The Money Game
by George J. W. Goodman, published 1976
(a.k.a. “Adam Smith”, a pseudo-name which he adopted while writing about the stock market)
As Paul Samuelson, a Nobel Prize winner in economics put it: “This is a modern classic.” I don’t disagree – and the book is entertaining enough - much more so than the average book about the stock market. First published in 1967, this book is, again, timeless. Like the author says, this book is about “image and reality and identity and anxiety and money.” Then he goes on to say: “The money which can preoccupy so much of our consciousness is an abstraction and a symbol. The game we create with it is an irrational one, and we play it better when we realize that, even as we try to bring rationality to it.” I agree – the stock market is a game – a game that is played by millions of people around the world everyday – a game which could pay off (in spades) if you can play it well. In this book, “Adam Smith” debunks some of the myths that people have about Wall Street, and reveals Wall Street for what it is – remember, it is only a game.
The book also reinforces the fact that the more things change, the more they stay the same – especially in the stock market. Take this quote from “Mister Johnson” (father of Ned Johnson, the current chairman of Fidelity, and a great idolizer of Jesse Livermore): “The market … is like a beautiful woman – endlessly fascinating, endlessly complex, always changing, always mystifying. I have been absorbed and immersed since 1924 and I know this is no science. It is an art. Now we have computers and all sorts of statistics, but the market is still the same and understanding the market is still no easier. It is personal intuition, sensing patterns of behavior. There is always something unknown, undiscerned.”
How I Made $2 Million in the Stock Market
by Nicolas Darvas, published 1986
Chronicles the successes and blunders (lessons) of the author – a nightclub dancer named Nicolas Darvas – in the U.S. stock market from late 1952 to early 1959. Through his exhaustive self-education and analyses, Darvas became a pioneer in point & figure charting, which is still used widely to this day. As the title of the book implies, Darvas discusses the perfection of his technical indicator on his way to making over $2 million in the stock market – most of it coming in the bull swing of 1957 to 1959. A very simple (and entertaining) introduction to the world of technical analysis – while constantly reminding the reader of the perils of the stock market. Following is an excerpt which illustrated that:
“In a few days of trading [at the office of his broker in uptown New York – as opposed to making his trades over the phone and halfway around the world], I threw overboard everything I had learned over the past six years. I did everything I had trained myself not to do. I talked to brokers. I listened to rumors. I was never off the ticker.”
The Millionaire Next Door
by Thomas Stanley and William Danko, published 1996
Okay, so this is not a book about investing or the stock market, per se. But I believe this is an important book to read – and I think it is most probably relevant for everyone that is taking the time out to read the things I have written on this website. In this book, the two authors debunk the popular myths of the typical American millionaire and tell us the means of how they get there – such as living below their means, their mindsets, diligent savings, and plain, old hard work – things that are lacking in modern American society.
I personally believe this is a must-read for most Americans, especially given the fact that we are in such a consumption-based society today (relative to other cultures such as the Asian culture). It also conveys the message that most Americans are capable of becoming millionaires, if they choose to work hard and save diligently. This is reinforced by the fact that 80% of today’s millionaires are first-generation rich (that is, they did not depend on inheritances) and while 80% of these millionaires have at least one college degree, as a group, they are not overly academically intelligent (the average SAT score of these millionaires is about 1150).