
Ask HN: What are the must-read books about economics/finance? - curiousgal
Hey HN,<p>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&#x27;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.<p>Thanks!
======
reqres
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.

~~~
marmot777
Would an economist go through an entire career and never read, say, John
Locke? I don't know the answer. I'm genuinely curious.

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

~~~
marmot777
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?

~~~
yomritoyj
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.

~~~
marmot777
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.

------
davidivadavid
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](http://www.deirdremccloskey.com/docs/price.pdf)

~~~
blahi
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.

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

~~~
smnplk
Oh, that same guy that did this
[http://www.nytimes.com/2015/09/21/business/a-huge-
overnight-...](http://www.nytimes.com/2015/09/21/business/a-huge-overnight-
increase-in-a-drugs-price-raises-protests.html)

~~~
smnplk
But I must say, this was amusing
[https://www.youtube.com/watch?v=7Z6TecVZAhk](https://www.youtube.com/watch?v=7Z6TecVZAhk)
:D

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

------
ohthehugemanate
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.

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

~~~
qznc
I guess this one:
[http://www.imdb.com/title/tt1358383/](http://www.imdb.com/title/tt1358383/)

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

------
kevinburke
(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/](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...](https://www.amazon.com/Poverty-Prosperity-Intangible-
Liabilities-
Scarcity/dp/1594032505/ref=sr_1_1?s=books&ie=UTF8&qid=1474597828&sr=1-1&keywords=from+poverty+to+prosperity+kling)

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...](https://www.amazon.com/Intelligent-Investor-Definitive-Investing-
Essentials/dp/0060555661)

~~~
blobbers
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.rbcpa.com/WEB_letters/WEB_Letters_pre_berkshire.html)

[http://www.berkshirehathaway.com/letters/letters.html](http://www.berkshirehathaway.com/letters/letters.html)

Enjoy.

~~~
thanatropism
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!

~~~
oli5679
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...](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.459.4558&rep=rep1&type=pdf)

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.

~~~
unixhero
Thank you, now this thread is going somewhere. _Popcorn time_

------
AndrewKemendo
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

~~~
jnordwick
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.

~~~
AndrewKemendo
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.

~~~
jnordwick
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.

~~~
tim333
>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?

~~~
hga
Perhaps start here:
[https://en.wikipedia.org/wiki/Phillips_curve](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...](https://en.wikipedia.org/wiki/1973_oil_crisis#End_of_the_Bretton_Woods_currency_accord)).

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.)

~~~
tim333
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.

~~~
hga
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.

------
soVeryTired
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.

------
oli5679
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.

~~~
tvanantwerp
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.

~~~
oli5679
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.

------
RockyMcNuts
As a start, take some economics courses, intro Micro and Macro. (Check
[https://www.coursetalk.com/](https://www.coursetalk.com/) [https://www.class-
central.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...](https://www.amazon.com/Worldly-Philosophers-Economic-Thinkers-
Seventh/dp/068486214X)

A couple of more right-leaning books - Hayek, The Road to Serfdom
[https://www.amazon.com/Road-Serfdom-Fiftieth-
Anniversary/dp/...](https://www.amazon.com/Road-Serfdom-Fiftieth-
Anniversary/dp/0226320618/ref=pd_sim_14_17)

Friedman, Capitalism and Freedom [https://www.amazon.com/Capitalism-Freedom-
Anniversary-Milton...](https://www.amazon.com/Capitalism-Freedom-Anniversary-
Milton-Friedman/dp/0226264211)

Less right-leaning

The Marx-Engels Reader [https://www.amazon.com/Marx-Engels-Reader-Second-Karl-
Marx/d...](https://www.amazon.com/Marx-Engels-Reader-Second-Karl-
Marx/dp/039309040X)

~~~
shermablanca
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.

------
bbayles
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.

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

~~~
bbayles
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).

------
jnordwick
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...](https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Operator)

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/...](https://www.amazon.com/Way-World-Works-Gateway-
Contemporary/dp/0895263440)

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\](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...](https://www.amazon.com/Game-Theory-Press-Drew-
Fudenberg/dp/0262061414)

~~~
15155
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.)

~~~
totalZero
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.

------
ddebernardy
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.

~~~
js8
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.

------
lujim
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...](https://www.amazon.com/Complete-Quantitative-
Professionals-McGraw-Hill-Investment/dp/0071468293)

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.

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

~~~
lujim
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)

------
vegancap
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.

~~~
npongratz
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/](https://fee.org/resources/economics-in-one-lesson-2/)

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

Adam Smith - 'Wealth of Nations':
[http://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf](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](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/](https://fee.org/resources/human-action-by-ludwig-von-mises/)

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

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

~~~
marmot777
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.
:-)

~~~
seereadhack
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](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.

~~~
marmot777
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.

------
scott00
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.

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

~~~
thr0waway1239
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](http://www.joelonsoftware.com/articles/CollegeAdvice.html)

------
marmot777
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](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.

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

~~~
marmot777
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.

~~~
marmot777
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."

------
tom_b
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...](http://statweb.stanford.edu/~tibs/ElemStatLearn/download.html)).
Although it isn't specifically about economics or markets, you should at least
read it.

I'm at a loss on general economics books.

~~~
curiousgal
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!

------
loeber
_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.

~~~
contingencies
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.

~~~
davidivadavid
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...](http://delong.typepad.com/sdj/2014/11/monday-smackdown-in-the-absence-
of-high-quality-delong-smackdowns-back-to-david-graeber.html)

------
geff82
"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.

~~~
mikecb
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.

~~~
geff82
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.

------
tmaly
Economics in One Lesson by Henry Hazlitt

Human Action by Ludwig von Mises

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

~~~
dmfdmf
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.

------
gtrubetskoy
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/](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.

------
malloryerik
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...](https://www.amazon.com/Global-Capitalism-Fall-Twentieth-
Century/dp/039332981X)

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-...](http://scholar.harvard.edu/jfrieden/pages/global-capitalism-
its-fall-and-rise-twentieth-century)

------
jmcgough
A Random Walk Down Wallstreet.

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

------
longsangstan
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.

~~~
HSO
> _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...](https://www.amazon.com/Mathematics-Plausible-Reasoning-Two-
Volumes/dp/1614275572/)

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

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

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

~~~
qntty
thanks for the Polya recommendation

------
gawry
A nice place to start might be the CFA study guide

[https://www.cfainstitute.org/programs/cfaprogram/courseofstu...](https://www.cfainstitute.org/programs/cfaprogram/courseofstudy/Pages/index.aspx)

------
randcraw
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

------
orthoganol
"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.

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

[https://www.amazon.com/Free-Choose-Statement-Milton-
Friedman...](https://www.amazon.com/Free-Choose-Statement-Milton-
Friedman/dp/0156334607)

------
pmilot
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](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.

------
shmulkey18
A brief but profound paper: The Use of Knowledge in Society by Hayek
([http://home.uchicago.edu/~vlima/courses/econ200/spring01/hay...](http://home.uchicago.edu/~vlima/courses/econ200/spring01/hayek.pdf)).

As others have said, the EconTalk podcast is excellent.

------
hkmurakami
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.

~~~
pjmorris
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.

------
n00b101
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

~~~
tedunangst
Second vote for Hull.

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

------
astazangasta
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...

------
meigwilym
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.

~~~
astazangasta
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!

------
2T1Qka0rEiPr
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.

------
qubex
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)

------
misiti3780
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

------
Henchilada
I highly recommend Debt: the first 5000 years [https://www.amazon.com/Debt-
Updated-Expanded-First-Years/dp/...](https://www.amazon.com/Debt-Updated-
Expanded-First-Years/dp/1612194192/)

and Heilbroner's Worldly Philosophers [https://www.amazon.com/Worldly-
Philosophers-Economic-Thinker...](https://www.amazon.com/Worldly-Philosophers-
Economic-Thinkers-Seventh/dp/068486214X)

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

------
edge17
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.

------
yomritoyj
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.

------
logfromblammo
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...](http://beanactuary.org/exams/preliminary/?fa=preliminary-computer-
based-exams) [1] [https://www.soa.org/education/exam-req/edu-exam-p-
detail.asp...](https://www.soa.org/education/exam-req/edu-exam-p-detail.aspx)
[2] [https://www.soa.org/education/exam-req/edu-exam-fm-
detail.as...](https://www.soa.org/education/exam-req/edu-exam-fm-detail.aspx)
[3] [https://www.soa.org/education/exam-req/edu-exam-mfe-
detail.a...](https://www.soa.org/education/exam-req/edu-exam-mfe-detail.aspx)
[4]
[https://www.casact.org/admissions/syllabus/index.cfm?fa=Ssyl...](https://www.casact.org/admissions/syllabus/index.cfm?fa=Ssyllabi&parentID=345)

------
ElonsMosque
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.

------
pjc50
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...](https://www.amazon.co.uk/Other-Path-Economic-Answer-
Terrorism/dp/0465016103)

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...](https://www.amazon.co.uk/Where-Are-Customers-Yachts-
Investment/dp/0471770892)

------
marginalcodex
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.

~~~
tomrod
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.

~~~
Dowwie
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.

~~~
tomrod
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.

------
chiliap2
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.

------
unixhero
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](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-...](https://www.amazon.com/Principles-Corporate-Finance-Richard-
Brealey/dp/0073405108)

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

Nicholas Taleb, Black Swan; [https://www.amazon.com/Black-Swan-Improbable-
Robustness-Frag...](https://www.amazon.com/Black-Swan-Improbable-Robustness-
Fragility/dp/081297381X)

Harry Markopolos, Nobody Would Listen, [https://www.amazon.com/No-One-Would-
Listen-Financial/dp/0470...](https://www.amazon.com/No-One-Would-Listen-
Financial/dp/0470919000)

Michael Lewis, Liars Poker, [https://www.amazon.com/Liars-Poker-Norton-
Paperback-Michael/...](https://www.amazon.com/Liars-Poker-Norton-Paperback-
Michael/dp/039333869X)

"Leveraged Sellout", Damn It Feels Good To Be A Banker,
[https://www.amazon.com/Damn-Feels-Good-Be-
Banker/dp/14013096...](https://www.amazon.com/Damn-Feels-Good-Be-
Banker/dp/1401309682)

------
baristaGeek
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.

------
crdoconnor
Traders, Guns and Money - Satyajit Das

Debunking Economics - Steve Keen

The Volatility Machine - Michael Pettis

------
Osiris30
On topic article on economist Paul Romer's view on the current state of macro:
[http://www.economist.com/news/finance-and-
economics/21707529...](http://www.economist.com/news/finance-and-
economics/21707529-no-holds-are-barred-paul-romers-latest-assault-
macroeconomics-emperors)

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

An absolute must.

------
eth0up
Road to Serfdom, by F.A. Hayek?

~~~
quantumhobbit
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.

~~~
hga
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](https://en.wikipedia.org/wiki/The_Road_to_Serfdom)

------
dash2
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.

------
mempko
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.

------
qwrusz
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...](https://www.cfainstitute.org/programs/cfaprogram/Pages/index.aspx)

TII book wiki:
[https://en.wikipedia.org/wiki/The_Intelligent_Investor](https://en.wikipedia.org/wiki/The_Intelligent_Investor)

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

------
dxbydt
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.

------
fitzwatermellow
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 ;)

~~~
hga
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.

------
yodsanklai
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.

~~~
baristaGeek
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.

------
cubey17
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](http://a.co/jicSNc9)

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

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

------
fiatjaf
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.

~~~
pyromine
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.

~~~
fiatjaf
That field is obviously a fantasy.

------
Dowwie
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"

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

~~~
Dowwie
Innoculation.

------
waleedsaud
Economics in One Lesson by Henry Hazlitt [https://mises.org/library/economics-
one-lesson](https://mises.org/library/economics-one-lesson)

------
known
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...](http://www.bloomberg.com/news/features/2016-05-30/the-untold-story-
behind-saudi-arabia-s-41-year-u-s-debt-secret)

------
crispytx
The Intelligent Investor by Benjamin Graham

One Up on Wall Street by Peter Lynch

~~~
totalZero
+1 for _One Up on Wall Street_. A very smart and practical read.

------
frankyo
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.

------
justifier
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;

------
hellogoodbyeeee
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.

------
jaynos
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.

------
danvesma
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-...](https://www.amazon.co.uk/When-Principles-Pay-
Responsibility-Publishing-
ebook/dp/B008CP1CDY/ref=sr_1_1?ie=UTF8&qid=1474630305&sr=8-1&keywords=geoffrey+heal)

------
JSeymourATL
> 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](http://www.goodreads.com/book/show/1995421.Seeking_Wisdom)

------
xapata
"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.

------
p4wnc6
In addition to the many fine recommendations already on the thread, I enjoyed
Winner's Curse and Irrational Exuberance.

------
kresimirus
How an Economy Grows and Why It Crashes from Peter Schiff:
[https://www.amazon.com/How-Economy-Grows-Why-
Crashes/dp/0470...](https://www.amazon.com/How-Economy-Grows-Why-
Crashes/dp/047052670X)

Very short read - economics basics from libertarian view.

------
SRasch
Capitalism and freedom by Milton Friedman

------
kgwgk
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).

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

[1]: [https://www.amazon.com/Whatever-Happened-Explanation-
Economi...](https://www.amazon.com/Whatever-Happened-Explanation-Economics-
Investments/dp/0942617649/)

------
joshuathomas096
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.

------
chromaton
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.

------
rubyn00bie
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...](https://www.amazon.com/Security-Analysis-Foreword-Buffett-
Editions/dp/0071592539)

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

[4]
[https://en.wikipedia.org/wiki/AD%E2%80%93AS_model](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](http://web.pdx.edu/%7Ecrkl/ec510/ec510-PD.htm)

[6] [https://www.amazon.com/Using-Econometrics-Practical-
Addison-...](https://www.amazon.com/Using-Econometrics-Practical-Addison-
Wesley-Economics/dp/0131367730)

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

[8] [https://www.amazon.com/Age-Economist-9th-Daniel-
Fusfeld/dp/0...](https://www.amazon.com/Age-Economist-9th-Daniel-
Fusfeld/dp/0321088123)

Edit: for formatting.

------
mitchelldeacon9
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

~~~
dredmorbius
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](https://reddit.com/r/dredmorbius)

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

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

------
saganus
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

------
rokob
Microeconomic Theory - MWG [https://www.amazon.com/Microeconomic-Theory-
Andreu-Mas-Colel...](https://www.amazon.com/Microeconomic-Theory-Andreu-Mas-
Colell/dp/0195073401)

------
tezza
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

------
sonabinu
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

------
zhte415
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.

------
karanbhangui
Haven't seen this one posted yet:
[http://www.mcafee.cc/Introecon/](http://www.mcafee.cc/Introecon/)

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

------
hendzen
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

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

~~~
pfarnsworth
In France, Statistics is considered part of engineering.

~~~
davidivadavid
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.

~~~
kejaed
Thanks for the explanation.

------
TheSpiceIsLife
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

------
itscharlieb
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!

------
brudgers
_Capital_

 _Wealth of Nations_

------
bgilroy26
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!

------
anacleto
+1 Mostly Harmless Econometrics - Angrist and Krueger

------
zallarak
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.

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

~~~
hga
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?

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

~~~
hga
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...](http://www.goodreads.com/quotes/65213-briefly-stated-the-gell-mann-
amnesia-effect-is-as-follows-you)

 _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.

~~~
dredmorbius
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.

~~~
hga
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](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.

~~~
dredmorbius
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.

~~~
hga
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.

~~~
dredmorbius
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...](http://www.worldcat.org/title/economic-
warfare/oclc/330856&referer=brief_results)

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.

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

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

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

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

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

------
haney
I'd highly recommend The Intelligent Investor.

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

------
colinmegill
Econned is essential reading

------
megadrive16
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!

------
kerrynusticeNkJ
gates on musical notes

------
branchless
Progress and Poverty:

[https://www.amazon.com/Progress-Poverty-Industrial-
Depressio...](https://www.amazon.com/Progress-Poverty-Industrial-Depressions-
Increase/dp/0911312587)

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

------
mkempe
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.

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

Discussion of the former here:

[http://www.gyroscopicinvesting.com/forum](http://www.gyroscopicinvesting.com/forum)

------
tiatia
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").

~~~
kerrynusticeNkJ
borowitz report

------
bronlund
I would also recommend this book:
[https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years](https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years)

------
bronlund
Here's a classic :)
[http://www.lawfulpath.com/ref/sw4qw/index.shtml](http://www.lawfulpath.com/ref/sw4qw/index.shtml)

------
fatdog
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.

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

