100 Books Like When Genius Failed

I didn’t read Liar’s Poker until fairly recently.

I started working for Dow Jones Newswires during the dot-com boom and saw how greed could drive markets. I worked through the housing boom in the Aughts and the financial crisis, and then started covering bitcoin around 2013. So by the time I got to Lewis’s book, I had a good understanding of how people can become obsessed with money.

But Lewis is just such a good writer, and has such insights into how markets work, that a book about bond buyers in the 1980s still feels like it’s about people trading so many other things today. 

As everyone knows at this point, anything Michael Lewis writes will be enormous fun to read, while being about something really important—something he’ll make you care about even if you didn’t when you started the book.

In this case, the subject is people who bet on the direction of mortgages (and thus, house prices), and how those who bet on a huge plunge were right. This book has an amazing cast of characters, all richly drawn: some are smart, some are not so smart; some are excellent schmoozers, some can barely tolerate human interaction; some care a lot about money, some care more about being right, especially if everyone else is wrong.

Each book I've recommended cries out to be made into a movie. This one actually was.

A history of hedge funds might seem like a weird recommendation by someone who has written a paean to passive investing.

But my favourite books use a subject to tell a much broader story, and Mallaby’s definitive book on the hedge industry manages to show how even the most illustrious investing careers can fizzle out as market regimes ebb and flow.  

It is a shame the author of this book died in the 9/11 World Trade Center terrorist attack because I always wanted to hear more from him. As with most of the books on this list, for me the details of what he did (did he enter with moving averages? How did he apply stochastics to his entry signals? Etc.) are not nearly as important as his mental state of mind. What did he feel like losing $1 million? How did he recover mentally? For me, being a good trader involves dealing with losses, and this book does a superb job of detailing how one trader did just that.

It wasn’t until reading this book that I realized how important it was to focus on the fast, instinctive part of our mind. Getting that initial judgment and reaction right makes everything else easier. Too often, I found myself wanting to understand things logically and rationally, assuming that my instincts and emotions were simply wrong.

This book helped me understand how useful both systems were and how to leverage them to achieve my goals faster and more effectively.

Ray Dalio is one of the most successful hedge fund managers of all time. You might ask what that has to do with doing good in the world, but I think it’s abundantly clear that many of the same principles and approaches that lead to quantifiable success in the business world can contribute to increased success in efforts to make the world a better place.

I don’t agree with Dalio on everything, but I found his core messages such as focusing on results, being direct and candid with colleagues, weighing the credibility of someone’s opinion based on their history of performance, and continually reassessing and adjusting our approach, very wise and a way of thinking and working that is too often absent in the charity sector.

Bogle’s philosophy is simple yet powerful: focus on the long term, keep costs low, and let compounding do the heavy lifting. I’ve always believed that great investing is about avoiding unnecessary risks and staying disciplined, and Bogle’s book distills that wisdom better than anyone else.

While I take a different approach than pure indexing, his principles of cost efficiency and long-term thinking are universal. Every investor—whether a stock picker or a passive indexer—should read this book at least once.

Of all the books about trading written over the decades, perhaps none is still so beloved, revered, and followed as this 1923 classic by journalist Edwin Lefèvre. Although technically a work of fiction, the book really is about the life and trading style of one of the greatest speculators of all time, Jesse Livermore (told under the guise of “Larry Livingston”).

What makes this book such a treasure is not just its fun prose, and interesting glimpse into what the process of investing in old exchanges and “bucket shops” was over a century ago, when ticker-tape and board boys with chalk and ladders were one’s only information about market prices, but also how the mind of one of the world’s greatest traders worked.

This book offers many gems of knowledge about trading—based upon the general principle that, although methods and technologies change, human nature does not and therefore “there is… show more.

A relatively new arrival on the list, Dreyfuss’s diligently crafted book is the most in-depth look at one of Wall Street’s most spectacular, if lesser-known, collapses in 2006.

The book takes us through the rise of two forces in energy trading embarking on a collision course that would be the ruin of one and an immense windfall of the other. Amaranth hedge fund was an up-and-comer and darling of the hedge fund space. Boasting stellar returns on its several billion in capital, it was able to raise massive sums to hand over to its wunderkind energy trading guru, the Canadian Brian Hunter.

Hunter had set out to dethrone John Arnold at Centaurus (the former Enron whiz kid and youngest member of the Forbes 400) as the biggest energy derivatives trader on the Street. Hunter’s ego soon got him into trouble when a series of disastrous and massively overleveraged bets collapsed,… show more.

A classic account of an extraordinary 18th-century British financial and political scandal. The South Sea Bubble centred on the joint-stock South Sea Company, which was founded in 1711. The South Sea Bubble was an ambitious scheme to simultaneously pay off the British government's enormous debts while simultaneously getting rich in London's newly created stock market. The company was given a monopoly of trade with South America but had little prospect of success. The Bubble was an early Ponzi scheme that promised vast returns to early and well-connected investors.

Its collapse in 1720 ruined thousands of shareholders from all walks of life, many of whom had bought their shares on credit, and caused huge problems to banks and goldsmiths unable to collect the loans they had made to speculators to purchase stock. A public uproar ensued and the subsequent investigation revealed widespread fraud by insiders and corruption in the Cabinet.