
Ask HN: Introductory Books on the Stock Market? - goose847
Hello all.
Most of the books out there on the stock market are these flashy title kind of books promising to make you money.<p>I&#x27;m instead interested at learning about the systems at play with the stock market as the whole thing has always confused me.<p>Books&#x2F;Articles&#x2F;Online Courses will be appreciated!
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sansnomme
Trading and Exchanges: Market Microstructure for Practitioners, An
introduction to quantitative finance by Blyth.

Avoid pop finance books that is light on numbers. If you want to understand
the qualitative aspects/culture/history, books like Flash Boys or Flash Boys:
Not so fast are more than sufficient. Stay away from "technical" books that
are designed for layman and non-technical readers. They will handwave Black
Scholes and economic math and you will simply be going through the movements
without truly understanding.

Books like Reminiscences of a Stock Operator are great secondary books to
supplement your primary readings. You don't give a beginning programmer
Pragmatic Programmers/Clean Code/Programmers at Work when he or she can barely
write a hello world, let alone a quicksort. You want a intro to programming
course followed by something like SICP to lay in the foundations of
abstraction and computer science. It is the same for finance. Half of the
books in this thread are either financial pop science or has little relevance
to somebody who wants a rigorous understanding of how the stock market system
works.

Also to note, Buffet and A Random Walk Down Wall Street are books that espouse
certain schools of thought on managing portfolio. Judge them by their history
and backtest their theories rigorously. It is like Object Oriented
Programming, fads wax and wane with time and everyone has their opinion on how
trading should work so take things with a grain of salt. Lastly, trading and
managing a 10 billion dollar fund is quite different from e.g. 100k in your
tax free social security account due to stuff like network effects and doors
that can only be opened when you have enough zeroes on your spreadsheet so
what's good for the goose is not always great for the gander.

Once you are done with stock markets, get a macroeconomics textbook to
understand how it ties into the federal reserve (or central bank) and how
government bonds affect liquidity, that sort of thing. Again, avoid pop
science books which shows up way too often on HN (this is worse with biology,
another subject that this forum has a poor grasp of).

~~~
HolyLampshade
I’ve worked in the industry for about 15 years now and Trading and Exchanges
is the first book I recommend to anyone who isn’t looking for a flashy “Invest
this way and make millions” book.

Excluding some of the technical details, specifically related to US Equities,
which are a bit outdated, it is hands down the best book on the subject of
market participants and their interactions.

Books like Reminiscences of a Stock Operator are great as well because they
provide a little historical context to market regulation and improvements to
market structure.

If someone were particularly interested in clearing and settlement there is
also After the Trade is Made

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ggambetta
The two books that helped me "get it" the most are "A random walk down Wall
Street" and "The intelligent investor".

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dave333
Some topics to Google: Fundamental vs technical analysis, Buy and Hold, Dollar
cost averaging, Risk management (<\--- most important), Swing trading vs day
trading, Understand put and call options (use
[https://www.optionsprofitcalculator.com/](https://www.optionsprofitcalculator.com/)),
Option greeks

that should get you started

~~~
dave333
A couple more: risk of ruin, and kelly criterion

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naxels
This video by Ray Dalio about the Economic Machine helped me more than any
book I read:
[https://m.youtube.com/watch?v=sMRRz1J9RkI](https://m.youtube.com/watch?v=sMRRz1J9RkI)

~~~
mmhsieh
nice thing about the dalio narrative is that you will not get this view of
credit cycles in a typical economics or finance course.

------
kratom_sandwich
One book that I have enjoyed is "The (Mis)Behavior of Markets: A Fractal View
of Risk, Ruin, and Reward" by Benoit Mandelbrot. Have a look at his Wikipedia
page, it has a link to the book on the Internet Archive.

Many here have mentioned "A Random Walk Down Wall Street"; let me add that
there exists a book called "A Non-Random Walk Down Wall Street", but I haven't
read it yet.

Browse Wikipedia on any trading-related topic you find interesting and you are
probably going to find some books, such as "The Quants"
[https://en.wikipedia.org/wiki/The_Quants](https://en.wikipedia.org/wiki/The_Quants)

Finally, you might want to check out the works of Jack Schwager [1], Michael
Lewis [2] or Ed Thorpe [3].

[1]
[https://en.wikipedia.org/wiki/Jack_D._Schwager](https://en.wikipedia.org/wiki/Jack_D._Schwager)

[2]
[https://en.wikipedia.org/wiki/Michael_Lewis](https://en.wikipedia.org/wiki/Michael_Lewis)

[3]
[https://en.wikipedia.org/wiki/Edward_O._Thorp](https://en.wikipedia.org/wiki/Edward_O._Thorp)

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WnZ39p0Dgydaz1
The reason you may not be getting the answers you want is because your
question is not particularly precise. It's kind of like asking "which
programming books are good?" \- Well, it depends on what you want to build.
Some people will recommend Assembly books, some LISP books, some Python, and
others Javascript, depending on what they fancy. Building a web application is
different from building a compiler. There is some overlap, but what you need
to know to be successful is different.

Trading is kind of like that. Long-term value investing, portfolio management,
day trading, options trading, quantitative strategies, high-frequency trading,
etc, are vastly different approaches, ranging from "assembly" to using a drag
and drop website builder. All these can be used to make money, but what you
need to know, and how you approach the problem, is different. Books will be
useful for one, and totally useless for other approaches. Just like an
assembly book won't teach you how to make a website.

You may want to think about what "kind" of trading you're interested in, and
then ask for specific recommendations related to that. Otherwise you will just
get people recommending random stuff they have some personal relationship
with, like recommending SICP to learn programming. Looking at the answers in
this thread, this is what's happening. They are all over the places at
different levels of abstraction.

EDIT: Also, few people explicitly make these distinctions. Most traders I've
talked to are "locked into" their approach and will talk about it as if there
were no others. That's becuase of the bias they have. E.g. someone trading on
fundamentals may talk to you about earnings reports but will likely not even
be aware of techniques using ML models to optimize order execution or fancy
order types. Just like many web developers will not be aware of how TCP/IP
works, but only vaguely know that it exists somewhere.

------
Jaruzel
You don't say what your current competence is, a way back when I wanted to
_understand_ how it all worked, I read this book:

[https://www.amazon.co.uk/Naked-Trader-anyone-trading-
shares/...](https://www.amazon.co.uk/Naked-Trader-anyone-trading-
shares/dp/0857197819)

Ignoring the 'anyone can make money' byline, a lot of the book covers how it
all works. Of all the trading books I've read, this was the easiest one to
follow, and the only one that I actually remembered what I'd read afterwards.

As a first step into online trading, I wholly recommend it, although I
wouldn't follow his tips verbatim, and your mileage may vary, also do not bet
with money you can't afford to lose, etc. (
[https://www.begambleaware.org/](https://www.begambleaware.org/) )

------
ryansmccoy
A few recommendations, which follow more fundamental investing, some people
have already mentioned:

One Up on Wall Street, 2nd ed. Lynch, Peter - explains what i think is a good
way of looking at the stock market

Common Stocks and Uncommon Profits by Philip A. Fisher - shows importance of
having investment philosophy

Ahead of the Market: The Zacks Method for Spotting Stocks Early - by Mitch
Zacks - shows the importance of quarterly earnings

The Five Rules for Successful Stock Investing: Morningstar's Guide to Building
Wealth and Winning in the Market - how to perform proper analysis on company

How to Make Money in Stocks: A Winning System in Good Times and Bad by William
J. O'Neil - shows example of growth/momentum investing

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Ice_cream_suit
Margin of Safety: Risk-averse Value Investing Strategies for the Thoughtful
Investor by Seth Klarman

[https://en.m.wikipedia.org/wiki/Margin_of_Safety_(book)](https://en.m.wikipedia.org/wiki/Margin_of_Safety_\(book\))

[https://www.amazon.com/Margin-Safety-Risk-Averse-
Strategies-...](https://www.amazon.com/Margin-Safety-Risk-Averse-Strategies-
Thoughtful/dp/1893122816#customerReviews)

------
mitchelldeacon9
Many contributors to this thread justifiably recommend this book, which is an
excellent introduction to finance:

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

I would also suggest the following books, which offer more in-depth analysis
of financial markets and securities:

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

Lynch, Peter and John Rothchild (2000) One Up on Wall Street, 2nd ed.

Mishkin, Frederic (2018) Economics of Money, Banking and Financial Markets,
12th ed.

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montalbano
A similar Ask HN a few weeks ago, and another one from four years ago will
probably have lots of good resources for you:

[https://news.ycombinator.com/item?id=22573204](https://news.ycombinator.com/item?id=22573204)

[https://news.ycombinator.com/item?id=12556160](https://news.ycombinator.com/item?id=12556160)

------
sdwolfz
The book that provided me with the proper knowledge about investing in the
stock market would be:

 _The Five Rules for Successful Stock Investing: Morningstar 's Guide to
Building Wealth and Winning in the Market_

The reason I recommend this is because it teaches you how to read _IFRS
Financial Reports_ and calculate _Discounted Free Cash Flow_ , with practical
examples.

Fun fact: many people have asked me over the years what my secret to investing
was, and I've always pointed them to the book, and told them it's basically
just about reading and understanding each line the financial reports. It takes
a lot of time to do this, and you have to do it every quarter, for all stocks
you own, want to own, and keep an eye on. With time you will learn what
sections to skip and it gets faster, easier. But you have to get your
information from the reports themselves. To this day not even one of those
people has followed my advice and read the book. I guess the thought of
putting in effort scared them away as they were also asking me if they can
find the reports summarized on some website and use that as their source if
information, or if they can pay for some service to calculate discounted free
cash flow for them. To me, having the summary and calculation alone is
pointless, and it's also the fastest part of the process. What's important is
to understand the reason behind the data in the report, something which the
summary eliminates. I have not yet attended a _Shareholders Meeting_ for any
company, but this also helps with understanding the reasons behind the data.

~~~
te
I was put off by the title of this book, but after reviewing the Table of
Contents, I'm quite intrigued and I'll be picking up a copy. Thanks for the
recommendation -- I probably wouldn't have gotten past it's title without it.

~~~
sdwolfz
My pleasure!

Yes, to be fair I was skeptical at first as well, the title does look like
click-bait. But it was recommended to me by somebody that I trust knew what he
was talking about, after that person gave us a talk about the stock market's
financial reports and shareholders meetings. I guess the down-votes I got were
because of a similar reaction from others, I'll have to keep in mind to write
a disclaimer next time I recommend it.

By the way, if you get around to reading it, please drop me an email if you'd
like to discuss about the content or need extra clarification on certain
topics, or more practical examples (you'll find your way to my email from my
user profile). I know I needed in the beginning and couldn't find anybody to
talk to since I was the only one in the group that read it, and I was too
embarrassed to ask the "mentor" such trivial questions.

------
bradwood
I'd suggest The Economist's Guide to Financial Markets.

([https://www.amazon.co.uk/Economist-Guide-Financial-
Markets-6...](https://www.amazon.co.uk/Economist-Guide-Financial-
Markets-6th/dp/1846681731))

------
mmhsieh
Reminiscences of a Stock Operator by Lefevre and Security Analysis by Graham
and Dodd

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idonotknowwhy
[https://www.goodreads.com/book/show/171127.The_Little_Book_o...](https://www.goodreads.com/book/show/171127.The_Little_Book_of_Common_Sense_Investing)

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chuckmcknight
I'm a fan of "The Single Best Investment" by Lowell Miller. It's a nice intro
to the philosophy behind the dividend-growth investment strategy.

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fouc
I once read through 21 "day trading" / stock market books in a month to glean
a basic understanding. Interestingly only one book had one small chapter on
money management & risk management.

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gnopgnip
The Intelligent Investor and Howard Marks The Most Important Thing

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lazyc97
Here is a book a bit dry but teaches you most of the foundational stuffs about
investing.

The Conceptual Foundations of Investing - Bradford Cornell

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qubex
It’s not ‘basic’, but I strongly recommend _Why Stock Markets Crash_ by Didier
Sornette.

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dmarchand90
The intelligent investor is a classic of value-investing, much lauded by
Warren Buffett

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srich36
Market Wizards by Jack Schwager

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haltingproblem
Background: Quantitative institutional trader with a Math/CS/Econ background.
I have built and run trading strategies at hedge funds for the US and emerging
markets.

True story: A senior trader on the trading desk asked me - "Why did the market
go up yesterday?". I tried to pontificate away at some explanation and after a
while just shrugged and said - "I really don't know", fully expecting to be
commended for my honesty. The trader laughed and said: "The market went up
because there were more buyers than sellers". Next question, "Why is the
market going down today", he continued "Because they are more sellers than
buyers". The whole machinery of finance exists to give you a _better_ story
around this but nobody really knows.

There are two perspectives to understand finance. We will call the two
perspectives the Alien Scientist and the Blob ;)

The Alien Scientist perspective is that you have arrived at a new planet with
a thriving civilization unlike your own and they act in inexplicable ways.
After a period of observation, you can predict the _outcome_ of the behavior
in the long term. You cannot predict why the outcomes happen. You also cannot
predict behavior in the short or medium term.

The Blob is one of the many beings who populate the planet under observation.
The Blob is actively trying to understand their environment and how their
fellow blobs behave so they can predict the outcomes and thrive from it. The
Blob is equally vested in understanding the why of the behavior of their
fellow Blobs and also the interaction of the environment, the blobs and so
forth (i.e. second, third, fourth-order effects).

You can take the approach of the Alien Scientist (long term investor) or you
can take the approach of the Blob (trader/economist). If you take the investor
(Alien Scientist) approach you are more concerned with the long term outcomes
in financial markets and not with the why (aside: most financial market
information is pure noise). The Alien Scientist approach should start by
reading "A Random Walk Down Wall Street" and books by John Bogle and Warren
Buffet's musings on investments. You would also do well to understand the
various tax structures and treatments available to you - 401k, housing, ....
since these can significantly impact your end outcomes.

You can invest all the time freed up not having to study finance by reading
gossip rags and watching reality shows - you will be entertained and there are
pretty people to look at ;) Or invest it in your wellbeing and your long term
earning power (i.e. career).

There is plenty of advice in this thread on the Blob approach if you want to
go that route.

Good luck!

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bvd
I would recommend Investing Demystified by Lars Kroijer.

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_ink_
I do not have a recommodation, but I would be specifically interested in books
about trading with options. Any suggestions?

~~~
dave333
Options as a strategic investment is the bible for options

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cocoonkid
extraordinary popular delusions and the madness of crowds

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te
A Random Walk Down Wall Street by Burton Malkiel

Buffett: The Making of an American Capitalist by Roger Lowenstein

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unkoman
Just go to r/wallstreetbets and buy put options

~~~
quickthrower2
Puts are so last week

