should Know About Investing and the Economy

A year ago I started writing what I hoped would be a book called 500 Things you Need to know About Investing. I wanted to outline my favorite quotes, stats, and lessons about investing.

I failed. I quickly realized the idea was long on ambition, short on planning.

But I made it to 122, and figured it would be better in article form. Here it is.

http://www.fool.com/investing/general/2014/12/12/122-things-everyone-should-know-about-investing-an.aspx

Como é uma lista demasiado extensa, deixo aqui o link direto

[Tridion]

$100,000 Says My Portfolio Will Beat Tony Robbins’
by Barry Ritholtz - December 13th, 2014, 11:00am

viewtopic.php?f=3&t=76243&start=1525#p1162438

Não tinha reparado, mas isso não invalida a minha dúvida existencial se terei demasiado alocado em commodities/ouro...mas também ninguém me deve saber responder como vai ser o futuro. Talvez algum Deus Virtual ou assim

[LTCM]

$100,000 Says My Portfolio Will Beat Tony Robbins’
by Barry Ritholtz - December 13th, 2014, 11:00am

viewtopic.php?f=3&t=76243&start=1525#p1162438

[Tridion]

$100,000 Says My Portfolio Will Beat Tony Robbins’
by Barry Ritholtz - December 13th, 2014, 11:00am

Estas citações chamaram-me a atenção:

The most obvious problem is bonds, which are 55 percent of this portfolio. The past three decades have seen the greatest bond rally in history. The oil embargo and inflation of the 1970s led to then-Fed Chairman Paul Volcker cranking rates all the way up to 20 percent in 1979 and 1980. The fixed-income story of the 35 years since has been the ongoing fall of interest rates from that 20 percent down to almost zero. As rates go down, bonds go up. Hence, this has been a unique period, one that has been especially good to fixed-income portfolios.

Ben Carlson, an investment analyst who writes the Wealth of Common Sense blog, showed that this recent bull market in bonds radically skewed the returns of Robbins’s portfolio by about 400 basis points a year. The period from 1928 to 1983 would have cut the returns of the portfolio almost in half, from 9.7 percent to 5.8 percent.

Adjusting a portfolio to take advantage of what already occurred is called form-fitting. Indeed, there is no reason to believe that the next 30 years will look anything like the past — especially in fixed-income markets. If you have a time machine, you can go back and take advantage of the bond rally. Otherwise, this portfolio is likely to perform poorly over the next 30 years.

A similar rookie mistake is made with commodities. After nearly three decades of little or no progress, gold had a spectacular run from 2001 to 2011. Then it hit a wall, losing more than a third of its value since those 2011 highs.

In real, inflation-adjusted terms, gold is unchanged since the early 1980s — the last peak in gold. However, it’s not only that one 30-year span: Lots of academic studies show commodities are a drag on portfolios. The key finding is that in real, inflation-adjusted terms, commodities add no value or performance to a set of holdings. As Cullen Roche noted, real commodity prices have been in a 130-year bear market. Based on historical commodity returns, the all-weather portfolio spots a smarter portfolio a 15 percent head start.

This sort of error can be attributed to the recency effect: People tend to assume that what just happened will likely to keep happening, even if it is somewhat unusual. Hence, the extrapolation of recent activity to infinity.

The all-weather portfolio is a biased sample, form fitted to have done well over recent decades.

Understanding that, let’s talk about a portfolio that was developed based on the returns of a century of data. It would look something like this:

All Century Portfolio

20 percent total U.S stock market

5 percent U.S. REITs

5 percent U.S. small cap value

15 percent Pacific equities

15 percent European equities

10 percent U.S. TIPs

10 percent U.S. high yield corp bonds

20 percent U.S. total bond market

This is a classic 60/40 portfolio. You can express this portfolio in a variety of ways, with different fund companies offering variations on a theme. I picked a basic, inexpensive set of holdings from Vanguard and Blackrock.

It looks like this:

(VTI) Vanguard Total Stock Market ETF

(VNQ) Vanguard REIT ETF

(VBR) Vanguard Small-Cap Value ETF

(VPACX) Vanguard Pacific Stock Index Fund

(VEURX) Vanguard European Stock Index

(AGG) iShares Barclays Aggregate Bond Fund

(VWEHX) Vanguard High-Yield Corporate Fund

(TIP) iShares TIPS Bond

Curioso ele não optar por commodities, uma vez que não se sabe o que o futuro trará. Perguntei-lhe isso via twitter e ele respondeu-me que "utilizando a informação dos últimos 100 anos e assumindo a mean reversion" este era o melhor portfólio que se poderia arranjar.

Tenho cerca de 15% de commodites/ouro. Mas a verdade é que são apontados argumentos válidos e interessantes para se ter uma exposição reduzida ou mesmo não os terem em carteira. Mas como será o o futuro?

[LTCM]

Without trying to quantify it here, I’d wager that remembering and implementing these lessons (patience, how long is long term?, basic relationships holding up if you only have enough patience, etc.) are worth a lot of “alpha” in a loose use of that word, and are available to all free of charge. Well, free of charge unless you count the internal organ damage some of those “short-term” periods can inflict.

The point here is certainly not that theory is perfect, that markets are perfectly efficient, that the CAPM holds, that security returns are “normally distributed,” that all you should care about is mean and variance, that mean and variance are best estimated from monthly historical experience, and so on. Indeed, we have, to a significant degree, spent our careers arguing against these propositions and investigating where value can be added. The point is not arguing for perfection. The point is that the very basic tenets of our field are better than what’s often casually asserted, implied, inferred, imputed, and assumed; and that those assailing these basic tenets are too short-term oriented and sometimes far too triumphalist. The point is that even if not perfect, you have to give it up for the 45-year mean-variance plot of the three main asset classes!

Bottom line: Let’s all be nicer to theory. If we stick with it long enough, it will probably be nice to us.

https://www.aqr.com/cliffs-perspective/ ... e-long-run

(Em vários aspectos um grande artigo do Cliff Asness)

[ricardmag]

Como não se pode partilhar links para livros piratas com copyright quem quiser o livro que me envie uma mensagem privada que envio o link para download.

[ricardmag]

Eu tenho o livro em pdf, como posso partilhar

[Cem pt]

Amigo LTCM:

Interessantíssima sugestão de leitura, que desde já te agradeço.

Estive a ler o capítulo 1 do livro e na realidade muitas das passagens que ali são referidas para mim fazem todo o sentido, pena que não estejam disponíveis mais capítulos para leitura online mas calculo que o seu conteúdo poderia ajudar muita gente a ganhar dinheiro nos mercados, afinal é para isso que todos cá andamos!

Obviamente que o seu conteúdo vai buscar ensinamentos sãos aos grandes nomes do trading mundial e versa sobre uma forma séria e previamente testada na forma de gerir ativamente uma carteira com elevadas probabilidades de sucesso, seja nos timings de entrada e saída como no aproveitamento de um correto money management, algo que como sabes pode deixar muita gente céptica!

Abraço.

[LTCM]

Being Right or Making Money, Third Edition contains a position trading strategy that any serious investor will want to keep nearby. Using the unbiased, objective standard in this book, you can stay on-target for profit in all market conditions. You'll learn how to create asset allocation models in both stocks and bonds, how to make sense out of contrarian opinion, and how to use indicators to keep you focused, no matter what.

Being Right or Making Money, 3rd Edition
Ned Davis

ISBN: 978-1-118-99206-7

December 2014

[LTCM]

[...] The all-weather portfolio is a biased sample, form fitted to have done well over recent decades.

Understanding that, let’s talk about a portfolio that was developed based on the returns of a century of data. It would look something like this:

All Century Portfolio

20 percent total U.S stock

market

5 percent U.S. REITs

5 percent U.S. small cap value

15 percent Pacific equities

15 percent European equities

10 percent U.S. TIPs

10 percent U.S. high yield corp

bonds

20 percent U.S. total bond

market

This is a classic 60/40 portfolio. You can express this portfolio in a variety of ways, with different fund companies offering variations on a theme. I picked a basic, inexpensive set of holdings from Vanguard and Blackrock.

It looks like this:

(VTI) Vanguard Total Stock

Market ETF

(VNQ) Vanguard REIT ETF

(VBR) Vanguard Small-Cap

Value ETF

(VPACX) Vanguard Pacific

Stock Index Fund Investor

Shares

(VEURX) Vanguard European

Stock Index Fund Investor

Shares

(AGG) iShares Barclays

Aggregate Bond Fund

(VWEHX) Vanguard High-Yield

Corporate Fund Investor Shares

(TIP) iShares TIPS Bond

This is just one example (but a damn fine one). If you happen to like other fund families, you should be able to find most of these holdings or their equivalents.

Again, one size does not fit all. For a younger investor with a longer timeline, I would add a little more equity — a microcap fund and an international small-cap value fund. That would come at the expense of less fixed income.

A more conservative investor might want to have less equity and more bonds; They could combine the Pacific and European holdings into one holding such as iShares MSCI EAFE Index Fund (EFA), and end up with more bonds at the expense of equities.

Investors interested in this sort of asset allocation can access this portfolio numerous ways. You can do it yourself for free. It requires a bit of work and you need to do a rebalancing once or twice a year. But it’s cheap and easy and will do better than 90 percent of what Wall Street has for sale.

The most challenging part of this is you. Your emotions, your lack of discipline, your ability to stick to a tried-and-true methodology and not get distracted by something shinier.

If you are likely to have any of those behavioral issues, you have two options. You can hire an automated software (a/k/a robo-adviser). Check out Betterment, Wealthfront or Liftoff. It will cost you a little something, but it will help protect you from yourself.

The third route is to hire an adviser. That is the costliest option, but it gets you a variety of additional financial, estate and tax planning. It also gets you a real person to talk you off of the ledge when necessary.

Anyone of these approaches should get you a more steady set of returns than whatever craziness your brother-in-law was talking about over Thanksgiving.

Last, the wager. I am willing to bet Tony Robbins that my Century portfolio will significantly outperform his all-weather portfolio over the next 20 years. Toward that I end, I propose that each of us puts $100,000 into our own portfolios. Set it with whatever automatic rebalancing you want — then leave it alone. On Jan. 1, 2035, whichever one is worth more is declared the winner. The loser then donates that original $100,000 investment to the charity of the winner’s choice.

Seems like easy money to me.

http://www.washingtonpost.com/business/ ... print.html

[bogos]

A meu ver o objectivo supremo é pura e simplesmente mandar o putin ao tapete, retirando-lhe receitas do petroleo

Para vergar o Putin só mesmo as medidas filhas da Putin...

[Artista Romeno]

A meu ver o objectivo supremo é pura e simplesmente mandar o putin ao tapete, retirando-lhe receitas do petroleo
http://internacional.elpais.com/interna ... 03438.html

[Cem pt]

The tumbling price of oil may have hurt investors who owned commodities, Russian stocks or oil companies, but has been a boon for hedge funds that use computer programs to follow market trends.

These funds, known as managed futures funds or commodity trading advisers, had their best month in more than 12 years in November, with several famous names recording double-digit percentage returns.

The outperformance comes as some relief for the sector after several years of weak returns that had left some funds battling customer redemptions.

The continuing rise in the dollar, particularly against the yen, and a rebound in equity markets also aided the CTA sector last month. The Opec cartel’s November 27 decision not to cut oil production gave an extra push to a price decline in the commodity which had begun to accelerate in the summer.

“If you are a trend follower, you made money on oil, and if you didn’t make money on oil, you weren’t a trend follower, because it has been going down for so long,” said Sol Waksman, founder of research group BarclayHedge, which tracks the CTA sector.

http://www.ft.com/intl/cms/s/0/92133aa4 ... z3KvKCmOCR

Uma verdade de La Palice!

Estar curto nos futuros do Crude Oil tem sido um real bodo aos pobres, eu que o diga, mas até quando e até onde?

Fala-se que o ojetivo inconfessado dos sauditas seja deixar estabilizar o ouro negro na casa dos 60 / 63 Usd/barril, para aí eliminar mais de 90% dos recentes produtores de shale-oil, que têm inundado nestes últimos 3 anos o mercado norte-americano em quase 1/4 das suas prórpias necessidades. Para daí voltar no futuro a influenciar uma relação procura / demanada que tradicionalmente tem estado quase sempre a ser imposta pelos membros da OPEP,diga-se, pela Arábia Saudita itself.

Só que estas estratégias globalizadas comportam sempre grandes riscos devido a fatores exógenos muito incertos e que por vezes saem furados por motivos de acontecimentos, táticas e alianças difíceis de prever à partida.

[LTCM]

The tumbling price of oil may have hurt investors who owned commodities, Russian stocks or oil companies, but has been a boon for hedge funds that use computer programs to follow market trends.

These funds, known as managed futures funds or commodity trading advisers, had their best month in more than 12 years in November, with several famous names recording double-digit percentage returns.

The outperformance comes as some relief for the sector after several years of weak returns that had left some funds battling customer redemptions.

The continuing rise in the dollar, particularly against the yen, and a rebound in equity markets also aided the CTA sector last month. The Opec cartel’s November 27 decision not to cut oil production gave an extra push to a price decline in the commodity which had begun to accelerate in the summer.

“If you are a trend follower, you made money on oil, and if you didn’t make money on oil, you weren’t a trend follower, because it has been going down for so long,” said Sol Waksman, founder of research group BarclayHedge, which tracks the CTA sector.

http://www.ft.com/intl/cms/s/0/92133aa4 ... z3KvKCmOCR

[LTCM]

...Perhaps sooner rather than later, investors must recognize that modern day inflation, while a necessary condition for survival, is not a sufficient condition for increasing wealth at a rate necessary to satisfy future liabilities associated with education, health care, and a
satisfactory retirement. The real economy needs money printing, yes, but money spending more so, and that must come from the fiscal side – from the dreaded government side – where deficits are anathema and balanced budgets are increasingly in vogue. Until then, Grant’s deflation remains a growing possibility – not the kind that creates prosperity but the kind that’s the trouble for prosperity.

-William H. Gross

https://e4e43573badd25bed685-7a10e944c8 ... xp1115.pdf

[LTCM]

LTCM, relativamente ao teu post anterior, consegues dizer-me se os "peers" da Vanguard considerados nesse estudo são todos de gestão passiva? Ou será que "peer" é qualquer fundo de investimento?

all share classes, including ETFs

https://advisors.vanguard.com/VGApp/iip ... AZrcZpTMnJ

[O Alquimista]

[

Richard Feynman (...)
Reading Feynman’s recollections of his career of intellectual discovery, you’ll see how hard he worked at honing his skepticism and l[u]earning to think for himself.[/u] You’ll also be inspired to try emulating him in your own way.

[Metallising_]

LTCM, relativamente ao teu post anterior, consegues dizer-me se os "peers" da Vanguard considerados nesse estudo são todos de gestão passiva? Ou será que "peer" é qualquer fundo de investimento?

[LTCM]

Here’s a list that I would still be comfortable with decades from now. Every book below has stood the test of time and, I’m confident, will remain useful for generations to come. You will quickly note that some aren’t even about investing. But they all will help teach you how to think more clearly, which is the only way to become a wiser and better investor. I’ve listed them alphabetically by author.

Gary Belsky and Thomas Gilovich, Why Smart People Make Big Money Mistakes and How to Correct Them

In clear, simple prose, Belsky and Gilovich explain some of the most common quirks that cause people to make foolish financial decisions. If you read this book, you should be able to recognize most of them in yourself and have a fighting chance of counteracting some of them. Otherwise, you will end up learning about your cognitive shortcomings the hard way: at the Wall Street campus of the School of Hard Knocks.

Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk

The late polymath Peter Bernstein poured a long lifetime of erudition and insight into this intellectual history of risk, luck, probability and the problems of trying to forecast what the future holds. Combining a stupendous depth of research with some of the most elegant prose ever written about finance, Bernstein chronicles the halting human march toward a better understanding of risk—and reminds us that, after centuries of progress, we still have a long way to go.

John C. Bogle, Common Sense on Mutual Funds

The founder of the Vanguard Group and father of the index-fund industry methodically sorts fact from fiction. Following his logical arguments can benefit you even if you never invest in a mutual fund, since Bogle touches on just about every crucial aspect of investing, including taxes, trading costs, diversification, performance measurement and the power of patience.

Elroy Dimson, Paul Marsh and Mike Staunton, Triumph of the Optimists

Neither light reading nor cheap (it’s hard to find online for less than about $75), this book is the most thoughtful and objective analysis of the long-term returns on stocks, bonds, cash and inflation available anywhere, purged of the pom-pom waving and statistical biases that contaminate other books on the subject. The sober conclusion here: Stocks are likely, although not certain, to be the highest-performing asset over the long run. But if you overpay at the top of a bull market, your future returns on stocks will probably be poor.

Richard Feynman, Surely You’re Joking, Mr. Feynman! or What Do You Care What Other People Think?

These captivating oral histories of the great Nobel Prize-winning physicist ostensibly have nothing to do with investing. In my view, however, the three qualities an investor needs above all others are independence, skepticism and emotional self-control. Reading Feynman’s recollections of his career of intellectual discovery, you’ll see how hard he worked at honing his skepticism and learning to think for himself. You’ll also be inspired to try emulating him in your own way.

Benjamin Graham, The Intelligent Investor

Originally published in 1949, called by Warren Buffett “by far the best book on investing ever written,” this handbook covers far more than just how to determine how much a company’s stock is worth. Graham discusses how to allocate your capital across stocks and bonds, how to analyze mutual funds, how to take inflation into account, how to think wisely about risk and, especially, how to understand yourself as an investor. After all, as Graham wrote, “the investor’s chief problem—and even his worst enemy—is likely to be himself.” (Disclosure: I edited the 2003 revised edition and receive a royalty on its sales.) Advanced readers can move on to Benjamin Graham and David Dodd, Security Analysis, the much longer masterpiece upon which The Intelligent Investor is based.

Darrell Huff, How to Lie with Statistics

This puckish riff on how math can be manipulated is only 142 pages; most people could read it on a train ride or two, or in an afternoon at the beach. As light as the book is, however, it is nevertheless profound. In one short take after another, Huff picks apart the ways in which marketers use statistics, charts, graphics and other ways of presenting numbers to baffle and trick the public. The chapter “How to Talk Back to a Statistic” is a brilliant step-by-step guide to figuring out how someone is trying to deceive you with data.

Daniel Kahneman, Thinking, Fast and Slow

Successful investing isn’t about outsmarting the next guy, but rather about minimizing your own stupidity. Psychologist Daniel Kahneman, who shared the Nobel Prize in Economics in 2oo2, probably understands how the human mind works better than anyone else alive. This book can make you think more deeply about how you think than you ever thought possible. As Kahneman would be the first to say, that can’t inoculate you completely against your own flaws. But it can’t hurt, and it might well help. (Disclosure: I helped Kahneman research, write and edit the book, although I don’t earn any royalties from it.)

Charles P. Kindleberger, Manias, Panics, and Crashes

In this classic, first published in 1978, the late financial economist Charles Kindleberger looks back at the South Sea Bubble, Ponzi schemes, banking crises and other mass disturbances of purportedly efficient markets. He explores the common features of market disruptions as they build and burst. If you remember nothing from the book other than Kindleberger’s quip, “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich,” you are ahead of the game.

Roger Lowenstein, Buffett: The Making of an American Capitalist

This book remains the most comprehensive and illuminating study of Warren Buffett’s investing and analytical methods, covering his career in remarkable detail up until the mid-1990s. If you read it in conjunction with Alice Schroeder’s The Snowball, you will have a fuller grasp on what makes the world’s greatest investor tick.

Burton G. Malkiel, A Random Walk Down Wall Street

In this encyclopedic and lively book, Malkiel, a finance professor at Princeton University, bases his judgments on rigorous and objective analysis of long-term data. The first edition, published in 1973, is widely credited with helping foster the adoption of index funds. The latest edition casts a skeptical eye on technical analysis, “smart beta” and other market fashions.

Bertrand Russell, Sceptical Essays or The Scientific Outlook

Russell is Buffett’s favorite philosopher, and these short essay collections show why. Russell wrote beautifully and thought with crystalline clarity. Immersing yourself in his ideas will sharpen your own skepticism. My favorite passage: “When a man tells you that he knows the exact truth about anything, you are safe in inferring that he is an inexact man…. It is an odd fact that subjective certainty is inversely proportional to objective certainty. The less reason a man has to suppose himself in the right, the more vehemently he asserts that there is no doubt whatever that he is exactly right.” Think about that the next time a financial adviser begins a sentence with the words “Studies have proven that….”

Alice Schroeder, The Snowball: Warren Buffett and the Business of Life

With unprecedented access to Buffett, Schroeder crafted a sensitive, personal and insightful profile, focusing even more on him as a person than as an investor—and detailing the remarkable sacrifices he made along the way. If you read it alongside Lowenstein’s Buffett, you will have an even deeper understanding of the master.

Fred Schwed, Where Are the Customers’ Yachts?

First published in 1940, this is the funniest book ever written about investing—and one of the wisest. Schwed, a veteran of Wall Street who survived the Crash of 1929, knew exactly how the markets worked back then. Nothing has changed. Turning to any page at random, you will find gleefully sarcastic observations that ring at least as true today as they did three-quarters of a century ago. My favorite: “At the end of the day [fund managers] take all the money and throw it up in the air. Everything that sticks to the ceiling belongs to the clients.”

“Adam Smith,” The Money Game

In the late 1960s, the stock market was dominated by fast-talking, fast-trading young whizzes. The former money manager George J.W. Goodman, who wrote under the pen name “Adam Smith,” christened them “gunslingers.” In this marvelously entertaining book, Goodman skewers the pretensions, guesswork and sheer hogwash of professional money management. Reading his mockery can help sharpen your own skepticism toward the next great new investing idea—which almost certainly will turn out to be neither great nor new.

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