Seven Nonfinancial Books That Made Me a Better Financial Professional
Among the many things that my years in finance have taught me is that the more well-rounded you are, the better you are as a financial professional. Investing demands that you be a polymath — knowing a lot about many things (including nonfinancial topics) and how those things interconnect into an organic whole.
In shaping my mind to be a better financial pro, here are some of the books that I read that changed how I perceive and understand the world.
How to Solve a Murder: The Forensic Handbook by Michael Kurland
Being a successful investor is just like being a successful detective. If you invite 10 detectives to look at a crime scene — say, a murder or a bank robbery — there is certainly something to be said for the diligent collection of facts and knowing what kinds of information can be gleaned from facts. These are all of the left-brained, analytical aspects of consciousness. But the detective that solves the crime is not necessarily the most analytical; no, the detective that solves the crime is the one that uses her creativity to reconstruct a story that connects all of the facts together into a cohesive whole. Crimes are also solved by another right-brained activity: assessment and understanding of human motivations and choices driven by those motivations. How to Solve a Murder is written for authors wanting to write more effective detective novels. When I was in graduate business school this book helped me to understand a detective’s mindset. I know I was a better detective — er, uh, investor — because of it.
Crime Scene: From Fingerprints to DNA Testing — An Astonishing Inside Look at the Real World of C.S.I. by Larry Ragle
Long before the television show CSI popularized crime scene investigation this kind of material was incredibly hard for lay audiences to find. Ragle rectified all of this when he began writing about this subject in the mid-1990s. Unlike the book I named just above, this book contains much more of the hard core techniques employed by detectives.
The 7 Habits of Highly Effective People by Stephen R. Covey
Time is in fixed supply, and for investors the demands on their time are nearly infinite. That is because the news flow is never ending and very rich; and that news flow drives perceptions of value for the securities you own. To succeed as a financial professional requires that you have amazing powers of personal organization. The 7 Habits of Highly Effective People is a classic in personal organization. As you read this book, you will discover that you already do many of the things discussed — but there is tremendous value in the overall framework provided, as well as in just identifying the personal skills needed. Don’t make the mistake that some of my fellow graduate school cohorts made when reading this book: Don’t dismiss the material because of its sincerity.
Basic Organizational Behavior by John R. Schermerhorn, James G. Hunt, and Richard N. Osborn
To succeed as a financial professional, you need to be more than a successful analyst. Why? You have to work with other human beings in order to get your work done. You will be working with fellow analysts and a supervisor, such as a portfolio manager or chief investment officer, and you need to get along with these people. Basic Organizational Behavior is powerful career lubricant: it allows you to perceive the interwovenness of behavior and how it creates culture within a firm. The book’s famous “forming-storming-norming-performing” framework alone is worth the price.
Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein
Understanding how mathematicians describe risk philosophically and numerically lies at the heart of modern finance and modern decision making. Bernstein tells the story from its very beginning thousands of years ago and demonstrates why statistics and risk-management are among the greatest inventions of human beings. Pay particularly close attention to gaps between real-world phenomena and the limits of math to describe those same events.
The Cartoon Guide to Statistics by Larry Gonick and Woollcott Smith
This may seem a silly choice for a CFA Institute content director, but I actually think it is the finest book written on statistics, and I have read four other, much more academic books on the topic. The Cartoon Guide to Statistics, however, explains statistics in such a way that you can understand the philosophy behind the mathematics. In other words, you become a better financial professional because you are able to better synthesize the elements of statistics: geometry, algebra, calculus, and probability theory — all of which have been borrowed from in order to create what we call “statistics.” Last, you cannot be a successful financial pro and not understand statistics. Many pros are hiding their ignorance; of that I assure you. You do not have to be one of those people.
The Yoga-Sutra of Patanjali: A New Translation with Commentary by Patanjali and Chip Hartranft
If you understand your mind and you have conscious awareness, you can come into better accord with reality and can avoid prejudices, preferences, and mental biases. This skill lies at the very heart of being a successful investor, and put another way it is the definition of wisdom: the degree to which you are in accord with reality. So, why not turn to a thousands-year-old text about meditation and conscious awareness? In particular, I found the commentary provided by Chip Hartranft to be spot-on in relating these ancient concepts to my own experience with meditation practice. What is more, in my opinion, meditation is the antidote to the many admonitions against judgment errors identified by behavioral finance!
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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25 thoughts on “Seven Nonfinancial Books That Made Me a Better Financial Professional”
Thanks Jason. Against the Gods is great; just rediscovered it after a decade in a bargain bin used book sale. Just bought Yoga-Sutra and Cartoon Stats to see what they are like. It is essential for professionals to be well read outside of finance to find some way to ground and connect with our non-financial clients.
Thank you for taking the time to comment on the above list. Thank you, too, for trusting some of the choices on the list. I really hope that you like those books as much as I do.
i have only read seven habits way back in 2009. good collection
Thank you, I am glad you found the list good.
Thank you very much! l am reading one of the book now, l got so much inspiration and power from the books, l appreciate your recommendation. hope you can recommend more books on finance . thank you!
Thank you for taking the time to share your thoughts with me and other readers : )
I wrote a previous post with tips about “How to Become a Research Analyst” [see:http://blogs.cfainstitute.org/investor/2013/09/12/advice-on-how-to-become-a-research-analyst/ ] and in the comments section of the post I listed many finance texts.
For your convenience, here are those that I recommended:
** Graham & Dodd’s Security Analysis, Fifth Edition; Cottle, Murray, Block; McGraw-Hill
** Financial Valuation: Businesses and Business Interests; James Zukin, editor; Warren, Gorham, and Lamont
* It’s When You Sell That Counts; Donald J. Cassidy; Irwin
* Against the Gods; Peter L. Bernstein; John Wiley
* The Shareholder Value Myth; Lynn Stout; Berrett Koehler
* Mydia Myth Makers; Benjamin Radford; Prometheus Books
* Strategic Intuition; William Duggan; Columbia Business School
* Models.Behaving.Badly.; Emanuel Derman; FreePress
* Profiting from Chaos; Tonis Vaga; McGraw-Hill
** The Intuitive Investor; Jason Voss (me); Select Books
* Analysis for Financial Management; Higgins; Irwin McGraw-Hill
* 101 Business Ratios; Gates; McLane
** Financial Reporting and Statement Analysis; Clyde P. Stickney; Dryden
** Financial Management: Theory and Practice; Brigham and Gapenski; Dryden
Thanks so much. My 2014 reading list is in place now. Cheers.
I hope that you enjoy the books and that they inform your thinking!
Big smiles sent your way!
Now a days, m studying 7 Habbits of Highly Effective People. Its a great source of self development material
Thank you for endorsing the book. It is among my favorite books!
After reading your article, it gives me a feeling of pride that I have read two books out of the seven mentioned: Seven Habits by my all time favourite Stephen R. Covey and Yoga Sutra of Patanjali.
It arouses a great interest to read the first two and especially the How to solve a Murder, a forensic handbook.
I am enthused to see how this can help in my Financial Analysis.
Thanks for this great Article. Love it
What a fantastic testament. Hurray! Thank you for adding the weight of your opinion to the list. Would you mind sharing with the readers more of your favorites?
Awesome collection… read 7 habits of highly effective people…really motivating i must say..i’ll also be attempting to appear in the CFA examinations..it would be really kind and helpful if you can suggest some good course books that would help me.
Thank you for sharing your experience with “7 Habits.”
As for what course books help with the CFA exam…the study materials that accompany the exam should be enough to help you prepare. When I took the exams that was the entire basis of my study effort. Note: for me it took about 1.5-2.0x the time to study for the exam as what was described. Use your time very wisely and leave yourself 3-4 weeks before the exam to review for and study for the exam.
Best wishes for success!
Thanks Jason wonderful collection indeed and would like to add one more book 5000 years of debt
It happens when think out of box this will give a better idea about the other things.Thanks
I hope that is exactly how people perceive the list I created: “thinking outside of the box.”
Thank you for adding that book to the list of possibilities!
Jason, you are just awesome. We need more people like you who can guide us and enlighten us. People need direction and a right mentor more than anything else. Kudos to you!!!
Thanks so much for sharing your praise. I have always enjoyed sharing the limited amount of what I know with the financial community and I am glad that you find this helpful.
4 of above 7 continue to be my favorites too! Helpful blog Jason!!
Thank you for weighing in on your favorite of the books. Almost everyday I find application for the forming-storming-norming-performing framework.
Feel free to expand on your comments or to share some of your favorite non-financial books that have helped you in your career.
Great Reading list Jason
I would like to add this Great book which I find vey insightful.
Consilience: The Unity of Knowledge
Thank you for sharing this work with the wider audience.
I have just cleared cfa level 3 in 2018. Which finance realted books should i go for?