One of the problems with many of the investing guides available is that they end up providing similar advice, packaged in slightly different ways. Joel Tillinghast, however, the manager of the Fidelity Low-Priced Stock Fund, has produced a book about stock selection that is a little different from the rest.
Divided into five sections, covering everything from financial psychology to valuation, it provides all the information that you need to know to gain an investing edge.
As you’d expect from one of the most successful contemporary fund managers, it makes a strong case that a combination of research, intelligent analysis and a recognition of our own behavioural flaws can enable investors to get outsize returns.
While not the final word on investing, it is an intelligent guide to stock selection and investment that deserves a place on every investor’s bookshelf, whether you work in the City or just want to find some shares to put into your Isa.
by Edward Thorp
Oneworld Publications, £25
(Buy at Amazon)
Edward Thorp might not be as big a household name as Warren Buffett or George Soros, but he has arguably been more influential, as he started the quantitative revolution in finance. Originally an academic at MIT focusing on mathematics, he made headlines when he worked out a way to beat the casinos at blackjack by counting cards. This nearly got him killed and started a war between punters and casinos that continues to this day.
He was banned from Las Vegas, so turned his attention to Wall Street, developing a way to detect, and exploit, anomalies in the stockmarket. He made an $800m fortune. Not shy about expressing his opinions and unwilling to suffer fools gladly, his memoir is a colourful read that will appeal to the general reader. He also provides useful detail about his investment strategies.
by Andrew Lo
Princeton University Press, £31.95
(Buy at Amazon)
Behavioural finance, which studies how human psychology moves financial markets, is a big topic at the moment. As a result of its influence, few people now believe that investors are completely rational – but there remains uncertainty about the extent to which stock prices are affected by the “madness of crowds”. Andrew Lo, professor of finance at MIT, attempts to show how elements of both rationality and irrationality can exist in financial markets at the same time as each other.
Lo draws on a great deal of academic research, as well as practical experience running a quantitative hedge fund, to argue that these quirks are due to the way that our brains have evolved over thousands of years. While we need these quirks to function efficiently, most people rely too much on their gut, as opposed to logic, when solving problems. The book is a substantial read yet more accessible, comprehensive and enjoyable than other books on the topic.
Bodley Head, £25
(Buy at Amazon)
Love him or loathe him, Gordon Brown had a massive impact on our lives, first as chancellor for a decade, and then as prime minister during the height of the financial crisis between 2007 and 2010. Apart from an introductory chapter covering his early life, and a few at the end of the book dealing with his life out of office, the emphasis in his autobiography is very firmly on his time in government. One theme that comes through loud and clear is Brown’s dislike of Tony Blair.
Brown clearly regrets his decision to stand aside in the 1994 contest to succeed John Smith as Labour leader, which Brown feels in retrospect he could have won. He then blames Blair for breaking a promise to stand down earlier than he ended up doing. More detail would in many cases have been welcome and fascinating – the decision to ratify the Lisbon Treaty without the promised referendum is almost completely passed over, for example. But all in all, this is a substantial memoir that provides an insight into what Gordon Brown really felt during his time in office.
by Yanis Varoufakis
Bodley Head, £20
(Buy at Amazon)
The Greek crisis has been pushed to the side by the drama over Brexit and the partial recovery in the eurozone. But it’s not been forgotten by the Greeks – unemployment is still around 20% and the country will take a long time to recover its pre-crisis standard of living. The former Greek finance minister Yanis Varoufakis gives his side of the story of the negotiations between his country and its creditors, which saw the Greek people seemingly reject austerity in a vote, only to be overruled by their leadership.
Varoufakis blames the lenders for continuing to make unrealistic demands, even when it was clear that some form of radical debt relief was needed. Varoufakis made a huge blunder in not pressing for Greece to default and leave the euro, but his blow-by-blow account of what took place during his six turbulent months in office is well worth reading.
Books by our contributors
Occasional MoneyWeek contributor Phil Oakley published his guide to profiting from the data in company accounts in How to Pick Quality Shares: A three-step process for selecting profitable stocks (Harriman House, £24.99). The present reviewer wrote Superinvestors: Lessons from the greatest investors in history – from Jesse Livermore to Warren Buffett and beyond (Harriman House, £24.99) and also had a short chapter in Harriman’s New Book of Investing Rules: The Do’s and Don’ts of the World’s Best Investors (Harriman, £19.99). Grab yourself some stocking fillers.