My 14 Favorite Investing Books (And Why)

Hi and welcome again to the Best Anchor Stocks blog,

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I thought it would be a great idea to bring a list of my all-time favorite investing books so that you have more material to read in your spare time. At first I thought it might be a good idea to order them, but then I realized that each book is unique in its own way and that ordering them would be (1) tough, and (2) not much of a value add.

I have read a lot of investing books over the last decade, but I am not one of those people who grows obsessed with remembering everything they've read. I believe that every book has a great lesson to teach and that if the reader comes out with that lesson learned then the book is worth its price (almost always). This single lesson learned is almost always enough to justify reading all the pages, even if we forget about 95% of its content.

Without further ado, let's give it a go!

1. Capital returns by Edward Chancellor

This is definitely one of my all time favourite investing books (so it being the #1 might be justified). It's basically impossible to become a good investor without understanding the capital cycle and how this capital cycle influences management's capital allocation decisions. Most times, management will be procyclical (ie., not great).

I used to completely ignore somewhat cyclical companies, but I changed my mind after reading this book. A cyclical company operating in a secular industry can be an outstanding investment if management understands and preaches with the concepts shared in this book.

For those of you willing to dig deeper, I also shared a while ago a thread on X (formerly Twitter) with the most relevant topics of the book.

2. Capital Allocation by David Giroux

Warren Buffett once said the following to highlight the importance of capital allocation:

After ten years on the job, a CEO whose company annually retains earnings equal to 10% of net worth will have been responsible for the deployment of more than 60% of all the capital at work in the business.

This books should help you get a birds-eye view on what options are available to management teams in terms of capital allocation. You should not expect an extremely detailed explanation, but that's precisely what in my opinion makes it so good. Remember that in investing you don't earn extra points for complexity. Capital allocation does not need to be complex, it needs to be sensible and applied over a very long period.

3. Flash Crash by Liam Vaughan

This might be a controversial one because if you have read this book, you'll know that it has more to do with trading than investing. This is, in my opinion, what makes it so special.

Besides being very entertaining, the book teaches long-term investors that markets don't move over the short term due to fundamentals. This might come as no surprise to anyone...but the people who constantly buy and sell stocks to profit from short term movements might not even know what the company does!

4. Common Stocks and Uncommon Profits by Phil Fisher

I have special affection to this book because it was one of the first I read when I started reading about investing.

It's a great book to get started and teaches how few people do actual deep research and why one can have an edge by doing it. The book was written a long time ago and many have argued that the market has gotten more efficient since then, but I'll take the under on that statement.

5. Quality of Earnings by Thornton L. O'Glove

This is the only pure accounting book of the list. It teaches how misleading the financial statements of any given company can be.

Accounting standards and rules have evolved a lot since this book was published (1987), but the desire of some management teams to "make up" the numbers has not (or might have even increased!).

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6. What I Learned About Investing from Darwin by Pulak Prasad

I could write a lot about this book here but I don't think it's necessary since I already wrote an entire article on it.

What I Learned About Investing From Darwin describes Nalanda Capital's approach to financial markets and how it has served the fund so well over its history. I had the chance of speaking with Pulak Prasad a couple of months ago and I must say that besides a great investor he is also a great person.

7. Lessons from the Titans by Scott Davis, Carter Copeland, & Rob Wertheimer

Another great book on corporate history. The book outlines the strategy followed by 10 leading industrial companies to understand what characteristics have helped them endure through the years.

I have always said that any long term investor should strive to improve its pattern-recognition skills, and I think this is a great book to do so.

8. The Big Money by Frederick Kobrick

There's not much to say about this book to be honest. Investing is not a destination but a journey, so we must constantly strive to learn more. There are few better ways to learn about investing than learning from the strategies of great fund managers such as Frederick Kobrick.

9. Capitalism without Capital by Jonathan Haskel and Stian Westlake

Looking back at history is always important to judge the future. As Charlie Munger said...

There is no better teacher than history in determining the future. There are answers worth billions of dollars in a $30 history book.

While I 100% agree with Charlie's take here, we must also be aware that business models change and we must learn to adapt to these changes. This book teaches how intangible assets can't be viewed through the same lens as tangible assets and why intangible-heavy companies might be so valuable.

10. Billion Dollar Lessons by Paul Carroll and Chunka Mui

To improve our pattern-recognition ability we must not only learn from the successful companies but also from the unsuccessful; this way we'll be able to understand both sides of the coin.

Billion Dollar Lessons analyses the worst business failures of recent history to help investors avoid what has happened in the past. You know what they say...

History doesn't repeat but it often rhymes.

11. Antifragile by Nassim Nicholas Taleb

Many will not link this book to investing, but I think there's a lot to learn from it that can later be applied to the investing world.

Antifragile teaches what makes something truly durable and why long term investors should deeply care about durability and surviving black swan events, even if these events are very rare.

12. Quality Investing by Lawrence Cunningham, Torkell Eide & Patrick Hargreaves

Just like "Lessons From The Titans", "Quality Investing" goes over a number of greatly successful companies to understand what they have in common. Great for cultivating pattern-recognition abilities.

13. One Up On Wall Street by Peter Lynch

I know this book might be known by pretty much all the readers, but I share it here for two reasons. First, it was one of the first books I read on investing a long time ago. Secondly, and probably most importantly, it taught me a great lesson: investing is not simple, but it's not as complex as many want to make you believe either.

14. 100 Baggers by Chris Mayer

Chris is a very good friend of mine and has always been extremely kind with me. His book is also a great source to train pattern-recognition abilities, as it goes over many companies that have been 100 baggers and what made them great.

I had the luck of interviewing Chris on the podcast, so feel free to listen to that episode if you want to dig deeper!

I hope you liked this style of article and be sure to hit me with your favorite investing book in the comments section (so that I can buy it and read it!).

In the meantime, keep growing!