20 Essentials for Achieving Financial Literacy

17. Liar's Poker by Michael Lewis: This is another inside look at the bond market and working at Salomon Brothers. Many of the LTCM partners and managers (covered in When Genius Failed) were also key subjects in this book.

Fiction

Through the power of entertaining stories, works of "financial fiction" can educate and inspire investors of all ages and experience levels. Here are a few of my favorites:

18. Reminiscences of a Stock Operator by Edwin Lefevre: This 1923 novel has been read and reread by most Wall Street traders. It tells the trials and tribulations of a "bucket shop" trader by the name of Jesse Livermore.

Bucket shops were trading venues akin to modern-day off-track-betting establishments. Now illegal, bucket shops were once common until the establishment of Regulation T and the various securities laws which now govern the financial markets. There are many lessons to be learned from the trading exploits of Livermore. The central character talks about how he has made and lost fortunes, provides trading advice which is still relevant today and gives insight into risk management and the use of leverage . All of my students have to write a paper which answers this question:

It is often said the more things change, the more they remain the same. How is that so for the stock market?

19. Atlas Shrugged by Ayn Rand: While I am not a devotee of Ayn Rand's philosophy of objectivism, this book is a very interesting look at how successful entrepreneurs, industrialists and the government interact.

20. Any book by Michael Ridpath: Ridpath is an author from the U.K. who uses investment banks and financial markets as the backdrop for murder mysteries. This is wonderful entertainment, which also provides excellent insight into the psychology and inner workings of the investment business.

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