Five of the best books I read in 2018

To close the year, John Stepek picks five of his favourite books on economics, investing and human behaviour.


For the very last Money Morning of 2018, rather than focus on the havoc of the thin trading between Christmas and New Year (we'll revisit that when everyone's back at work later this week), I thought I'd run through my books of the year.

As was the case last year, this is not a review of books that were published this year (although some of them were). Instead, it's a list of five of the best non-fiction books I've read this year.

There are a couple of old classics in there that I've only just got round to reading, but I think it's always worth getting an up-to-date take on yesterday's bestsellers in case, like me, you haven't yet read the entire financial canon.

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Here goes.


Against the GodsThe Remarkable Story of Risk (1998)by Peter L BernsteinPublished by Wiley

Buy it on Amazon.

This is a superb piece of financial history which cuts to the heart of what the entire financial industry is founded on humanity's efforts to control and manage risk in ever more effective ways.

Bernstein covers a broad sweep of history as he charts the evolution of the science of statistics and probability, ranging from Ancient Greece to the gambling dens of Renaissance Italy to the development in London of ways to measure life expectancy more accurately.

Along the way he covers key concepts such as regression to the mean, the uses and abuses of data, and the expansion of derivatives markets. In other hands, that could make for a challenging, if not boring read. Yet the book fairly romps along, thanks to Bernstein's eye for an anecdote and intriguing historical characters. It's deservedly a classic, and one I'd wholeheartedly recommend to anyone who hasn't read it yet.


FactfulnessTen Reasons We're Wrong About the World and why things are better than you think (2018)by Hans RoslingPublished by Sceptre

Buy it on Amazon.

Despite my frequently bearish views on investing, I'm actually an optimist on human beings generally. So I really enjoyed this book, which attempts to clear up some persistent misconceptions about the state of the world. Put simply, the world is healthier, wealthier, and safer than you think.

Statistician Rosling, who died last year, does not attempt to downplay the very real problems the world faces. Rather, he aims to combat misplaced pessimism and knee-jerk thinking in order to ensure that we tackle the right problems in the right ways, and in the right order.

This may not sound like a book with direct relevance to investors, but in fact, in pointing out the cognitive errors we make, Rosling's book makes one of the most important points for any investor to bear in mind we need to look at the facts as they are, not as we expect or wish them to be.


Deep Value InvestingFinding bargain shares with big potential(second edition, 2018)by Jeroen BosPublished by Harriman House

Buy it on Amazon.

You often hear that value investing is dead, particularly these days. Fund manager Jeroen Bos makes it very clear that this is not the case, as he discusses in detail, his methods, victories, and occasional mistakes, in this excellent, inspiring book.

Armed with myriad case studies and genuinely useful, practical information, Bos makes it clear that, for all the talk of efficient markets, there are plenty of opportunities for canny investors to spot situations where the odds are skewed in their favour.

In short, the investment books I enjoy the most are the ones that make me keen to go and put the ideas into practice myself. This is one of those books. It also has a foreword by my colleague Merryn Somerset Webb, which is a nice bonus.


The Theory of Moral Sentiments (1759)by Adam SmithPublished by various

Buy at Amazon.

I read Adam Smith's less well-known masterpiece in preparation for appearing at Merryn's Edinburgh Fringe Festival show in August this year. And if you think I'm not going to claim bragging rights for wading through this tome, then you're a bigger human being than I am.

Like most books written in the 1700s, it's not an easy read. It's not hard to understand, but the writing style is dense Smith seems to think that if a sentence has fewer than four separate clauses, it's a wasted opportunity.

But it's inspiring, and it is also a valuable antidote to the hyper-individualistic caricature often painted of capitalism (particularly since the 1980s). Before he was an economist, Smith was a psychologist. His vision is rooted in a deep understanding that human beings are social animals, and that it is our strong sense of empathy for our fellow beings, that has enabled our species to be as successful as it is.

The first line of the book sums it up. "How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derides nothing from it except the pleasure of seeing it."


It's a reminder of how humane Smith was, and it's entirely compatible with his better-known follow-up.

The Theory of Moral Sentiments makes it clear that Smith wanted a better life for all people in The Wealth of Nations, he looks at how to go about it. And judging by where we are 250 years on, he didn't do a half-bad job.

For context (or if you don't fancy tackling Smith's original work), then you should get hold of Jess Norman's excellent biography, Adam Smith: What he Thought, and Why it Matters.

Three honourable mentions


Barbarians at the Gate (1989)by Bryan Burrough and John HelyarPublished by Harper Collins

Buy it on Amazon.

Barbarians at the Gate is a classic piece of business journalism by two Wall Street Journal writers. It dissects the 1988 leveraged buyout of tobacco group RJR Nabisco by Kohlberg Kravis Roberts & Co. At the time, it was the biggest leveraged buyout of all time, worth $25bn, and caused a great deal of controversy. The book is extremely entertaining it reads like a thriller and while the numbers look a lot smaller from this side of quantitative easing, the egoes are absolutely recognisable. Is it of much practical use to investors today? Probably not. But if you want to read a real-world Bonfire of the Vanities, this is the book for you.


The Choice Factory(2018)by Richard ShottonPublished by Harriman House

Buy it on Amazon.

If you make a living from selling, or you want to understand more about how other people are selling stuff to you, then this is a good, quick-to-read primer on 25 behavioural biases that influence our purchasing decisions, many of which keen readers of behavioural economics will recognise only too well.


KidsMBA (2018)by Professor Mark Watson-GandyPublished by Kids MBA Ltd

Buy it on Amazon.

This is a clever idea. Watson-Gandy, an insolvency barrister, hit upon the idea of creating a short course aimed at teaching business skills to children aged around 12 to 16. This short book aimed at the 11-plus age group is based on the course. Some sections are more successful than others the fact is that writing for kids is hard and the tone of the book sometimes feels at odds with the content. But it's the only book I've ever read that attempts to explain a balance sheet or limited liability to children, and if I'm honest, I reckon a lot of adults could use it as a handy bluffer's guide to setting up on their own too.

PS just before I go, some news I have a book coming out next year myself. It's called The Sceptical Investor, it's about contrarian investing, and it'll be published by Harriman House.

John Stepek

John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.