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Ask HN: What are the must-read books about economics/finance?
446 points by curiousgal on Sept 23, 2016 | hide | past | favorite | 269 comments
Hey HN,

I am pursuing an engineering degree in Statistics, I hope to get into finance so I am interested in knowing what books you consider a must-read for someone who doesn't know almost anything about economics (from a philosophical point of view; positive vs normative economics) and finance in general to help them grow intellectually.

Thanks!




Please do not look upon popular economics best sellers as a good way to get a rounded economics education. While many have value in critical insight and entertainment, they often offer only a narrow perspective on economics. Novice economists typically lack the ability to critically appraise them without a wider economic framework to work from.

An academic reading list (i.e. university course texts) will provide you a good theoretical foundation as to how economists interpret and model real economic issues. It's important to grasp the plethora of important economic concepts like diminishing returns, comparative advantage and concepts of market efficiency (among many others things) and how they apply within micro or macro economic issues.

With some foundational knowledge in place, a good economist then goes on to relax the underlying assumptions and look for analogues in the real world. This is where the popular reading list come in, often they take a deep dive in specific areas i.e. where traditional economic assumptions break down.

In short, the academic reading list gives you a framework to understand economics. The best seller list tempers that framework with real world exceptions, paradoxes and open questions.

It's a bit disappointing to see a real academic reading list so far down this comment page (I strongly recommend looking at oli5679 suggestions). I doubt HNers would suggest reading up on javascript as a good foundation for a computer science education. Yes, you can become a well rounded computer scientist by starting on javascript. But it's more important to have a grasp on core computer science ideas like algorithm design & analysis and automata.


Academic economics textbooks need to be read with a skeptical eye as they tend to be overly simplified. Think of it as a useful framework for future work and a shared language, not an explanation of what actually happens.

Much like how physics textbooks love frictionless surfaces.


Would an economist go through an entire career and never read, say, John Locke? I don't know the answer. I'm genuinely curious.


Economics rather strongly deprecates both history and philosophy, often offering only a brief overview of the former and a highly digested form of the latter.

One windfall of the World Wide Web are the fundamental texts now online. Many legally, through the Internet Archive, or various libraries -- the Online Library of Liberty and Mises.org, as much as I disagree with their ideological bases, have quite good collections. More in the form of illicit copies. LibGen, BookXX.org, and Sci-Hub offer access to many books and articles. Wikipedia is strong in economics, in particular offering biographies of many particular authors and theorists.

Worldcat (https://www.worldcat.org/) will help you track down published books at libraries worldwide.

Having studied economics at Uni, I'm making up for many deficiencies of my curriculum.


Quite possibly, just as one can be a productive physicist without reading, say, Einstein, in the original.


I wasn't asking as a productivity question it was more wouldn't they want to read the history of thought leading to what they're doing just out of sheer curiosity?


Definitely, and I'm sure many do. And it is often very surprising how far ahead the older authors had thought. But while such reading is fun as a leisure activity, doing it seriously requires full-time dedication as a historian of thought because often even if the words are intelligible the concepts have drifted so much that they can be understood only by studying not only the famous works but their entire intellectual milieu. For example, to someone trained in contemporary economics even Keynes' 'General Theory' written in 1936 is very hard to make detailed sense of. So as a practical matter it comes down to a choice of studying either economics or the history of economics.


BTW, i get what you mean on detailed sense. I would imagine most economists know Keynes well enough yet have never cracked open General Theory. I'm an interested layman and god knows I wouldn't try to read it any more than I'd read Hegel right now if i wanted a deeper understanding of Marx. Hey, there're only so many hours in a day.


Yes, I agree a philosophy scholar would do that but what about economists? And is it leisure for economists to read even a few of the classics or is it work related? It could be both I suppose or maybe anything's leisure that doesn't move the ball forward on the current project they're working on. Fair enough if that's the case.

BTW, is a quant a practitioner of applied economics? I do know the trading related work they do at least the popular perception of of the work they do.


Adam Smith is still very relevant.


So classical liberal is where it's at foundation wise for the field of economics? In case it's not obvious I have limited knowledge of Econ. My formal training in economics consists of Intro to Micro, Intro to Macro, and a course in Political Economy.


For what it's worth, I really enjoyed Naked Economics by Charles Wheelan, even though it may be considered a popular economics best seller. I though it offered a great introduction to a field I knew very little about.


One approach is to go to the MIT OpenCourseWare website, look for the economics department, and look at their reading lists.

Of course, that's going to be mostly academic reading (textbooks, etc.). But if you want to learn the basics, it's probably safer to start there than the pop econ books (and I would dispense with most heterodox reading before you're able to assess them within a larger framework).

Two good books that haven't been mentioned here:

Economic Theory in Retrospect, by Mark Blaug. Very useful to get a good historical grounding in the main ideas that compose today's orthodox economics.

The Applied Theory of Pirce, by McCloskey. Your usual microeconomics textbook, but far more thorough, insisting a lot on grasping the intuition behind the concepts. Available for free from the author's website here: http://www.deirdremccloskey.com/docs/price.pdf


Definitely agree, esp with the textbooks part - a macro 101 and micro 101 book will do you well.


I am very glad this is the top voted answer. Forget investing books and blogs and whatever. All worthless junk. Read the accounting textbooks and figure out valuations. Then you can figure out trading with your stats skills.

A couple of good youtube channels though! Martin Shkreli's channel and Aswath Damodaran.

Then some books might be beneficial to you but you yourself can be the judge of that. Everybody thinks they get finance and economics. They don't.


>All worthless junk

This is a ridiculous statement, especially when combined with the implication that some amateur will be able to "trade", successfully, with a bit of statistical knowledge. The fundamentals of economics and finance are stored in books. If you're starting out, you have a long way to go before you can no longer learn from them.

I do agree with your recommendations for sites. But you're going to get far more out of Prof. Damodaran's "worthless junk" textbook than you will his blog.


There's quite the difference between a textbook and an investing book. If you read my comment again, you will notice that I recommend getting textbooks.

Damodaran's Corporate Finance is a textbook. Taleb's books and any other "philosophy of investing" are junk. Some philosophy of investing books provide some value but only after the reader already has quite the knowledge and experience.

tl;dr - Read the curriculum, not amazon's top section.


I just checked Shkreli's channel and it is like a breath of fresh air (never imagined that I'd say something like that about Shkreli). The way he starts to talk about the finance and investing as a career choice - a skill that you sell to other people, instead of trying to money by investing your own money, is surprisingly rare angle in any popular take on investing: https://www.youtube.com/watch?v=ARrNYyJEnFI


Wait, Martin Shkreli's channel? The guy who's been indicted on securities fraud?


He's really, really good, and he is millennial enough that he happily spends hours live streaming the minutia of how he assembles spreadsheets to evaluate a company.

He often does a phone in where you can call him and discuss basically anything you like. There are hours of him patiently and openly discussing drug pricing, racism and economics with random people on YouTube.


Oh, that same guy that did this http://www.nytimes.com/2015/09/21/business/a-huge-overnight-...


But I must say, this was amusing https://www.youtube.com/watch?v=7Z6TecVZAhk :D


Was it? Just seemed like a bunch of jerks gratingly talking over each other... Did I not watch long enough?


Same guy.


Top of my list would be "the ascent of money", by Harvard Prof Niall Ferguson. It explains what money and financial instruments are, by telling the stories of their history. Hes a great story teller, and for each aspect of finance that he explains, there's a story of a famous piece of history which it caused. For example, the application of oriental maths to finance caused a huge boom for Italian bankers, especially including one family, the Medici. That financial boom was responsible for the artistic boom we call Renaissance art. Or how the Dutch republic triumphed over the enormous Hapsburg empire, because the world's largest silver mine couldn't compete with the world's first stock market.

Fantastic read, and a great way to gain financial literacy.


I only watched the tv series but it's basically "finance according to neoclassical economics" which is about as relevant to the real world as Alice in Wonderland.


There is also a TV series based on this book, I think, which is fairly good.


I guess this one: http://www.imdb.com/title/tt1358383/

Seems to be available in full and bad quality on Youtube.


(Economics major and longtime econ book/paper reader here) I very much enjoyed The Cartoon Introduction to Economics as an introduction to microeconomic concepts: http://standupeconomist.com/cartoon-intro-microeconomics/

It's extremely readable and funny and covers most of the situations in real life where you can apply economic concepts to understand why something is the way it is.

Understanding why countries and economies grow (and why some grow faster than others!) doesn't always fall under the "economics" umbrella but is really useful for informing policy (and a useful reminder these days, when both US presidential candidates rail against trade agreements). "From Poverty to Prosperity" lays out a very readable and convincing argument for how countries have grown and become rich. https://www.amazon.com/Poverty-Prosperity-Intangible-Liabili...

For finance I very much enjoyed The Intelligent Investor, which also (apparently) inspired Warren Buffett's investing philosophy. https://www.amazon.com/Intelligent-Investor-Definitive-Inves...


This is a common misunderstanding. Buffett Partnership Ltd., Buffett's initial hedge fund, was very much was guided by the cigar butt style investment principles of Graham.

When Buffett bought Berkshire Hathaway a few years after closing the partnership, his investment philosophy had changed. Your best bet to understand his investing is to simply read his letters.

He may come across as a bit folksy or country bumpkin, but he's fairly clear in his methodology.

Here are some links you may find helpful: http://www.rbcpa.com/WEB_letters/WEB_Letters_pre_berkshire.h...

http://www.berkshirehathaway.com/letters/letters.html

Enjoy.


I mean, much of Graham's "investment philosophy" has been thoroughly invalidated by the Modigliani-Miller theorem published in the 1960s. But like Deepak Chopra, he's still around!


There is a reasonable case that 'value' (low beta) stocks exhibit excess returns in equity markets. See Fama & French

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.459...

M&M says there shouldn't be 1st order implications for a firm's dividend payout ratio on its stock price (there are potential effects caused by taxes, agency and signalling that they assume away for simplicity).

However, other popular value metrics such as low price to earnings, market cap to book value, historic beta or past/future earnings growth are not affected by M&M. The efficient market hypothesis is an assumption rather than an implication of the theorem and there is a good empirical case for the combination of value investing and leverage.


Thank you, now this thread is going somewhere. Popcorn time


How well do the assumptions behindd modigliani-miller match what happens in the real world?

I think 'invalidated' is a little strong. Do be aware that within economic models, the map is not the territory.


Well, it assumes no taxes (so it would only apply to Apple et al.), and also symmetric information and an efficient market (which are both debatable).


The assumptions are extremely strong, and the theory is not robust to changes in those assumptions. Agree?


I'm not sure how a theorem is even supposed to invalidate a philosophy. Invalidation is normally done by experimental evidence not making up a theorem.


Aside from that modigliani-miller's theorem "that in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed." has basically nothing to do with Graham's idea that in the real world with bankruptcy costs, agency costs, asymmetric information, and an inefficient market you should seek a margin of safety in investment. Graham's ideas have much empirical evidence and are completely unlike Chopras nonsense. See The Superinvestors of Graham-and-Doddsville for details, written by Warren Buffett who has quite a good record in this stuff https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-a...

http://www8.gsb.columbia.edu/rtfiles/cbs/hermes/Buffett1984....


What's your take on it?


Indeed, Buffet worked at Graham's (the author of The Intelligent Investor) partnership.


The following list will introduce you to Western Economic Philosophy as it relates to modern history specifically. This list is weighted heavily toward neo-classical economics and does not get into computational model based economics - specifically microeconomics, which comprises the bulk of economics education today:

Schumpeter - History of economic analysis

Adam Smith - Theory of Moral Sentiments

Kaynes - The General Theory of Employment, Interest and Money

Marx - Capital

Benjamin Graham - The Intelligent Investor

Galbraith - The Affluent Society

Galbraith - The Great Crash

Milton Friedman - Capitalism and Freedom

Nassim Taleb - Black Swan

Ron Suskind - Confidence Men

Scott Patterson - Dark Pools

If you want to delve into heterodox economics afterward, start with the following:

Hayek - Individualism and Economic Order

Mises - Human Action

Rothbard - Man, Economy, State


All of those are very dated and you won't learn much about modern economic thought from them. Many of those people (Keynes, Marx, Graham, etc...) are like reading Freud. Very little of what Freud wrote has made into modern psychological though. It is more of his methodical approach that brought psychology into the modern age. The same can be said of many on that list. They brought a rigor of thought to economics that it might have been lacking; it isn't really that their ideas have passed the test of time. The 1970's for example almost caused the destruction of Keynesian thought with its basically impossible high inflation and high unemployment until the neo-Keynsians patched it up enough to limp forward.


I think it's safe to say that Keynes works are the foundation of modern macroeconomics. His economic cycles are doctrine in economic planning. Moreover he has been invoked increasingly post 2008 recession.


I didn't say that he wasn't important. I definitely think he's foundational especially to center-left political economics. I just said that nobody is a Keynesian in the original sense anymore. You have to be a neo-Keynesian now.

I think it is safe to say that most of his theories are dead as a doornail. Keynesian thought always had this problem melding macro and microeconomics (similar to physicists have with relativity and quantum mechanics -- the physics of the very large and the very small -- not fitting together).

The stagflation of the 1970s seriously attacked the very foundation of Keynes ideas. It was literally impossible for it to happen. The wage-price spiral was blown to pieces. Even today's world is completely unexplainable in original Keynesian terms, especially when looking at a global scale.


>The stagflation of the 1970s seriously attacked the very foundation of Keynes ideas. It was literally impossible for it to happen

How so? Most of his ideas seem pretty valid. The 70s stagflation was set off by the oil shock when oil prices rapidly increased four fold. I'm not sure how his failure to analyse that happening after his death invalidates that his ideas worked ok under normal circumstances?


Perhaps start here: https://en.wikipedia.org/wiki/Phillips_curve

And the oil shock was sort of a one time thing, and can't be viewed in isolation of Nixon having to close the gold window, more specifically how the US took advantage of the previous fixing of the US dollar price of gold before that fell apart (https://en.wikipedia.org/wiki/1973_oil_crisis#End_of_the_Bre...).

In other words, these were discontinuous and unique things, or turn it around, was it an oil shock, or a dollar devaluation shock? Nothing obliged OPEC to accept less and less value in the dollars they price their oil in.

You could go further and say that the relaxation of these Federal government interventions, including the price and distribution controls on oil and distillates in the '70s, it was pretty much a command economy until Reagan dismantled it, has better allowed the market to function.

(Not that the government has stopped manipulating the money supply, interest rates, etc. ... although that got rather out of control by the end of the '70s as well, with double digit annual inflation and > 20% prime rates to fix that.)


I still have a job seeing what Phillips proposing a relationship between inflation and unemployment in 1958 has to do with Keynes theories of insufficient aggregate demand causing deflation in the 1930s. Keynes's ideas seem pretty good and still relevant, and Phillips' ideas a bit dubious and largely unrelated.

I get the impression much criticism of Keynes is better directed at his followers who called themselves Keynesians and came up with various nonsense after his death than at Keynes himself.


Well, it's just a start, the most (in)famous policy adopted by people who called themselves Keynesian, even got it written into law if I remember correctly, that failed so badly no one can deny the failure. And let's be careful with No True Keynesian arguments....

Plus, unless I'm grossly misinformed, Keynes theories went a lot further than that claimed insight about aggregate demand and deflation, but I haven't studied him deeply, since when I last looked in the '80s it seemed to be garbage, and nothing I've heard since then changes the opinion I formed.


Is the fact that people still vigorously debate whether Keynes is dead reason enough to read him or at least have the basics down?


Keynesianism is in the midst of its death throes.


All of those are very dated

I think he knows that, since he added a disclaimer right at the top saying these are all heavily weighted towards neoclassical econ (i.e. "modern books" ≠ new books). Which is another way of reminding the reader that they are generally older books.


I respectfully disagree - would you be able to provide some more contemporary options?


This reading list probably isn't a good starting point.

But it's a good thing to do right after the starting point. Understanding the major influential figures, what their ideas were, and how those ideas were justified is important context. Each of the people on this list continue to reverberate through political economics in the most significant ways imaginable.

So it's up to OP if s/he wants to take the "classical works" route. But I'll just mention that if s/he does, this is a good list. Both in terms of the people selected and the books selected for each person.


This time it's different?

Irrational Exuberance by Robert Shiller could be on the list above.


Excellent list. This is basically an undergraduate Econ degree here.

I would also add Veblin to this list of authors.

Also, one of my favorite overviews of economists is The Worldy Philosophers.


Thorstein Veblen? Also, may be off center or not, but, Peter Bernstein "Against the Gods".


Not OP, but yes, Thorstein Veblen.

I'm not familiar with Bernstein.


Your list is very similar to my own. I think a philosophical approach will set the proper state of mind for thinking about the specifics of the more modern theories.


That's a pretty good list, though I have to take exception to your suggestions for heterodox economics all coming from the Hayek-Mises-Rothbard Austrian/Libertarian tradition. There's considerably more to heterodox economics than Libertarian school.

"Heterodox economics" is an umbrella term used to cover various approaches, schools, or traditions. These include socialist, Marxian, institutional, evolutionary, Georgist, Austrian, feminist,[3] social, post-Keynesian (not to be confused with New Keynesian),[2] and ecological economics among others.[4]

https://en.m.wikipedia.org/wiki/Heterodox_economics

Steve Keen offers a fairly compelling criticism in Debunking Economics.

Ha-Joon Chang, of LSE, has several books providing criticisms and overviews of economics, his Economics: the user's guide is a light and readable overview. http://www.worldcat.org/title/economics-the-users-guide/oclc...

(It's worth noting that Ha-Joon Chang tends toward a Marxian view and in particular is a contrarian in trade and development concepts. I happen to think his views have merits.)

There are several books which cover the history of economic thought, from more and less inclusive perspectives. Roger Backhouse's The Ordinary Business of Life is extraordinarily dry, but reasonably encompasses the mainstream. http://www.worldcat.org/title/ordinary-business-of-life-a-hi...

Heilbroner's The Worldly Philosophers is a classic: http://www.worldcat.org/title/worldly-philosophers-the-lives...

For heterodoxy, I'd add to the Austrian side:

Herman Daly on ecological economics. http://www.worldcat.org/title/ecological-economics-principle... ul it in f l. Erick D. Beinhocker's The Origin of Wealth: Evolution, complexity, and the radical remaking of economics strikes me from reviews and a brief overview as one of the more interesting recent books on economics. I've yet to read it in full. http://www.worldcat.org/title/origin-of-wealth-evolution-com...

There's slew of other books, many quite bad, on the subject. I'm largely convinced economics is vastly overdue for a robust remaking. I'm not convinced that will happen.

(It was my degree subject at uni. I've been trying to comprehend it and rationalise its vast internal contradictions and inconsistencies since.)


How heterodox are Hayek and Mises compared to Milton Friedman. I'm not trolling here. I'm actually asking. I thought that they were essentially proponents of similar theories? I'm the definition of a layman though, so I could easily have that all wrong.


I haven't read enough of Friedman to argue details, but I do know they were from different economic schools. Mises and Hayek were of the Austrian school. Friedman was in the Chicago school. As far as heterodox, Friedman seems to have enjoyed more political and social influence than Hayek and Mises ever did.


I thought Hayek was fairly influential in his time? He won a Nobel prize and had a significant impact on European politics.

https://en.wikipedia.org/wiki/Friedrich_Hayek


Von Mises in particular is largely regarded as a crank, and his followers worse, by the econ wonks I count as friends. I have heard it described by an econ-wonk friend along the lines of, "I don't agree with Friedman's conclusions but I recognize the universe in which he lives. If Von Mises told me the sky was blue, I would have no choice but to check."


The similarity between Galbraiths 1929 and what happened in 2008 blew me away.


That is an excellent and highly readable book. Most of Galbriath's are.


Isn't Nassim Taleb opposed to neo-classical economics?


Great suggestions!


I work in a quant hedge fund - I'll give you my take. The first thing I would point out is that there is a massive difference between academic theory and practice. I don't want to turn this into an anti-academic rant, but I do want to emphasise that we value very different things. For this reason alone, most of what you read in most textbooks won't do you much good.

Personally I wouldn't place too much emphasis on outside knowledge. Basic knowledge of economics wouldn't hurt, but don't go nuts. Khan academy will give you more than enough theory. You don't want to spend all your energy developing a skill that a trained economist applicant will crush you at. Neither should you focus too much on e.g. stochastic analysis. In the real world, no-one cares whether a stochastic process is previsible or progressively measurable. But knowing how to derive Black-Scholes couldn't hurt.

So far I've msotly talked about what you shouldn't read. I'll try to talk a little bit about what you should. Read the financial press. The FT or the wall street journal, depending on where you're based. Read finance blogs. Frances coppola is good. So is the Bank of England's blog. Check out Alphaville at the FT too. You'll be expected to know what's going on in the world right now. Could you explain what QE is? For a finance job, that's more important than knowing what the IS/LM model says. What's been going on in China recently? What do you think about their currency outflows?

Know how to code. At least one of Python, Matlab or R for the buy side, one of Java or C++ for the sell side.

Most importantly, though, you should be able to demonstrate enthusiasm. Any given junior quant role will get hundreds of applications, and some demonstrable interest will put you head and shoulders above the pack. A link to some decent analysis on github would do (none of the hundred or so applicants to the last position we advertised did that). Play with some financial data. Quantopian is apparently a good resource.

I've talked about how to prepare for a general finance job. The specific reading you should do will depend on exactly what job you want. Do you want to be a quant? If so, buy side or sell side? Read up on the difference. Go check out efinancialcareers, have a look at the skills they're asking for within each sector, and take it from there.


I'd recommend textbooks or corsera rather than pop econ books.

Mostly Harmless Econometrics - Angrist and Krueger

Principles of microeconomics - Mankiw (beginner)

Intermediate microeconomics - Varian (intermediate)

You also want to cover finance and time series - I don't know what would be good there.


For someone coming from a totally different field, I'd actually recommend the opposite approach: start with pop-econ to actually develop an interest, then move on to more serious academic works. Starting from zero, a textbook risks being far too boring to stick with. Best to generate an interest first, then dive deeper once you've got a context and hunger to know more.


Yeah, I think the best econ and finance journalists are more captivating than a textbook. I'd recommend Matt Levine, Tim Hartford, anything in the Economist magazine Paul Krugman's early essays (before he became a political columnist) as well as the Freakonomics and econtalk podcasts as a general introduction.


I second the suggestion of mankiw's book, covers a lot, it's well written and mixes both interesting anecdotes and actual "theory".


How would compare Mankiw's Principles of Micro / Macro separately vs. his single, Principles of Economics text? Some background: I'm a graduate student with little time, but this election cycle has motivated me to learn some basic economics / history in my spare time.


They are similar, with a lot of overlapping material. I would recommend focusing on micro to start with because to me its basic ideas, models and techniques have the most value for life/business.


Mankiw's text is decent, but heavily influenced by his politics.

Regardless of who you read, it's good to be skeptical and consider their personal agenda.


As a start, take some economics courses, intro Micro and Macro. (Check https://www.coursetalk.com/ https://www.class-central.com/ )

Actually the first book I'd recommend would be The Worldly Philosophers, a readable history of economics

https://www.amazon.com/Worldly-Philosophers-Economic-Thinker...

A couple of more right-leaning books - Hayek, The Road to Serfdom https://www.amazon.com/Road-Serfdom-Fiftieth-Anniversary/dp/...

Friedman, Capitalism and Freedom https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton...

Less right-leaning

The Marx-Engels Reader https://www.amazon.com/Marx-Engels-Reader-Second-Karl-Marx/d...


Good recommendations.

I would add that once you've understood the basics, subscribe to the economist magazine and try your best to understand the articles. Look up what you don't know until you feel comfortable reading and discussing the issues.

Whatever you do, avoid zero hedge. While there can be some intelligent and cogent analysis on there, it's mostly doom and gloom.


FWIW this would be my list of books every investor should read, which is different from what you should read to work in finance but anyway ...

Capital Ideas: The Improbable Origins of Modern Wall Street by Peter L. Bernstein. A lively introduction to the theoretical foundations of modern finance and their history, Markowitz, Sharpe, etc. https://www.amazon.com/Capital-Ideas-Improbable-Origins-Mode...

The Essays of Warren Buffett : Lessons for Corporate America by Warren E. Buffett. In his own words...you can also find many if not all online, on Berkshire website https://www.amazon.com/The-Essays-Warren-Buffett-Corporate/d...

Buffett: The Making of an American Capitalist by Roger Lowenstein. Insightful biography...The Snowball was written more recently with Buffett's approval, but would read this one first https://www.amazon.com/Buffett-American-Capitalist-Roger-Low...

Common Stocks and Uncommon Profits and Other Writings by Philip A. Fisher. It's not widely appreciated, but Warren Buffett's method is 50% Ben Graham and 50% Phil Fisher. If you can find value stocks that are also great franchises, and hold onto them for dear life, you will be rich... if you also bet big, operate companies well, don't screw up, live in a bull market era and survive long enough, maybe as rich as Buffett. https://www.amazon.com/Common-Stocks-Uncommon-Profits-Writin...

The Intelligent Investor: A Book of Practical Counsel by Benjamin Graham. Classic introduction to value investing https://www.amazon.com/The-Intelligent-Investor-Practical-Co...

Unconventional Success: A Fundamental Approach to Personal Investment by David F. Swensen. Asset allocation, and the perils of mutual funds...leading endowment investor of our time (Yale) gives his advice for individuals https://www.amazon.com/Unconventional-Success-Fundamental-Ap...

The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks. Lessons in investing... at any time, any one of them can be 'the most important thing' and so they all are jointly and severally 'the most important thing'. https://www.amazon.com/The-Most-Important-Thing-Thoughtful/d...

The Investor's Anthology: Original Ideas from the Industry's Greatest Minds (Vols 1 and 2) by Charles D. Ellis (Editor), James R. Vertin (Editor). Essays from a broad selection of writers https://www.amazon.com/The-Investors-Anthology-Industrys-Inv... https://www.amazon.com/Classics-II-Another-Investors-Antholo...

The Money Masters; The New Money Masters; Money Masters of Our Time, by John Train. Methodologies of all-time great money managers, in their own words https://www.amazon.com/The-Money-Masters-John-Train/dp/08873... https://www.amazon.com/Money-Masters-Time-John-Train/dp/0887... https://www.amazon.com/New-Money-Masters-John-Train/dp/08873...

Market Wizards; The New Market Wizards; Hedge Fund Market Wizards, by Jack D. Schwager. Interviews of successful traders https://www.amazon.com/Market-Wizards-Jack-D-Schwager/dp/088... https://www.amazon.com/The-New-Market-Wizards-Conversations/... https://www.amazon.com/Hedge-Fund-Market-Wizards-Winning/dp/...

Manias, Panics, and Crashes: A History of Financial Crises by Charles P. Kindleberger. Why good markets go bad https://www.amazon.com/Manias-Panics-Crashes-Financial-Inves...

Reminiscences of a Stock Operator by Edwin Lefevre. Fictionalized biography of a famed early-20th century trader https://www.amazon.com/Reminiscences-Stock-Operator-Edwin-Le...

A Random Walk Down Wall Street: The Best and Latest Investment Advice Money Can Buy by Burton G. Malkiel. Reality check from an efficient market theorist https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/03933...

This is a rollicking good read on links between Shannon, Kelly, Thorpe, who wrote 'Beat the Dealer' and was maybe the first hedge fund legend https://www.amazon.com/Fortunes-Formula-Scientific-Betting-C...

And maybe something on technical analysis, but not really sure what to recommend...a lot of people view it kind as mumbo jumbo, but I kind of think fundamentals are like playing your poker hand, technicals are like playing the opponents' tells...the chart gives you an idea of who owns it at what price, what levels might make people rethink positions. Maybe this one as an easy intro, dumb title notwithstanding https://www.amazon.com/Stan-Weinsteins-Secrets-Profiting-Mar...


I read Dubner and Levitt's Freakonomics in 2005. It's lame to say that a pop-science book changed my life, but since then I've thought about economics every day.

I would recommend some pop-econ to become familiar with a stylized version of how economists think. I'd recommend Tim Harford's The Undercover Economist Strikes Back and The Logic of Life and Robert Frank's The Economic Naturalist. (Dubner's and Levitt's books are entertaining, but I wouldn't try to learn much about economics from them)

The world of professional economists has been fascinating to watch over the last 10 years, as academic economist blogs are very active and very high quality. Watching debates and commentary about the global financial crises unfold on the blogs in real time was really something. Economist bloggers have a real influence on policy now, and whole schools of thought have coalesced out of blogs (e.g. market monetarism).

There are some excellent economics podcasts out there now. EconTalk (with Russ Roberts) has been going since 2006. I'd recommend listening to some of his interviews with academic economists. Macro Musings (with David Beckworth) just started this year, and the policy discussions have been quite informative.

The Marginal Revolution University website has an fantastic series of videos on economics topics. The "Development Economics" course I would recommend strongly - I wish I'd been taught the Solow Model in school.

Economics is a very interesting discipline to study from the outside. Learning a bit about it puts policy debates in a new light - I've become much more liberal on some topics and much less confident on a lot of topics. I find that reporting about economics issues is generally pretty terrible, so beware that if you get into economics you'll want to stop reading a lot of news analysis.


I second EconTalk. High quality, accessible, and interesting.

I didn't think Freakonomics was great, but some people love it, and as long as it gets people to enjoy economics, I'm happy.

My first foray into an economic way of thinking was just reading The Economist every week — it's news, but seen through the lens of economics and business. Now I'm a doctoral student in economics at MIT.


Third on EconTalk. I've listened to it since 2010. Really interesting, really intelligent conversations.

http://www.econtalk.org/


>I read Dubner and Levitt's Freakonomics in 2005. It's lame to say that a pop-science book changed my life, but since then I've thought about economics every day.

Don't believe everything you read in Freakonomics. Unfortunately it's written to be entertaining (which it is) but isn't always the most rigorous representation of the truth (which is disappointing)

http://www.americanscientist.org/issues/pub/freakonomics-wha...


This is why I said "Dubner's and Levitt's books are entertaining, but I wouldn't try to learn much about economics from them."


Can you give me some examples of the academic econ blogs? I'm looking to get into it


See Mark Thoma's "Economist's View" for a broad sampling.

I personally enjoy Marginal Revolution (Alex Tabarrok and Tyler Cowen), Confessions of a Supply-Side Liberal (Miles Kimball), and The Money Illusion (Scott Sumner).


Reddit's /r/economics has a fair and conventional list.

Evonomics, The Institute for New Economic Thinkng, CrookedTimber, are fairly moderate but nontraditional blogs.


This one was recommended by the former head of NYMEX to me when I started my career in trading. Written about Jesse Livermore who made and lost his fortune multiple times. He was often blamed for rigging the market, but his lesson is simple: you basically can't rig the market; it will destroy you way more easily. Take what the market gives you and be happy it even decided to give you that:

https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Opera...

And you'll see a lot of recommendations for everything from Hazlitt to Piketty, but my favorite you never see recommended for macro is The Way the World Works by Jude Wanniski. He was one of the life long Democrats who became a Reagan advisor (and basically quickly turned back into a Dem before passing away about ten years ago):

https://www.amazon.com/Way-World-Works-Gateway-Contemporary/...

Besides that, this is a really broad questions. There is stuff like John Hull for derivatives (this is what I survive on):

https://www.amazon.com/dp/0133456315\

This is the game theory book I and many others have survived on in college and many years past. Haven't really found a better one yet:

https://www.amazon.com/Game-Theory-Press-Drew-Fudenberg/dp/0...


Good call on the Hull recommendation - How do you feel about Natenberg's Option Volatility and Pricing?

What do you trade, out of curiosity?

(Career software engineer and fledgling options trader here, these were recommended to me when I first started learning. Still looking to make an industry change.)


To chime in...

Natenberg is solid, IMO better than Hull.

There are some nuances in pricing that will not really be captured in either book. For example, you don't learn that the implied vol of a one-week deep-in-the-money call should be lower than the same-strike put vol in cases where you have a dividend going ex the day before earnings. You will likely exercise the call before earnings to capture the dividend, so you shouldn't price in theta (or, from another angle, variance) for the event. And the thing is, every good options trader views these nuances differently.

All you really need to know about options pricing is: Greeks to understand the risk, skew/kurtosis/etc to understand the limitations of Black Scholes, and how to make sure your inputs are reliable so you can think critically about what constitutes a "fair" price.

To build past those basics, you have to take some kind of view on the name/sector/market. Understanding the product is mainly a means to an end---that end, of course, being an elegant way to express your views about the market.


For options the other two that I've read and liked are Sinclair and McMillian:

https://www.amazon.com/gp/product/0470181990/

https://www.amazon.com/Options-Strategic-Investment-Lawrence...


IMO start with a recent book that spells out useful pointers to give the classics a critical read:

"Debunking Economics", by Steve Keen.

Keen gave a talk at Google a few years back that was a pretty good summary of what's in the book's first version.

If you're into stats and finance also check out the author's finance classes on youtube. Besides a bunch of videos that cover what's in his book, there are quite a few on financial modeling, and at least one video in there that delves into power laws and financial markets.

Also, try to throw in a few history books to your mix: history of the world, of science, and of ideas. History helps contextualize and make sense of what was going on in the mind of contemporaries as economic theories matured.


If you're mathematically inclined, Steve Keen himself recommends Dynamic Economic Systems by John Markus Blatt.

As an aside, I would also recommend reading Thomas Piketty's Capital for 21st Century. IMHO it gives you a deeper historic perspective on economics than just couple decades back.


If you're looking for the nuts and bolts on how capital markets around the world work this book is hands down the best there is.

https://www.amazon.com/Complete-Quantitative-Professionals-M...

Equities, Futures, Rate Swaps, Options, Credit, Treasury, Corporate, Municipal, Mortgage and Agency Bonds. Then the technology that supports it all.

It is not only a fantastic high level view, but it get granular enough to explain things like how US Treasuries prices quoted in 32nds of a dollar or how fixed income securities are identified by something called a CUSIP or what a strike price is for an option. Granular enough to explain practical day to day concepts that would help you at your first job in a financial firm.


This sounds like a great book. Does it cover Smart Order Routers as well?


It's been a while since I read it, but according to kindle search it deals with Smart Order Routers (SOR) at location 6941 (and a few other places)


+1 - excellent book!


Henry Hazlitt - 'Economics in one lesson' Mises - 'Theory of Credit and Money' Adam Smith - 'Wealth of Nations' Milton Friedman - 'Capitalism and Freedom' Murray Rothbard - 'A New Liberty'

Have been my personal, but somewhat one-sided favourites.


Legal ebooks and audiobooks of various formats provided gratis from some fine nonprofits:

Henry Hazlitt - 'Economics in One Lesson': https://fee.org/resources/economics-in-one-lesson-2/

Mises - 'Theory of Credit and Money': https://mises.org/library/theory-money-and-credit

Adam Smith - 'Wealth of Nations': http://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf

Murray Rothbard - 'For a New Liberty': https://mises.org/library/new-liberty-libertarian-manifesto

And for those who want to really go deep (some might say, far into the weeds!), I'll add Ludwig von Mises - Human Action: https://fee.org/resources/human-action-by-ludwig-von-mises/

Disclosure: I worked a very short stint at FEE almost a decade ago.


That's the neo-liberal cannon. Also Marx, Das Capital?


Nobody in their right mind would try to read Capital. It's a massive, unreadable tome that you could summarize in an article online somewhere. That's borderline sadistic to suggest someone try to get through that thing. :-)


I'm not going to claim that I am in my right mind all the time but I read Capital. Well, the main volume. In English. And I skimmed the others. I think it was worthwhile. I value the experience especially in light of how often the text is reinterpreted and cast off in the US without much attention to the text itself. If you dare try, this is site might be helpful. http://la.utexas.edu/users/hcleaver/357k/357k.html. Pro tip: don't start at the beginning of Capital. It's abstract and your eyes will glaze over. Start with Chapter 26, finish it out from there and then loop back.


You're much braver than I am. I'd go so far to say hard core. You must be either a scholar or a layman with extraordinary discipline. Either way. Keep at it.


Awesome! Good find :)

I absolutely love FEE, I probably read their articles almost daily.


..and by reading these you'll learn (among other things) that what people think these guys wrote and what they actually wrote are often quite different.

Good choices BTW, even though, as you say, they're a bit one-sided. Essential reading regardless of which "side" you're on.


You're right that it's one-sided toward neoliberal doctrine. In addition, I would suggest Keynes, as well Marx, or even Kropotkin's "Conquest of Bread".


And Kaldor, Kalecki, Sraffa, Minsky, Lavoie, Shumpeter, Hayek, Graziani, Khaleman, Wallerstein, Thaler. And anything systems oriented and lots of history, sociology and anthropology. Economics tends to be highly reductionist.


You could justifiably argue that the better part of the modern economic syllabus is just a formalist footnote to Smith. So that's a great suggestion.


Absolutely true!


My first read of your request made me think you were looking for books mainly for personal intellectual growth. There are a lot of answers in that vein, as well as a few that seem suitable replacements for an undergrad econ degree. A second read made me wonder if you're actually asking for practical advice about what you should read in order to get a job in finance, given you won't take many econ or finance courses. I'll answer in the second vein, as it seems to be somewhat underrepresented.

Investment Banking/Private Equity/Investment Analysis

McKinsey & Co, Koller, Goedhart, Wessels: Valuation

Damadoran on Valuation

Trading or Quant

Hull: Options, Futures, and Other Derivatives

Joshi: Introduction to Mathematical Finance

Harris: Trading and Exchanges: Market Microstructure for Practitioners

There should probably also be a category for what I think of as quantitative fundamental investing. For an idea of what I mean, look at what the investment firm AQR does. I'm not sure of good books in this area though.


Basic Economics by Thomas Sowell is the book that got me interested in economics. It's a large but easy to understand read.


Thomas Sowell books which stay within the boundaries of economics are all excellent and very readable. I also recommend Applied Economics - which is more practical than Basic Economics.

A funny and probably relevant piece from Joel Spolsky:

"Super quick review if you haven't taken any economics courses: econ is one of those fields that starts off with a bang, with many useful theories and facts that make sense, can be proven in the field, etc., and then it's all downhill from there. The useful bang at the beginning is microeconomics, which is the foundation for literally every theory in business that matters. After that things start to deteriorate: you get into Macroeconomics (feel free to skip this if you want) with its interesting theories about things like the relationship of interest rates to unemployment which, er, seem to be disproven more often than they are proven, and after that it just gets worse and worse and a lot of econ majors switch out to Physics, which gets them better Wall Street jobs, anyway. But make sure you take Microeconomics, because you have to know about supply and demand, you have to know about competitive advantage, and you have to understand NPVs and discounting and marginal utility before you'll have any idea why business works the way it does."

http://www.joelonsoftware.com/articles/CollegeAdvice.html


Wanted to second Sowell's works, surprised to see him mentioned only once here. He's very accessible and values simplicity and clarity above all else in his writing. As he says,

"If academic writings were difficult because of the deep thoughts involved, that might be understandable, even if frustrating. Seldom is that the case, however. Jaw-breaking words often cover up very sloppy thinking. It is not uncommon in academic writings to read about people “living below subsistence.” The academic writers I edited seemed to have great difficulty accepting my novel and controversial literary doctrine that the whole purpose of writing is so that people can read the stuff later on and know what you are trying to say. These professors seemed to feel that, once they put their priceless contributions to mankind on paper, a sacred obligation fell upon the reader to do his damndest to try to figure out what they could possibly mean."

http://www.tsowell.com/About_Writing.html


These are important books but obviously not a comprehensive list.

* John Locke's Two Treatises of Government - It's political philosophy but it's hard to understand Classical Liberalism without having read some Locke.

* Adam Smith's Wealth of Nations - He and Locke are the two main guys to read for a solid start on Classical Liberalism, which is completely different than modern political liberalism. It's like having two features in an app with nearly the same name. Confusing as fuck.

* E. F. Schumacher's Small Is Beautiful: Economics as if People Mattered - This book will shift your perspective, useful to avoid becoming an a mindless advocate for one school of thought or another.

* Marx is a tough one as Capital is massive and unreadable and The Communist Manifesto is a propaganda pamphlet but I think you need to at least find some articles that summarize the basics.

* Keynes and Hayek - This hip hop battle is a decent start: https://www.youtube.com/watch?v=d0nERTFo-Sk then read Keynes' The General Theory of Employment, Interest and Money and Hayek's The Road to Serfdom.

* Milton Friedman's - Yes, read Capitalism and Freedom. I hesitated to include it as the guy's so good at making the case that it can turn you into a market advocate bot. Please resist that.

Can someone help me on this, is there a book balance Hayek and a book to balance Friedman? I'm sorry but Keynes doesn't do it for me. Look at the difference in titles between Hayek and Keynes. It's hard to motivate to read the Keynes book but nobody ever has trouble reading Hayek.

I see a lot of these ideas come up on HN a lot. What I don't like so much is when someone becomes an advocate for a particular ism. To me, all isms are rubbish. All of them. Understand but do not become a shill for an ideology.


Galbraith could be more of polar opposite (than Keynes); if one is pressed to have the balance.


John Kenneth Galbraith most famous book was The Affluent Society. If you don't want to be a slave to fashion, read Robert Reich's all-time favorite book on economics, The New Industrial State.


Not pressed but it's a good idea isn't it? I considered Galbraith for my list but wasn't sure if he was a fit and only vaguely remember what Theory of the Leisure Class was about to be honest. Thank you.


I mistakingly attributed _Theory of the Leisure Class_ to Galbraith, when it was actually written by Thorstein Veblen. I've not read it but I guess it's now on Marmot's canon. I hope it's a good book.

It was John Kenneth Galbraith who wrote _The Affluent Society_, which Wikipedia says is about, "the manner in which the post-World War II United States was becoming wealthy in the private sector but remained poor in the public sector, lacking social and physical infrastructure, and perpetuating income disparities."


Hi,

I found Larry Harris' Trading and Exchanges: Market Microstructure for Practitioners a solid introduction to market making and trading. Terms and concepts are easy to pick up from the text. I was comfortable enough after reading it to skim stats journal papers talking about market making models. The Stockfighter team had mentioned it in older threads here. It's expensive, but I just borrowed it from the library at my university instead of buying.

I also like The Elements of Statistical Learning which is free from the authors (http://statweb.stanford.edu/~tibs/ElemStatLearn/download.htm...). Although it isn't specifically about economics or markets, you should at least read it.

I'm at a loss on general economics books.


I've actually been reading The Elements of Statistical Learning (The French version at least) and I've found it extremely interesting.

Thank you Tom!


Debt: the First 5,000 Years by David Graeber is a controversial but rather important recent publication. I haven't seen it mentioned yet, so I wanted to recommend it.


I also came to recommend this: it's possibly the most interesting book I've ever read. (Maybe save TCP/IP Illustrated Volume 1: The Protocols)

It cops a lot of flak from some conservative established economists though, probably because most of the book is dedicated to disassembling economic myth from the perspective of history and anthropology.

Great case study of a fresh pair of eyes and an example of someone from one field applying different thinking to another field and coming to some very different conclusions. Can't recommend it enough.


Conservative economists like Brad DeLong?

Nah, I think it caught a lot of flack because a lot of the research it contains is sloppy at best.

Some is downright hilarious, though, as you can see with the story of Apple according to Graeber:

"Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages..."

http://delong.typepad.com/sdj/2014/11/monday-smackdown-in-th...


"Economics in one lesson" is a classic worth reading and thinking about. While you don't necessary have to follow the libertarian way of thinking it guides you to, it still shapes your critical thinking about economic policies a lot.


EIOL is a representation of one school of economic thought up to a certain time. It includes many of the principles taught to high school and 101-level college students, but it may mislead readers who are unaware that there are other models, and other conclusions, that more recent research have uncovered. In other words, it's much like recommending a book that includes the Aristotelian and Galilean theories of gravity: yes, it's useful to know, but only in an historical context.


I think of it as the following: the book is how the fundamentals really are. Taking those fundamentals and truths, you apply some smaller adjustments to make a world worth living.


Wikipedia entry on it, which skimming seems to be fair: https://en.wikipedia.org/wiki/Economics_in_One_Lesson and I note it was published in 1946, making it something of a classic. There a links to multiple versions of free on-line copies of it at the bottom.


Economics in One Lesson by Henry Hazlitt

Human Action by Ludwig von Mises


Great suggestions! I second this.


These books are just old reactionary propaganda. If that's your thing there's much better reactionary propaganda around.


What are you a communist? Talk about old.

BTW, you should also read Hazlitt's "The Failure of the 'New Economics' ". Hazlitt shredded Keynes and doesn't pull any punches. Too bad nobody listened to him.


"Reactionary propaganda" is code for "true".


I wouldn't be so quick to dismiss these if I were you. One needn't be a free-market capitalist, FWIW, to get a lot out of Hazlitt's book in particular. It's very practical.


Ludwig von Mises. The master of market economics that never understood capitalism.

"This country, and with it most of the Western world, is presently going through a period of inflation and credit expansion. As the quantity of money in circulation and deposits subject to check increases, there prevails a general tendency for the prices of commodities and services to rise. Business is booming. Yet such a boom, artificially engineered by monetary and credit expansion, cannot last forever. It must come to an end sooner or later. For paper money and bank deposits are not a proper substitute for nonexisting capital goods. Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis. It has happened again and again in the past, and it will happen in the future, too."

What he failed to understand, that in capitalism -basically give or take after 1750 in the western world - complex production has to be pre-financed and EVERY boom leads to a credit expansion. The bigger the boom, the bigger the expansion. It is tragic, that he had deep insights into market economy mechanism, but not into capitalism. He was still dreaming of a treasure box full of gold in the cellar of a company that the company uses to build things. The biggest driving force of capitalism is...debt. Debt that has to be serviced with new debt. More debt.


Downvote but no reply. Wow. Arguments... :-)


To better understand our monetary system I highly recommend watching the "Money as Debt" movie. It's on youtube as well as http://www.moneyasdebt.net/ (which I think links to y/t anyway). It provides a pretty good explanation of gold-backed vs credit-backed money and is fun to watch.


Aside from strict econ, finance and trading books, I'd heartily suggest economic history.

One of my personal favorites:

Global Capitalism, Its Fall and Rise in the Twentieth Century by Jeffry Frieden.

https://www.amazon.com/Global-Capitalism-Fall-Twentieth-Cent...

From the Journal of International Eeconomics' review:

“Perhaps the greatest merit of Frieden's book is that it allows the reader to see the themes of winners and losers, risk and uncertainty, integration, economic growth and technological change emerge clearly from the deep forest of contemporary history. One gains a greater appreciation for the timelessness of these phenomena and how to begin to get a grip on the bigger picture of policy making and the global economy.”

I found that quote on the author's site. http://scholar.harvard.edu/jfrieden/pages/global-capitalism-...


A Random Walk Down Wallstreet.

Great introductory book on investing, especially if you're interested in personal finance.


If you know Chinese, there is a must read: Economic Explanation(經濟解釋） by Steven Cheung.

If you don't, you can read: Economic Explanation: Selected Papers of Steven N.s. Cheung. (Same book name but different content - collection of essays vs a book on theories)

Why Steven Cheung? As a close friend to Ronald Coase, he too focuses on empirical research (the real world) rather than blackboard economics (the imaginary world); hates the use of math for the sake of it; emphasizes on testable implications (positive economics).

His classic paper The Fable of the Bees is a great example of how empirical work destroys blackboard economics.


> how empirical work destroys blackboard economics

The value of empirical work hinges on the assumption that the economic environment you're modeling is ergodic, or at the very least stationary AND that you have enough data of good enough quality.

If those conditions are not given, then you need theory. To establish relationships, not just time-series properties, this needs to hold for all variables separately as well as their copula, else you need theory. If one of the ingredients in your model is not observable, you need theory.

I am really tired of all this post-adolescent posturing by "hard scientists" who haven't thought things through. Maybe the relevant distinction is not between "real world" and "imaginary world" but between mirage and best-you-can-do-under-the-circumstances. (Then again, I am a theorist so perhaps I am overly harsh.)

I suggest Polya's Plausible Reasoning [1] as a better guide to "economic epistemology". Maybe look into Rational Belief theory (key reference: M. Kurz's 1994 papers [2,3]) for a "compromise" in modeling. Also, Fischer Black: Estimating Expected Return [4].

_________

[1] https://www.amazon.com/Mathematics-Plausible-Reasoning-Two-V...

[2] http://web.stanford.edu/~mordecai/OnLinePdf/03.OnRBE_ET_1994...

[3] http://link.springer.com/article/10.1007/BF01213817

[4] http://www.cfapubs.org/doi/abs/10.2469/faj.v51.n1.1873


thanks for the Polya recommendation


Maybe i overread it but The Fable of the Bees is from Bernard Mandeville. https://en.wikipedia.org/wiki/The_Fable_of_the_Bees

My two takes for a good historic understanding of economics are this Books: Economics of Good and Evil, Tomáš Sedláček https://www.amazon.com/Economics-Good-Evil-Economic-Gilgames...

and Schwarzbuch Kapitalismus, Robert Kurz (could't find a English Version) https://www.amazon.com/Schwarzbuch-Kapitalismus-Ein-Abgesang...


If I remember correctly Steven Cheung' deliberately "steal" the name of the book you mentioned.

Here is link of his paper: https://www.jstor.org/stable/724823?seq=1#page_scan_tab_cont...


I only agree with empirical economics when it is forward looking. If you have these great models that you've honed and can accurately predict ten of the last ten recessions, but your model then goes on to predict 20 of the next zero recessions, I'd say you basically overfitted to your prejudices and your model is bunk. I get really wary of economists that "prove" their theories on back data but still can't predict worth shit.

However, this guy sounds really interesting, and I've bookmarked him to go looking for this weekend. Thanks for the cites.


A nice place to start might be the CFA study guide

https://www.cfainstitute.org/programs/cfaprogram/courseofstu...


For readable bios of the major economic thinkers, I like:

New Ideas from Dead Economists: An Introduction to Modern Economic Thought, by Bucholz and Feldstein

The Worldly Philosophers: The Lives, Times And Ideas Of The Great Economic Thinkers, by Heilbroner

And for a readable sample of the economists' thought in their own words, there's:

Teachings from the Worldly Philosophy, by Heilbroner


"Global Capitalism: Its Fall and Rise in the Twentieth Century" by Jeffry Frieden is a masterpiece. It will give you a thorough, expansive view of the global financial world - the major events and trends - as they unfolded over the last century. This book is regularly assigned as a text book in Ivy League economic history classes, so even though it's short on math/ econometrics, it's a serious work.


I found Milton Friedman's "Free To Choose" fundamental and very readable.

https://www.amazon.com/Free-Choose-Statement-Milton-Friedman...


Surprisingly, a lot of people in this thread hesitate to recommend Thomas Piketty's "Capital in the Twenty-First Century". I'm not sure why this book is somehow surrounded with overblown controversy.

I think it is an excellent book on historical economics. His conclusions are drawn from an extremely large dataset that is publicly available and downloadable here: https://www.quandl.com/data/PIKETTY

It's by no means an Economics 101 book, but it should definitely be part of any economist's personal library in my opinion.


A brief but profound paper: The Use of Knowledge in Society by Hayek (http://home.uchicago.edu/~vlima/courses/econ200/spring01/hay...).

As others have said, the EconTalk podcast is excellent.


A random walk down wall Street

Reminisces of a stock operator

When genius failed

Unconventional success

And generally just read financial news and follow markets until you develop a sense for spotting BS.


Glad to see 'When Genius Failed' (Lowenstein) here. I felt like it was the perfect sequel to 'Liar's Poker', Michael Lewis' first book on his life as a bond trader at Salomon Brothers in the 1980's. I feel like these two books are valuable, even essential, background for studying finance as practiced by Wall Street.


"Reminisces of a stock operator" is delightful.


Options, Futures, and Other Derivatives by John Hull

Principles of Corporate Finance by Richard Brealey, Stewart Myers, Franklin Allen

Traders, Guns and Money: Knowns and unknowns in the dazzling world of derivatives by Satyajit Das


Second vote for Hull.

Corporate Finance by Stephen Ross is another text. I'm not sure how it compares to Brealey.


I will resist the urge to tell you what NOT to read and merely recommend a few favorites:

1. I am a big fan of John Kenneth Galbraith, who writes very clearly about a few things. I recommend both "The New Industrial State" and especially "The Affluent Society", where he argues that economics is insufficient to deal with post-scarcity.

2. Deirdre McCloskey's "If You're So Smart" is a great skewering of the blinkered nature of economic inquiry. Much of what is wrong with economics is what is wrong with scientific inquiry generally (being stuck in a formalism, confusing their models with reality); this is an excellent criticism.

3. Anything by Ha-Joon Chang. He writes intelligently about development and globalization; he is unorthodox in his economic practice, and his arguments are simple and drawn from history. There are a lot of "My god, it's full of stars!" moments in his work.

4. Still looking...


Best book you can read first is "Debt the First 5000 Years" by David Graeber. He is an anthropologist and the book outlines many economic topics giving you a historical context.

Then go and read all the standard literature and you will be surprised how terrible and unscientific it all is.


After a few pop-sci economics books (freakonomics, the undercover economist...) I progressed to Ha-Joon Chang's Economics: The User's Guide.

It's covers all the major schools of thought, along with their pros and cons. I highly recommend it.


Ha-Joon Chang is one of the most interesting economists out there, one who eschews mathematical formalism and takes a much more social history looks at the way economics operates. I was really delighted when the FT gave him a food column last summer - fantastic, diverting discussions about trade, war and development in the middle of a discussion of his favorite dishes. Always read him if you can!


For a truly fun read I'd suggest Dan Ariely's "Predictably Irrational". It's less academic than "Thinking fast and slow" by Daniel Kahneman (which is also great), but I found that refreshing.


Mathematically trained economist here.

Why Stock Markets Crash by Didier Sornette The complete oeuvre of Paul Wilmott

(The Computational Beauty of Nature, by Gary W. Flake because it's wonderful and puts you in the right frame of mind)


All must reads in my opinion

Fooled By Randomness - Taleb

The Black Swan - Taleb

Antifragile - Taleb

When Genius Failed - Lowenstein

Liars Poker - Lewis

The Big Short - Lewis

Flash Boys - Lewis

Too Big To Fail - Sorkin

Against the Gods - Bernstein

One Up On Wallstreet - Lynch

The Intelligent Investor - Graham


I highly recommend Debt: the first 5000 years https://www.amazon.com/Debt-Updated-Expanded-First-Years/dp/...

and Heilbroner's Worldly Philosophers https://www.amazon.com/Worldly-Philosophers-Economic-Thinker...


"Debt"'s troubling passage on Jubilee is archaic.


Everyone seems to be addressing the finance part of it without the "growing intellectually" part of it. I've been fortunate to be surrounded by economists my whole life. Economists are also tremendous historians; reading a lot of history and recasting what you know about history into economic frameworks will greatly sharpen your intellectual abilities. As with most things involving learning, having and seeking out intellectual peers is a valuable way to challenge all your ideas.


Since you are already in a quantitative field I think it would be good to quickly get to the heart of what economists actually do. I would suggest

Varian, 'Intermediate Microeconomics' Luenberger, 'Investment Science' Wooldridge, 'Introductory Econometrics'

for the undergraduate background and then at the graduate level Jehle and Renyi for microeconomics, Duffie for asset pricing theory, Tirole for corporate finance and Campbell, Lo and Macinlay for econometrics.


Try the Society of Actuaries / Casualty Actuarial Society study resources [0] for exams P (probability) [1], FM (financial mathematics) [2], MFE (models for financial economics) [3] or S (statistics and probabilistic models) [4]. Look at the PDF syllabus documents, and there will be a section on "suggested texts".

Looking up the suggested texts for previous test years (or for obsolete tests) may also reveal texts that may be cheaper now or available as used copies.

You could probably get something like Price Theory and Applications (Landsburg) or Principles of Corporate Finance (Brealey, Myers, Allen) for cheap.

[0] http://beanactuary.org/exams/preliminary/?fa=preliminary-com... [1] https://www.soa.org/education/exam-req/edu-exam-p-detail.asp... [2] https://www.soa.org/education/exam-req/edu-exam-fm-detail.as... [3] https://www.soa.org/education/exam-req/edu-exam-mfe-detail.a... [4] https://www.casact.org/admissions/syllabus/index.cfm?fa=Ssyl...


This might sound unconventional but in terms of Economics I would recommend a comic book called "Economix" by Michael Goodwin. According to financial advisor David Bach:

"You could read 10 books on the subject and not glean as much information."

Personally I believe thats because the subject and history of economics is presented in such an accesible and fun way in this book without compromising the quality and historical accuracy.


Note that "finance" and "economics" are separate disciplines, roughly corresponding to applied vs theoretical.

The book which changed my thinking the most was "The Other Path" https://www.amazon.co.uk/Other-Path-Economic-Answer-Terroris...

It would be easy to give it the traditional libertarian gloss of "reducing regulation to improve the economy", but it's much more subtle than that. It looks at the costs of being outside the "system", and the benefits of simplifying the system so as to include more people and businesses. Along with land reform to reflect the actual reality of buildings.

Also, short and entertaining, but with lots of insights into principal-agent problems and bubble mentality: "Where Are the Customers' Yachts?" https://www.amazon.co.uk/Where-Are-Customers-Yachts-Investme...


There is no must-read books for economics (or almost any other field of study). Non-fiction economics books are meant to teach the reader something new. As Economics represents a set of ideas owned by no one individual, the best overview of economics will contain all of the important, integral ideas of the subject.

Any summary of economics that introduces the core concepts will be great and serve its purpose.


Economist here.

I disagree that if someone wants a broad introduction that by picking up Samuelson or MWG will be able to figure out the field from first (mathematical) principles.

New Ideas from Dead Economists is a fantastic, broad introduction into the philosophy of economics that you appears interested in.

Works by Keynes, Smith, Marx, Robinson, Hayek, and Ricardo do a fantastic job laying the groundwork for modern economic theory.

If you're looking for the quantitative side of economics, Mostly Harmless Econometrics, Freakonomics, and (on the very theoretical side) Recursive Methods in Economic Dynamics are must reads.

Capital by Picketty is currently being debated, as the underlying evidence towards his theories are compelling but not necessarily testable.

Game theory is also a fun field within economics, and has overlap in CS and (occasionally) statistics.


I thought that Piketty released or references sources for the underlying data supporting his work from "Capital..." so why are you considering it not necessarily testable? I don't understand what you mean by that phrase.


For example, colonialism, which Picketty and Acemoglu base a lot of their work on, would be hard to reimplement for experimentation. Hence the debate. The data and conclusions are interesting and compelling, but not yet decisive.


One I don't see recommended very often is: Fortune's Formula. It describes the lives of Claude Shannon and Ed Thorp (author of Beat the Dealer) and how they use the Kelley formula in both gambling and investing. The Kelley formula, as the book explains, is a formula for determining the optimum amount to bet on a wager (or investment) if you know the edge you have over the house.


End to End exploration and explanation of how and why global economy works. - Peter Dicken, Global Shift https://uk.sagepub.com/en-gb/eur/global-shift/book242137

Any corporate finance textbook, probably; Brearly Myers, Corporate Finance, https://www.amazon.com/Principles-Corporate-Finance-Richard-...

Watch the Yale/Stanford lectures opencourseware on Financial Markets with Schiller; http://oyc.yale.edu/economics/econ-252-11

Nicholas Taleb, Black Swan; https://www.amazon.com/Black-Swan-Improbable-Robustness-Frag...

Harry Markopolos, Nobody Would Listen, https://www.amazon.com/No-One-Would-Listen-Financial/dp/0470...

Michael Lewis, Liars Poker, https://www.amazon.com/Liars-Poker-Norton-Paperback-Michael/...

"Leveraged Sellout", Damn It Feels Good To Be A Banker, https://www.amazon.com/Damn-Feels-Good-Be-Banker/dp/14013096...


People have mentioned different authors across different schools of economic thoughts such as Mankiw, Rothbard, Friedman, Hayek, Smith, Keynes, etc. There's one that's also being mentioned which I particularly would avoid recommending which is Piketty.

Those are the best recommendations.

I would like to give a recommendation that might be a little bit different: 'Why Nations Fail' by Acemoglu.


Traders, Guns and Money - Satyajit Das

Debunking Economics - Steve Keen

The Volatility Machine - Michael Pettis


On topic article on economist Paul Romer's view on the current state of macro: http://www.economist.com/news/finance-and-economics/21707529...


"Where are the customers' yachts?" by Fred Schwed is a must read for anyone interested in investing in stocks.

An absolute must.


Road to Serfdom, by F.A. Hayek?


Very much worth reading and not just to prove your right wing or libertarian bonafides.

I think the essence of good economic thinking is understanding unintended consequences and reading the road to serfdom is a great way to really think about unintended consequences. Basically that well-meaning policies that have a side effect of centralizing power tend to do more harm than good.


The single most interesting thing for me was the information theoretic, at least in style, exposition on how trying to centralize all economic decision making at the top of society simply can not work.

Also points out how essential economic freedom is to all other freedoms, for if all jobs come from the state, to disagree with it ... well, at the extreme, as two roommates from the PRC in 1988 explained it to me, the biggest change in their lifetimes was how getting on the wrong side of the local political committee was no longer an automatic death sentence through their refusing to issue you food ration coupons, it just meant you had to spend more money buying food on the free market.

Wikipedia entry is here, haven't reviewed it except to note it has links to condensed versions (Hayek was amazed at how well the Readers Digest did it) and citations of the published editions: https://en.wikipedia.org/wiki/The_Road_to_Serfdom


This one provides a great foundation for how to think about economics before you get into the details. It's a must-read.


Academic economist(ish) speaking here. Be aware of the distinction between books of economics (the discipline) and books about economics by non-economists. Both can be great - I loved The Big Short.

Strongly recommend Keynes, and surprised nobody has mentioned Minsky or Kindleberger - outsiders now receiving recognition.


I work in finance. I agree with other comments that suggested the CFA Program curriculum.

Specifically, CFA Level 1 textbooks are among the best introductions to finance and economics I found. You don't have to sign up for the CFA exam$, the textbooks can be bought separately. CFA might not be as fun reading but are a very practical foundation (and will help put future readings in context).

You say you hope to get into finance but don't know almost anything about it. How did you decide to get into finance without knowing much about it?

I enjoy it but it's not for everyone. Finance is also huge. Economics is less relevant to finance than many realize (most roles do not require having studied econ and Goldman's CEO recently called the firm a "tech company").

May I humbly suggest, prior (or in addition) to spending precious time reading finance/econ books, speak to a few people who work in finance and read finance sites to get a better feel for it.

Books can be amazing, even if just read for intellectual curiosity, but they take a long time to read. There are other ways to learn which are quicker/more relevant to you vs. entire books.

Lastly, one "must-read" book is The Intelligent Investor by Ben Graham. The revised edition with notes from Jason Zweig is excellent. The industry is still obsessed with the book ~70 years after it came out and for good reason. Even if you disagree with it or think it's outdated (and many do), the book comes up so often it's worth reading to be in the loop.

CFA Program: https://www.cfainstitute.org/programs/cfaprogram/Pages/index...

TII book wiki: https://en.wikipedia.org/wiki/The_Intelligent_Investor

*This is my first HN comment. Apologies for any noob mistakes.


David Ruppert's "Statistics and Finance" is the classic you are looking for. It is a standard textbook in most finance curriculums in the US. Roughly 50% of the book is plain statistics as applicable to finance. The rest is finance with a statistical flavor.


Alternatively, don't learn from books, but the markets themselves. Open a Paper Trading account via Think or Swim. Begin a steady diet of Bloomberg / WSJ / CNBC every day. Whenever a word or idea is mentioned that you don't understand, Google it or consult Investopedia. Figure out what the Fed actually does. How debt and credit markets work. The microstructure of physical and electronic commodities trading. Maybe skim an online "Stochastic Calculus" class. Join Quantopian and master every algorithmic strategy known to humankind. Dive deep into cryptocurrency and blockchain technologies.

And who knows, perhaps one day you'll invent something that obviates the need for a global system of monetary trust ;)


While I didn't take it as far as faux playing the market, reading/skimming my father's copy of The Wall Street Journal from 3rd through 12 grades, roughly all of the '70s, a period with very ... interesting economics, especially our worst post-New Deal in your face government interventions (Nixon's Wage and Price Controls, which were not lifted for petroleum or natural gas until Reagan, which created the "Energy Crisis" more than any OPEC embargo, then again, we were also allowed to own gold again), did me as much good as reading the books I've commented on in this thread.

Don't know if the WSJ is still a good source today, but "a steady diet" of one or more of these day to day sources and watching what they get right and wrong will do you a world of good.


As far as economics is concerned, I recommend Mankiw's principle of economics. It's widely used as a textbook for economics undergraduates. It's very well written and entertaining. In my opinion, it's better than general public vulgarization books.


Mankiw's books is the best option if you want an inferential and qualitative understanding of the subject. If you want something with more mathematical rigor I suggest Blanchard's Macroeconomics.


Can't recommend this book highly enough: A Concise Guide to Macroeconomics, Second Edition: What Managers, Executives, and Students Need to Know http://a.co/jicSNc9


It is not a book, but Matt Levine is the way I get my daily finance news. He is fantastic.


Absolutely agree. And Matthew C. Klein of alphaville at the FT.


I have news for you: statistics is totally unrelated to economics. Better rethink everything you think you know.

For people wanting recommendations, I suggest Carl Menger's Principles of Economics, which has saved me from stupidification on college.


This is a completely unrealistic statement. Our models are imperfect, but with ever increasing economic data there is ever increasing opportunity to utilize statistics with economic and financial data.

In fact look in to the field of econometrics and unless that field is a fantasy, there is a huge relation between statistics and economics.


That field is obviously a fantasy.


Why finance? Finance was the major viable option for people with your background but that's not the case anymore. Every industry needs people with your background -- more than ever!

However, if you're hell bent on going into finance and you're going to read one economics book, read Thomas Piketty, "Capital for 21st Century".

These are the classic economics tomes that you'd read over a lifetime:

Karl Marx, "Capital" Adam Smith, "The Theory of Moral Sentiments" Adam Smith, "The Wealth of Nations" FA Hayek, "The Road to Serfdom"


I'm curious, why would you recommend Piketty's Capital for 21st Century as the one economics book?


Innoculation.


Capital in the 21st century is a political piece, and is certainly not a good intro to economics book.


I agree that it's not a good intro to economics book. I haven't presented it as one.


Economics in One Lesson by Henry Hazlitt https://mises.org/library/economics-one-lesson


The Intelligent Investor by Benjamin Graham

One Up on Wall Street by Peter Lynch


+1 for One Up on Wall Street. A very smart and practical read.


Economics in one lesson by Henry Hazlitt changed my life. If you want to read one book only, read this one. It's sort, easy to understand and ruthlessly logical.


at the moment i'm uninterested in the arc of economic studies in acadamia so the opencourseware reading lists seem the wrong place to start for me

can anyone suggest reading to understand how contemporary banks function, where can i get an understanding of a bank or credit union from a software engineer's perspective: dependencies, steps to start, challenges of running, protections from common problems, interesting emerging disruptions;


There are some really good suggestions here about the economics and finance in general. I think having a good solid understanding of the financial crisis is valuable in today's world. I recommend "All the Devils are Here" by Bethany McLean. It offers a well rounded, facts-first approach to explaining the crisis. It does not point fingers or assess blaim, which is a valuable perspective.


Derivatives Markets by Robert McDonald is a great textbook. I would not suggest reading it cover to cover, but it's a great reference for truly understanding bonds, options, etc.

I'd also recommend anything by Matt Taibbi, but only if reading about the shadiness of Wall Street interests you. His books are well written and fact checked, but definitely have a bias that you may not care for.


A scholarly work on how ethics and CSR can be a positive influence on the economic model:

https://www.amazon.co.uk/When-Principles-Pay-Responsibility-...


> from a philosophical point of view; positive vs normative economics...

Thought provoking on a variety of levels - Seeking Wisdom: From Darwin To Munger by Peter Bevelin > http://www.goodreads.com/book/show/1995421.Seeking_Wisdom


"The Great Transformation" by Karl Polanyi. It's a tough read, because it was translated from Hungarian. It's an important read, because it provides an alternative analysis to both Smith and Marx. Polanyi was informed by recent developments in anthropology which contradicted the major theories of how modern economies had formed.


In addition to the many fine recommendations already on the thread, I enjoyed Winner's Curse and Irrational Exuberance.


How an Economy Grows and Why It Crashes from Peter Schiff: https://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/0470...

Very short read - economics basics from libertarian view.


Capitalism and freedom by Milton Friedman


I was going to recommend Malkiel's book but of course it has been already mentioned several times. So I'll add to the list Zweig's "The Devil's Financial Dictionary" (funny but also educational) and Sharpe's "Investors and Markets" (more academic).


Whatever Happened to Penny Candy [1] is a fascinating book and a short read.

[1]: https://www.amazon.com/Whatever-Happened-Explanation-Economi...


Thinking, Fast and Slow by Daniel Kahneman. He won a Nobel Prize in Economics in 2002 for his work in Behavioral Economics. I truly believe understanding human behavior and decision making is a key foundation to anything else you read in Economics.

This book changed my life, I highly recommend it.


Understanding Wall Street by Jeffrey Little gives a good overview of many kinds of financial instruments, including stocks, bonds, and options. It's NOT an investment flavor of the week book and is now on its 5th edition, the first having come out over 30 years ago.


Preface: For a bit of I suppose... uhh, qualification, I took nearly every single upper division Economics class my university offered (~25). I did so because I LOVE Econ. Also, sorry for the rambling nature of this.

First things first, finance is only sort of economics, it's really just finance. I'd highly recommend taking an accounting class (or book) and a grab an intro finance book. Accounting will really help with jargon, and just some really basic things (like balance sheets). Also, "Security Analysis" [0] is the "only" book you'll ever need, Warren Buffet recommended it to Bill Gates, and now Bill Gates recommends it to everyone.

Back to Economics... There are two primary "groups" of thought... sort of like twins separated at birth who grow to hate each other.

---------------------------------- The First: Neoclassical Economics ----------------------------------

Focuses primarily on microeconomics and largely mathematical. It's birth is largely due to Economists wanting to make econ a "true science" like we see the physical sciences (biology, chemistry, physics). It starts around the late 1800s and really picks up steam around the time of Einstein. Math was hot and being applied everywhere.

A really interesting period to research and study is right after black Tuesday (and before the great depression) and what the central bank didn't do (before central bank intervention in markets). While I really detest the bastard, Milton Friedman's work on monetary policy is pretty science and generally good here. [1],[2].

I'm a Keynesian (I suppose-- Econ gets deep fast), and so you'd be no where without reading some of what Keynes did to get our assess out of the great depression (i.e. government spending). It's also more or less the birth of Macroeconomics... You'll know you're good when you laugh at forgetting: Y = C + I + G + (X - M). Some good things to get started are looking at the IS-LM [3] model and AS-AD [4] model.

That gets you into the 60s - 70s. Tall Paul Volker is the unsung hero of the 80s, read about him (he ran the federal reserve). After that microeconomics starts to fragment into things involving game theory and behavioral economics (Daniel Kahneman is the man).

Econometric analysis mathematically speaking is just multivariate regression analysis for time series or cross-sectional data. More "modern" analysis is probably using panel data [5] (combination of cross sectional and time series). Calculus, linear algebra, and differential equations should prepare one plenty for everything but panel data analysis. The real "econ" part is applying solid econ theory to the mathematics you're using, a textbook will help [6]. For finance this is your bread and butter.

Game theory will apply a lot of different mathematical tools. You will need to love pure math. To really get into it requires pain or love. I like a healthy amount of both.

---------------------------------- The Second: Heterodox Economics ----------------------------------

So as it turns out, neoclassical economics is at most half of Economics. It's really where the "philosophy" comes into play. You're gonna need a quick history lesson to sort of see it's topic matter. Economics really didn't exist before... the 1500s. You can try to apply economics to earlier times but you could also just make shit up and post it to twitter. Both would be equally likely to contain truth.

Economics came into existence around the time the Dutch began developing trade routes (1550s). A by product of all this trade, is tons of cash, and goods-- currency (silver, metals, whatever) starts to actually be used in society (before that it was mostly just a status symbol). It pisses off a lot of _institutions_, most of all "the church" and monarchies because money is allowing people to gain power. It's usurping power from them. This is the rise of the "merchant class" and now thanks to money (trade really, but whatever it's complicated)-- people are liberating themselves from the social status they're born into. Eventually modern republics appear, and governments form. Nations trading globally becomes more common (Dutch, English, Spanish) and we get to Adam Smith, David Ricardo [7], et. al.

Now it's the 1800s. People are seeing the birth and growth of capitalism, industry, corporations, and the tumultuous death of agrarian life. Now the way the "common person" lives their day dramatically changing, for a few it was better for most it was worse. Some economists begin to ask why are we replacing these now defunct _institutions_ with equally shitty, or possibly shittier, ones. This is more or less becomes the birth of heterodox economics which largely studies the more abstract ideas like "institutions"; by it's very nature the content tends to be philosophical.

By the 1920s heterodox economics is falling by the wayside. The content is less able to be tested like a physical science (i.e. no math/stats); so, it's treated like a misbegotten child... By the 1950s heterodox content was marginal at best-- the cold war and fear of communism made (makes) people insane. Economists pretty much had to be pro-capitalism or face being called "commies" and thrown in jail or worse being a narc in a witch hunt. This was more or less the nail in the coffin in mainstream heterodox economics (at least for research in the Occident). After the cold-war ended the nail got pulled out, but I wouldn't say it's really outta the coffin yet.

This book [8] isn't great but it's quickly digestible and will point you in the appropriate directions.

---------------------------------- ----------------------------------

Some Rambling to Finish

I'd highly recommend not just learning how to use the tools, but why we have them and where they came from. Economics is vastly deeper than the average person will ever know. That depth is greatly empowering and guiding when using its lenses to see and solve problems. One last thing, know there's no going back, you will see the world differently.

[0] https://www.amazon.com/Security-Analysis-Foreword-Buffett-Ed...

[1] "The Role of Monetary Policy." American Economic Review, Vol. 58, No. 1 (Mar., 1968), pp. 1–17 JSTOR presidential address to American Economics Association

[2] "Inflation and Unemployment: Nobel lecture", 1977, Journal of Political Economy. Vol. 85, pp. 451–72. JSTOR

[3] https://en.wikipedia.org/wiki/IS%E2%80%93LM_model

[4] https://en.wikipedia.org/wiki/AD%E2%80%93AS_model

[5] The course I took on panel data, http://web.pdx.edu/%7Ecrkl/ec510/ec510-PD.htm

[6] https://www.amazon.com/Using-Econometrics-Practical-Addison-...

[7] He more or less invented trade theory (competitive advantage) https://en.wikipedia.org/wiki/David_Ricardo

[8] https://www.amazon.com/Age-Economist-9th-Daniel-Fusfeld/dp/0...

Edit: for formatting.


Here is my short list of favorite books on finance and economics:

FINANCIAL SECURITIES / BANKING / VENTURE CAPITAL

Bruck, Connie (1988) Predator's Ball: Inside Story of Drexel Burnham and Rise of Junk Bond Raiders

Draper, William (2011) Startup Game

Graham, Benjamin and Jason Zweig (2006) Intelligent Investor, revised ed.

_________ and David Dodd (2008) Security Analysis, 6E

Greenblatt, Joel (1999) You Can Be a Stock Market Genius

Greenwald, Kahn, Sonkin, Biema (2001) Value Investing: From Graham to Buffett and Beyond

Henwood, Doug (1997) Wall Street: How It Works and for Whom

Levitt, Arthur (2003) Take on the Street: How to Fight for Your Financial Future

Lewis, Michael (1989) Liar's Poker: Rising Through the Wreckage on Wall Street

_________ (2010) Big Short: Inside the Doomsday Machine

STATISTICS

Ayres, Ian (2007) Super Crunchers: Why Thinking by Numbers is the New Way to Be Smart

Bernstein, Peter (1996) Against the Gods: Remarkable Story of Risk

Kahneman, Daniel (2011) Thinking, Fast and Slow

Silver, Nate (2012) Signal and the Noise: Why So Many Predictions Fail, but Some Don't

Taleb, Nassim Nicholas (2005) Fooled by Randomness, 2E

_________ (2010) Black Swan: Impact of the Highly Improbable, 2E

BUSINESS DEVELOPMENT / ENTREPRENEURSHIP / INNOVATION

Christensen, Clayton (1997) Innovator's Dilemma

Stone, Brad (2013) Everything Store: Jeff Bezos and the Age of Amazon

Wallace, James and Jim Erickson (1992) Hard Drive: Bill Gates and Making of the Microsoft Empire

Walton, Sam with John Huey (1992) Sam Walton: Made in America

Wilson, Mike (1996) Difference between God and Larry Ellison: Inside Oracle Corp

POLITICAL ECONOMY / THEORY / ECONOMIC HISTORY

Arrighi, Giovanni (1994) Long Twentieth Century

Braudel, Fernand (1979) Civilization & Capitalism 15th-18th Century, vol. 3: Perspective of the World, trans. Siân Reynolds

Brechin, Gray (2006) Imperial San Francisco: Urban Power, Earthly Ruin

Heilbroner, Robert (1999) Worldly Philosophers: Lives, Times & Ideas of Great Economic Thinkers, 7E

Marx, Karl (1867) Capital, vol. 1

Stiglitz, Joseph (2003) Roaring Nineties: A New History of the World’s Most Prosperous Decade

_________ (2010) Freefall: America, Free Markets and the Sinking of the World Economy

Vallianatos, E.G. (2014) Poison Spring: Secret History of Pollution and EPA

Vilar, Pierre (1976) A History of Gold and Money: 1450-1920

Yergin, Daniel (1992) Prize: Epic Quest for Money, Oil and Power

Would enjoy email correspondence with anyone interested in these subjects: mitchelldeacon9@gmail.com All the best


Good list. You hadd me at Yeergin (I started reading from the bottom)

I'm exploring a set of related topics at https://reddit.com/r/dredmorbius

I'm setting up some small and quiet broader forums at https://reddit.com/r/MKaTS


If you want to get a picture and understanding of the development and history of economic thought I second this suggestion of the Worldly Philosophers. It is very readable. It won't help you at all with a job in finance, but it will make you a more informed citizen, and better able to understand 'how the world works.'


Great list! See my email in my profile.


Kuznetsov,A. - The Complete Guide to Capital Markets for the Quantitative Professional (2006)


Not sure how popular this take on finance is, here in HN (really I have no idea), but I found these two very interesting.

"The New Depression: The Breakdown of the Paper Money Economy"

and "The Dollar Crisis: Causes, Consequences, Cures" both by Richard Duncan


Microeconomic Theory - MWG https://www.amazon.com/Microeconomic-Theory-Andreu-Mas-Colel...


When I entered Financial Services in London I was recommended this book as the bible:

"How to Read the Financial Pages"

This book really breaks down the finance industry from a component and historical point of view. Stocks, dividends, bonds, TBills, Eurobonds


Adam Smith - Wealth of Nations

Keynes - The General Theory of Employment, Interest and Money

Ben Bernanke - Essays on the Great Depression

Robert Shiller - Irrational Exuberance

Levitt and Dubner - Freakonomics: A Rogue Economist Explores the Hidden Side of Everything

Daniel Kahneman - Thinking, fast and slow


A must-read no one has mentioned is macro-man.blogspot.com

Written by a macro hedge fund type guy (and friends) is brings cognizant analysis of the highest level, plus a bunch of finance slang you're going to need to get used to.


Haven't seen this one posted yet: http://www.mcafee.cc/Introecon/

I prefer the 2007 version, it's more mathy.


If you want to learn about quantitiative trading:

1) Active Portfolio Management: A Quantitative Approach for Producing Superior Returns and Controlling Risk

2) Quantitative Equity Portfolio Management: Modern Techniques and Applications


I'm curious, what exactly is an engineering degree in statistics?


In France, Statistics is considered part of engineering.


That's not quite correct.

However, "engineering" in France is more of a title than a field. It corresponds to all degrees delivered by the écoles d'ingénieurs which, although they were intended to create engineers, have since evolved to meet the requirements of the job market, and have kept their name although their teachings aren't quite as strictly engineering-related as they used to be.

So yeah, you could get a degree from an engineering school that's mostly about statistics. But you could also learn about statistics while doing a math degree at the university. It's just some terminological oddity coming from our weird system.


Thanks for the explanation.


Bourgeois Dignity: Why Economics Can’t Explain the Modern World by Deirdre McCloskey, and presumably the other books in the series[1]

1. Bourgeois Dignity: Why Economics Can’t Explain the Modern World


The Alchemists: Three Central Bankers and a World on Fire - Neil Irwin

Great account on central banking in general and central banking policy during the 08-09 crisis in particular!


Capital

Wealth of Nations


Capital Ideas:The Improbable Rise of Modern Finance takes a historical approach to the development of finance.

It was striking to me how recent many developments are!


+1 Mostly Harmless Econometrics - Angrist and Krueger


Books about economics- read Keynes and Friedman.

Economic history- lords of finance, too big to fail.

Most quant finance books are low quality and I'd suggest avoiding them.


I still think one of the best textbooks on economics is Paul Samuelson's Economics. Assuming you mean macro-economics that is.


Samuelson got the Soviet Union so horribly wrong that I can't recommend it on that detail alone, for it either meant he was a True Believer, Useful Idiot, or the tenor of the times meant he had to publish words he knew were false, which then throws the rest into question, for how much of it was also fashion vs. what he thought to be true?


How did Samuelson get the USSR wrong specifically? I'm curious.


The successive editions of his books show a steady backing off of how wonderful their economy was as more and more facts about it couldn't be ignored.

At the very least he believed their BS statistics; it's been so long since I looked at this in detail (like the '80s), I'd have to re-do the research, but you should be able to find something on the net about it. But it was utterly disqualifying, at least if you have a policy of avoiding Gell Mann Amnesia: http://www.goodreads.com/quotes/65213-briefly-stated-the-gel...

Especially given how horribly difficult the topic of macroeconomics is, if you want to have a chance of getting it right there's no room at all for fundamental mistakes like his.


I'm starting to form a different model from the standard (gross managerial incompetence / systemic failures of the Communist model) for why the USSR failed, though I'm largely in the information-gathering stage.

On Samuelson, I'm increasingly less impressed with him over time. I studied with his book (~17th edition or so, mid/late 1980s), and have compared later editions with the first (1948 IIRC). I'm not sure how much the economics improves, if any, but the tone and style of the earlier edition is much higher than the later books, which read as very nearly childish.

That said: if you've any narratives on the fall of the USSR you'd like to suggest, I'm all ears.


The most interesting narrative is from Jerry Pournelle, who points out that part of bankrupting of the USSR was their outfitting the North Vietnamese Army (NVA) with 3 complete armies of mechanized equipment, from trucks to tanks (this kind of army: https://en.wikipedia.org/wiki/Field_army).

One was used up piecemeal. One was stomped flat by the Army of the Republic of Vietnam (ARVN) and the air support provided by us (one of the first big uses of precision guided bombs), with 40,000 of it's 150,000 men counting themselves lucky to get back to the North sans equipment. And of course the third, using more armor than any WWII battle, finally succeeded when the Democrats used Nixon's Watergate infirmity to defund the South, not much a solider can do when he has less than a basic load of ammo and one grenade.

That, plus of course the general screwed up economy, lots of direct Reagan economic warfare and sabotage (e.g. those natural gas pumping turbines), supporting the Mujahideen (still cheap at the price), and the potential of our negating their entire $$$$$$ Strategic Rocket Force's inventory if we built out SDI, prompted their leadership to drastically change course. And in a way pretty much no one predicted, they failed but in a mostly peaceful way, no WWIII needed to end the Protracted Conflict.

Pournelle was a player in this in the '70s or so as a strategic "think tank" guy (worst thing the DoD asked him (and I assume his people) to evaluate was a proposal to flood the Midwest and hide subs in the resultant lake (I kid you not, and I've heard of this insane scheme independently)), then helping to get SDI launched in the Reagan administration.

Of course, the simplest narrative is that Reagan was the first US president who decided to end, rather than "contain", the USSR.


Hrm. I'd have to see Pournelle's specifics, though I'm not particularly inclined to find him highly credible. The narrative is interesting.

A few pieces I've been putting together from numerous sources:

1. The USA and USSR were the two dominant oil suppliers of the first half of the 20th century, and are still typically trade off the 2nd & 3rd spots, after Saudi Arabia, today. Oil is much of what made the 20th century. See Daniel Yergin's The Prize (mentioned several times in this thread), and Manfred Weissenbacher's Sources of Power -- he notes this in the introduction. The book is an exporation of how energy shaped history.

2. The final collapse of the Soviet Union happened in large part through the oil glut of the late 1980s. The USSR had overextended its domestic committments, had been forced into an unsustainable arms race by the US (which had greater capabilities than the USSR through much of the postwar period, total ground fources excepted).

3. William Ophuls, a little-known author, who combines ecology and political science. In his 1977 book Ecology and the Politics of Scarcity, he calls much of the subsequent three decades of development, including the fall of the USSR, the industrialisation of China, and the nonindustrialisation (mostly) of India and Africa. Moreover, he gets the dynamics right, a far more crucial element IMO than timing, which is hugely uncertain.

I've found it interesting that command economies (USSR, China, North Korea, Cuba, East Germany) often see a very rapid initial growth stage, then a stagnation. One might argue that there are exceptions (Saudi Arabia is essentially a family-government-enterprise-state institution based on oil), and there are market-democratic states that fare poorly. But that quick-launch-early-plateau dynamic seems fairly common.

Appreciate the ref even if I'm taking it skeptically.


About to go to bed, but this item:

The final collapse of the Soviet Union happened in large part through the oil glut of the late 1980s.

Is at least claimed to be part of Reagan's economic warfare against the USSR.

Note also that not any one or even two of these things were likely sufficient to bankrupt it, they all piled on particularly in the '80s, and most of it was external and intentional.


Collapse tends to be a process of knocking out of foundations until something ultimately precipitates the rapid chain-reaction of failure.

In the case of energy, there's much in the dynamic and magnitude which offers itself as a principle mode of failure. And yes, it does fit into the "Reagan's economic warfare" mode.

On which, a couple more observations.

1. There are those who claim "economic warfare" isn't, and cannot, be a thing. I have words for such people, which generally aren't welcomed on HN. I also have references to comprehensive policy books on the topic of economic warfare: Yuan-Li Wu, Economic Warfare (1952), http://www.worldcat.org/title/economic-warfare/oclc/330856&r...

2. There are those who claim that trying to defeat other nations through energy policy and markets is absurd. Alex Epstein, a particularly exemplary case of idiot, is one such. The USSR-oil case really seals the argument against his assertion. I've noted this previously elsewhere.


Debunking Economics by Steve Keen. Though be warned, you might not quite appreciate economic textbooks afterwards.


Debunking Economics by Steve Keen, though be warned, you might not quite enjoy economic textbooks afterwards.


Eliyahu Goldratt books, especially ones that include his explanation about Throughput Accounting.


I suggest building reading lists baed on a list of Nobel Prize winners for the subject.


Read 10-Ks and 10-Qs and build operating models in excel.


I'd highly recommend The Intelligent Investor.


One of the best articles on Economics is Ayn Rand's "Egalitarianism and Inflation" in her anthology "Philosophy: Who Needs it".


Econned is essential reading


Here are my recommendations. This list is optimised to teach you the fundamentals of economics and finance, give you alternative perspectives on status quo economic/financial thinking and then equip with you with tools, ideas, and concepts to come up with original investment ideas and increase the likelihood that they are going to actually make you, your clients, and your firm a lot of money without anybody getting grilled by the House Financial Services Committee, the SEC, or ending up in jail.

1.) Get a recent copy of the CFA curriculum and do the end of chapter exercises. You can probably skip a lot of the quantitative methods material if you’re doing a degree in stats. The CFA curriculum will give you a solid understanding of all the major sub-categories of economics (micro, macro, corporate finance, security analysis, accounting, financial statement analysis, alternative investments, derivatives, portfolio management, and most importantly ethical standards for financial professionals.

2.) Read the Economics Anti-Text Book to crush any illusion that the neoclassical economic paradigm, which the CFA curriculum is based on, is the only scholarly interpretation of how economics works in the real world. Then read it again. If you’re really a diehard scholar read some of the alternative economics papers that the book references.

3.) Find a good book or paper that covers Rational Choice Theory in depth. Then, at least, read Kahneman and Tversky (1979). If you can, read all of Kahneman and Tversky’s papers. This should also help clear any illusion that humans being are rational agents, which is a cornerstone of neoclassical economics, and give you a foundation for thinking about how people in markets really make decisions.

4.) Read Fooled by Randomness to get more alternative thinking on decision making and how finance and economics works in the real world vs. the textbook stuff that you’re going to learn via the CFA curriculum.

5.) Read Business Dynamics (Sterman, 2000) to learn how to model systems the “right” way.

6.) Read Best Practices for Equity Research Analysts (Valentine). Regardless if you want to be an equity analysis or not, this book is the best book around if you want to learn how to organise yourself to succeed working day-today in an investment decision making role. Just think about the equity specific aspects in the context of whatever category of finance you’re interested in.

7.) The Sleuth Investor (Mandelman). A lot to people complained that some of this book’s suggestions cross an ethical line. I disagree. Again, this books will give you an alternative perspective about how economic agents gather information on the critical factors that will move the variables they’re interested in (e.g. stock prices, bond ratings, commodity prices, earnings, etc). It’s basic premise is get out of the building and collect HUMINT (echoing Valentine more aggressively) like a CIA case officer instead of a nerd in a cube reading the same 10K’s, sell-side research, as everybody else.

8.) Expectations Investing (Mauboussin) is a must read for how to come up with contra-consensus investment ideas and get it right.

9.) Investing: The Last Great Liberal Art is a must read for learning how to incorporate information from other fields (physics, biology, sociology, etc) into your economic analysis.

10.) (Optional) Diaminds: Decoding the Mental Habits of Successful Thinkers that challenges you to think about your thinking and assess how great business thinkers think. Not a economics but definitely will help you become a better economic thinker.

Good luck!


gates on musical notes


Progress and Poverty:

https://www.amazon.com/Progress-Poverty-Industrial-Depressio...

Why is there so much poverty amongst all our progress? Georgism and land value tax. Essential reading IMHO and an enjoyable read also.


For a thorough understanding of free-markets and the laws of economics, Capitalism: A Treatise on Economics by George Reisman. Economic Sophisms by Frédéric Bastiat. Socialism by Ludwig von Mises.


Financial Intelligence for Entrepreneurs – Karen Berman & Joe Knight

Simple Numbers, Straight Talk, Big Profits – Greg Crabtree

The 1% Windfall – Rafi Mohammed

Accounting Made Simple – Mike Piper

How to Read a Financial Report – John A. Tracy

Venture Deals – Brad Feld & Jason Mendelson

And http://www.bloomberg.com/news/features/2016-05-30/the-untold...


"Fail Safe Investing" by Harry Browne and "The Intelligent Investor" by Benjamin Graham.

Discussion of the former here:

http://www.gyroscopicinvesting.com/forum


Niederhoffer did his PhD in statistics. He is nuts but he basically invented quantitative trading. Maybe you read his book "Education of a trader" and the "New Yorker" article about him ("The Blow up artist").


borowitz report


I would also recommend this book: https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years


Here's a classic :) http://www.lawfulpath.com/ref/sw4qw/index.shtml


Mark Joshi's "The Concepts and Practice of Mathematical Finance" came recommended to me by some people in the field as a foundation. I found it quite readable.


The Ownership of Enterprise talks about different types of organizational forms (corporations, cooperatives, etc.) and how the form affects its function, and vice versa.




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