89 Books Like Wiped Out. How I Lost a Fortune in the Stock Market While the Averages Were Making New Highs

Though not a volume pertaining to “hard science,” Mackay’s book is an early and essential inquiry into “group psychology” long before the phrase was coined. I used this and Kuhn’s books as background when writing World on Fire.

Why do perfectly respectable people act against their own self-interests, often violently, I wondered, when drawn into the seductive folds of a crowd? Mackay wrote his first edition in 1841, just a few decades after the convulsions that swallowed up Priestley and Lavoisier, then updated it in 1852: he chronicled the spreading group madness of such historical phenomena as the South Sea Bubble, “alchymists,” the Crusades, witch manias, and the “popular admiration of great thieves.”

Mackay’s 1852 preface crystallized his theme with the question: “Men, it has been well said, think in herds; it will be seen that they go mad in herds while they only recover their senses slowly and one… show more.

Over 100 years ago, a stockbroker wondered why his clients lost money over a full cycle in the stock market. After all, if stocks were back to where they started, shouldn’t they have broken even? He found that at bottoms, investors were cautious short-term traders, whereas at tops, they were confident long-term owners.

This little booklet is available inexpensively on Amazon.

This book helps us understand why all the sheep around us are illogically but emotionally walking over the cliff into World War III.

We imagine ourselves as individual agents making our own free will choices, but actually, we are walking, talking bundles of feelings who desperately wish to be judged by other sheep as good members of a tribe. We move as a herd, and to war again the crowd is going. We chant, “Follow the Leader.” But we follow the followers.

When I was at Yale, Professor Irving Janis became aware of my interest in mass psychology and asked if I would be interested in seeing a manuscript he was working on. I jumped at the chance and soon was reading Victims of Groupthink.

The book relates histories of bureaucratic decision-making that went wrong. Janis postulated that in a group setting, people defer the hard work of reasoning to others, whom they assume must be working on the problem. As a result, no one works on the problem, and whatever decision emerges derives from the dynamics of group psychology. This book is out of print and hard to find.

In financial markets, knowing what the large trader is doing is vital. In his book, Tom Williams, who was a syndicated trader, taught us the main signs that allow us to identify the participation of the large traders on the chart, which allows us to make judicious analyses about where the price is most likely to go.

I love it because it describes exactly how Wall Street used to work in the bad old days of the early 1900s, before the Great Crash and the Great Depression, before sweeping reforms turned it into what is today. I learned so much from this story about the characters who dominated the Street and set it up for failure.

I see all sorts of parallels with the growth of cryptocurrencies and the scams that surround that industry. I love the way Sinclair describes the Wild West, the ferociously greedy mentality of the players back then, and how he details the machinations of Ponzi schemers and fraudsters before there were any laws barring such scoundrels from doing whatever they pleased with gullible investors’ money.

Just the fact that this is the tenth edition tells me that this is a financial classic. Once your credit is solid and you know how to save, you’ll want to make your money grow. Understanding investment terms will demystify financial planners' and brokers' jargon so you won't be disadvantaged.

I like the fact that this book fits in my pocket and doesn’t weigh 50 pounds! I never have to ask, “What are you talking about?” when I meet an investment professional. It’s an easy-to-use resource.

The global financial crisis that erupted in 2008 was a shocking event. Britain’s cash machines came within a few hours of stopping working, and the global banking system would have collapsed were it not for unprecedented multi-billion-dollar government bail-outs. Gillian Tett, trained as an anthropologist, became a financial journalist but kept on applying her fieldwork skills. Almost alone in her new profession, she grasped the huge risks that were developing underneath the radar and wrote about them in the Financial Times. Her book, Fool’s Gold, was one of the first books written about 2008’s giant crisis and remains one of the best. 

To my mind, Tett is the world’s top financial journalist, and I’ve always learned a great deal from her pioneering in-depth reporting.

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. 

Technical Analysis is traditionally denigrated by the academic community, not without good reasons. But as a matter of fact, traders and practitioners used them (also, not without good reasons) extensively, to the extent that Technical Analysis is often qualified as “self-fulfilling prophecy”.

There is therefore a good reason to be more or less familiar with these techniques, at worst, following the adage “Know your enemy”. The problem, with Technical Analysis, is that, as it is not a true science, it is not easy to find books about it, written in a serious way. This is however the case with this one, covering all the usual technical analysis methods, both the graphic and the numeric ones, in a clear, concise, and exemplified way.