Ah, the roar of the surf, the caress of the sun. What does a Fool take to the sugar sands? Not Graham and Dodd's Securities Analysis, no way, no how. We asked denizens of Fool HQ to recommend investing books whose covers you'd actually crack at the beach between potato chips and Coppertone. Here are our champions -- with a few laughs near the end:
Den of Thieves
, by James Brewer Stewart
Mike Milken was a financial genius, worth every penny of the $500 million he deemed fair to pay himself (for one year!) while at Drexel Burnham. Federal regulators hounded him out of business based on mere trading technicalities, and he remains an unheralded financial genius. Right? No way! Den of Thieves catalogues the various crimes of the big traders of the eighties. And make no mistake, they were committing heavy-duty financial crimes. They created networks of investment bankers and traders that manipulated markets for their own advantage. In the process, they took companies on wild rides as their stock prices were inflated or devastated in order for the likes of Milken, Ivan Boesky, Dennis Levine, and Martin Siegel to reap fortunes.
This book clicks because it offers not just a good explanation of what was happening (crimes being committed), but the lives of the participants. And what could be more interesting than the lives of Park Avenue criminals? Such as when Levine storms out of his annual bonus meeting because he has been insulted by a bonus of a mere one million dollars (feel free to make it sound like Dr. Evil!). Or when Boesky, dining at the fabled Cafe DesArtistes, orders everything on the menu. It is, in the end, a fun ride of a book. Just don't expect a movie ending. Although the book is based on figures that were caught and convicted, our criminal justice system simply does not exact revenge on white-collar criminals the same way street level hustlers are treated. A great read! -- Al Silber (TMF Weasel), Business Development
The Go-Go Years: The Drama and Crushing Finale of Wall Street's Bullish 60s
, by John Brooks
Youth may have been turning on and dropping out, but Wall Street boomed, and computer stocks were the era's Internet mania. Former New Yorker writer John Brooks spins a gripping tale of huge money gained and lost by a rogues' gallery of capitalists and shysters, from Ross Perot building a fortune to Saul Steinberg mounting takeovers of venerable corporate names and bleeding them dry.
Individual investors are powerless in a game where the Old Establishment fights to govern itself in the face of high-flying mutual funds made famous by Gerry Tsai, leveraged buyouts by the new house-of-cards conglomerates, and the Securities and Exchange Commission straight-jacketed by politics while it tries to push the biggest market reforms since the early 1930s. If your financial pain in the last year is great, this is a world to escape to. It offers just enough parallels to pull you in but none to rub the wounds. -- Tom Jacobs (TMFTom9), Editorial
How to Lie With Statistics
, by Darrell Huff
I recommend this oldie but goodie. Originally written in 1954, and revised in 1993 (they found more lies?), this short-but-sweet book takes a humorous look at how statistics are misused and abused by Wall Street, advertisers, and a myriad of others trying to prove a point anyway they can. This book was clearly written to educate, amuse, and enrich, and at an Amazon price of $8, it won't set you back too much. Can it be more Foolish? If you like the quote, "There are lies, damned lies, and statistics," then you'll love this book. -- Ollen Douglass (TMF DaddyO), Finance
Where Are All the Customer's Yachts?
by Fred Schwed
Fred Schwed gets my vote for First Fool. This little book, written in 1940 by an acerbic observer of Wall Street during the '20s and '30s, could have been written last year with just a few minor changes in the technology references. Graced with a kind of Thin Man style and humor, the portrait of Wall Street and its customers is both laugh-aloud funny and very sobering when you realize just how little has changed. It serves up a lesson in maintaining your head when all around are losing theirs. -- Ann Coleman (TMFAnnC), Editorial
The Tipping Point
, by Malcolm Gladwell
Ever wonder how Hush Puppies shoes -- a fine serviceable shoe, but certainly no trend setter -- suddenly became "hip" in the mid-1990s? Wolverine, owner of Hush Puppies, did not create this change, but they profited greatly from it. Gladwell provides a way to think about how change happens ("Three Rules of Epidemics") and the types of people who have the natural ability to be change agents (connectors, mavens, and salesmen). In the case of this brushed-suede classic, Gladwell traces Hush Puppies' rise in popularity back to the source: used clothing stores in trendy New York City neighborhoods and the "mavens" who shopped there.
How can you use this knowledge? While there is no formula for effectively creating change, there is also no need to approach problems with a series of random attempts to see what works. Using well-known "Big Differences" (the drop in the New York City crime rate in the late 1990s and the change in children's television begun by Sesame Street), Gladwell details the "Little Things" that together created a situation or product that was far better than it had ever been. Unlike Wolverine and its Hush Puppies, Sesame Street did control the change that resulted in its product success through extensive market research. For anyone who tries to solve problems or "do stuff better," understanding these case studies allows you to take a fresh look at where you are, where you would like to be, and the possibilities for getting there. As an investor, the companies that understand this message and use it to their advantage are the ones to look for.
A writer for The New Yorker magazine, Gladwell presents his argument with the same mixture of original reporting, research, analysis, and fascinating story-telling that is a New Yorker signature. A great book for thinkers and problem solvers. Enjoy! -- Rachel Leahey (TMF2Putt), Customer Service
The Clustered World
, by Michael J. Weiss
Have you ever moved to new towns or neighborhoods and suddenly gotten an entirely new collection of junk mail and catalogs? The reason is probably PRIZM's Claritas marketing cluster system, which categorizes zip codes, streets, and blocks into 62 "clusters." These clusters give a demographic description of who lives there -- including income, race, hobbies, and media habits -- but they also try to describe the personality of the area.
My own neighborhood (Dupont Circle in Washington, D.C.), for example, is a "Bohemian Mix" where people are more likely than the average American to rent foreign videos, own an espresso maker, drive a VW Cabriolet, and read GQ. Weiss gives you an introduction to each of the 62 clusters and an understanding of how marketers use them. The book also has some very interesting maps that should give you some cocktail party fodder -- i.e., a Washington, D.C. map that shows Brie vs. Velveeta consumption by neighborhood. -- Duffy Winters (TMF Etiquette), Corporate Solutions
The Motley Fool Money Guide
, by Selena Maranjian
We love this book, but don't believe us. Believe the most reliable independent sources of all, Selena's family and friends:
Mom: "Wow, what a terrific book! Move over, Jane Austen and E.M. Forester -- this breathtaking work puts the rest of the English literary canon to shame."
Sister: "It brought tears to my eyes. The parts about how a stock is born and how to save money when buying a house were particularly poignant. I had to put the book down for a little bit when reading about how to understand financial statements, because I was so choked up."
Brother-in-law: "Thanks for nothing! I started reading it after work and couldn't put it down until I finished it -- at 4:30 a.m. What an incredible page-turner! I've never read such a gripping and suspenseful financial book."
Cousin: "I bet there's a bidding war soon for the movie rights. I can just see Emma Thompson as the sensible estate planner, Harry Dean Stanton as the wily full-service broker, Julia Roberts as the entrepreneur with the heart of gold, and Steve Buscemi as the used car salesman."
Dad: "Can you get us a few dozen copies of the book at a discount?"
College friend: "Great book. Wth its short sections, it's perfect for the bathroom. I'm really enjoying it."
And last, but never least, a nod to...
The Essays of Warren Buffett: Lessons for Corporate America
, by Warren Buffett and Lawrence Cunningham
Buffett, the daring and resourceful masked rider of the open plains, leads a gunslinging adventure through the landscape of the wild and untamed West. No, wait a minute. That was the Zane Grey novel I read a couple of weeks ago. The Essays of Warren Buffett, on the contrary, is quite simply the most succinct expression of Warren Buffett's approach to business and investing now available. While many other books on the shelves claim to have insight into the methods of the man who is arguably the best investor ever to make a trade, this is the only book that gives you the message straight from the Oracle of Omaha himself. Plus, Buffett's rollicking showdown with Dead-Eye Ike is an allegory of frontier justice unparalleled in the literature of Western Americana. -- Jerry Thomas (TMF Cheeze), Community
And there you have them, Fools, investing books you will actually read at the beach. Have fun, send us a postcard, and don't check your portfolio 'til you get back!