(Part 2) Best products from r/finance

If you are genuinely interested in the markets, this book is a great place to start: http://en.wikipedia.org/wiki/The_Intelligent_Investor. For context, this was written by Warren Buffett's teacher, in which class Buffett got an A+.


Another great book is "You can be a stock market genius", by the prominent hedge fund investor, Joel Greenblatt. Yes, the title is sensationalist, but the book is full of great fundamentals in stock market investing: http://www.amazon.com/You-Can-Stock-Market-Genius/dp/0684840073


As far as advice - be wary of anything that looks too good to be true. Most of the safest and surest money is made from being thoughtful and patient. Reading these somewhat dense books is a great start that lots of people skip..


Best of luck!

What's your background in Excel? You need to have a solid base in Excel (like really really solid - some major projects using pivot tables, some macros, etc.).

Here is what I recommend - there is this really nice book called Next Generation Excel that I got just after I got out of university and started on Wall Street (free book from a class at the last minute? Why not). See through a couple of the scanned chapters (that is what I do before making a purchase) and see if you like it or not.

It goes through nicely all the functions Excel provides and what you can do with it as an analyst.

However, I'm also a firm believer in the notion that knowledge should be free to learn for everyone - so I recommend too the links in the side bar, like Macabacus (which teaches you the IB models using Excel) and the Financial Modeling links.

Get comfortable with Excel - make it your second language, and when you start to appreciate what makes Excel better than other spreadsheet programs out there, then you are on the right track.

ONCE you do that, then move on to VBA. VBA isn't difficult per say and there isn't a good book or recommended series out there (or at least what I found). I just recommend looking through /r/excel for your VBA questions.

Again, VBA is an extension of Excel rather than it's own thing. You can write a 100 line code and spend a week making a macro to help you do that thing in Excel, or click a few buttons already there to make that thing happen.

If you are interested in learning more about stocks, bonds, mutual funds, etc., and the pros and cons of these financial instruments I strongly recommend these two books; A Random Walk Down Wall Street and How a Second Grader Beats Wall Street. A Random Walk does a good job at explaining all the different investment options and introducing the language to a person whose had no exposure to Investments before. How a Second Grader sort of treads along the same lines but it is an easier and more entertaining read as the author does a better job with engaging the reader. The book also gives good starting points for a person with no experience, which I followed when I first read it, and it has worked well for me. Essentially both books share the same theme, which most books on investments do, what's the most accurate way of predicting the true value of an investment instrument in theory and can the theory be applied to real world scenarios? Last but not least, I suggest you look into index funds. Good luck!

The absolute best resources that I have found for integrating finance with Excel are the books by Simon Benninga. I really wish that they would have taught using his books in school (nearly all of the work I do is Excel based). They can be a little pricey, but I have found that they are more than worth the cost. If you are an absolute beginner and not completely comfortable with beginner financial concepts (or how to implement them in Excel), start out with his Principles of Finance with Excel. If you have a fairly solid grasp of basic financial concepts his book Financial Modeling is a probably the best resource that I have found for building a solid foundation in Excel. One caveat is that the Financial Modeling book is that it is written for pre-Office 2007, so you may have to make some minor adjustments to some of his formulas in newer version of Office.

For more advanced concepts, I have really found the Bionic Turtle channel on YouTube pretty usefull.

Good Luck!

For questions 1 and 2.

1. If you are packing the loans into a CDO, they are being sold on the open market. Once it achieves a AAA rating, as most did even though they were mostly subprime, alt a, or arm, it is sold and shipped off the originator's books (While the originator of the CDO collects X% in fees)
   
   Basically how the originator makes their money is by X amount of CDOs they sell. There was no incentive to pick and choose the best borrowers to sell a loan to because how the CDOs were sold they achieved the best rating regardless of the borrowers credit risk.
   
   Due to this model, people are going to try and get as many people into the homes and sell the CDO asap. This caused questionable lending practices to result, NINJA (no income, no job, no assets) loans, manipulating borrowers income, assets, etc.
   
   Things that could be changed to help not have this occur again:
   
   a) Feds monetary policy was pretty meh during this period, due to low interest rates the banks had pretty much an endless supply of money and when all the reasonable ventures dried up they had to explore other opportunities to lend.
   
   b) Ratings agencies need an overhaul in how they receive their commission, preferably they should be being paid by the investor not the person issuing the security. This will help to eliminate the bias that results.
   
   c) Having X% (2-5) remain on the institutions books who created the CDO will help to make them responsibly lend. This is because if they are required to have it remain on their books, they will make better longer term decisions in who to lend to.
   
   I'm pretty sure all of these issues are discussed in Nouriel Roubini's book Crisis Economics
   
   Another Great book already mentioned in this thread is by Michael Lewis The Big Short
   
   If your interested in the European Crisis Michael Lewis also just came out with Boomerang

Do you mind a quick story?

I was a triple finance major. My university offered a series of courses that allowed me to get degrees in corporate financial management, commercial bank management, and investment science & portfolio management. They taught me that "if you crunch all the numbers, you can definitely get the 'right' answer for what a stock is worth."

I served as the president of the investment club for 2 years - we had $500k in real money and we had beat the S&P by over 2% every year since the fund started.

Here's the BIG part they missed (so much for a finance degree I guess).

Timing... is... everything.

I had bought NuSkin enterprises personally sometime early in the year. I think I roughly doubled my money and figured it was a good stock, so it should be bought. Not having been taught that timing matters, I recommended it to the investment club. Needless to say, it was NOT a good buy... at least, not at that price.

The club lost a little money on it but I learned a valuable lesson. Timing matters.

My friend went to Chicago to be a technical trader and I became a financial advisor. Eventually I learned that 'trading' was not a sin, even though it was taboo in school. Buy a good stock at a bad price - bad trade. Buy a terrible stock at a bargain - moolah!

I think it's great that you're trying to get a foundation for investing, but keep in mind that investing IS really about timing. Sure, you can crunch the numbers, but if you can't look at a chart and say "it's not a good time to buy" then it's all meaningless.

Try THIS BOOK or find something like it. It's important to be able to read price charts and not just to crunch numbers. In fact, if you get good enough at reading the charts you won't need the numbers. Other people can calculate them and leave their footprints in the price charts for you to follow.

Then, of course, pick the book that interests you the most in your series. Then the one that interests you 2nd most. If you get bored with one, put it on a shelf and come back later.

There is no truth in those books, only stories - you make the truth in your own mind based on what you will perceive reading them.

Best of luck.

I think that a great first step would be to look outside of r/finance. This subreddit is really not advanced at all.

Yorn just recommended you an arbitrary portfolio and some very, very specific (and illiquid) assets. There's a multitude of things wrong with what he said but the biggest ones are:

1. You have $40,000. There is no way to invest in that many assets, so you can't even execute the strategy that he recommended. Not to mention the transaction costs would be ridiculously high.
   
   
2. Commodities are highly mean reverting over the short and long term. There is no guarantee of an increase in price with inflation. Technological advances could cause the price of a commodity to be must cheaper in the future for example. They aren't buy and hold instruments.
   
   
3. The high risk section. Taking a total punt with 20% of your net worth is pretty stupid.
   
   He is right that you need to learn a lot to invest successfully. One of the first things you should learn is that you don't take unfounded investment advice.
   
   Now, for my advice (which you should research heavily):
   
   There are a few strategies that retail investors can implement if they would like to pursue active management of their portfolio.
   
   These are:
   
   Value - buying stocks that that are undervalued based on some fundamental factor (like earnings). Value is conducive to longer term holdings. This book, despite its dumb title, is a good primer.
   
   Low volatility - Buying stocks with a low standard deviation of price returns. www.betaarbitrage.com Also conducive to long term holdings.
   
   Momentum - Buying assets that have recently increased in price. Tougher to implement and requires more frequent trading, but can be done at the sector level (and across asset classes) through ETFs.
   
   Also, be wary of the advice that index investing as your best/only option. The S&P500 has returned basically 0% in the last decade with 2 50% drawdowns. Not the type of characteristics I'd like to see in my portfolio.
   
   Also, diversification means buying assets that are negatively correlated in bad times. Not just buying a lot of things.
   
   EDIT: Just read below that you don't know what a mutual fund is. I like this book for an introduction to financial markets.

I am a physics PhD student who prepared for a quant transition and got an offer relatively soon after applying.

How much time do you have, where are you going to look, and from which university are your degrees? This book is an easy read, a bit American-centric. There are also books with preparation problems, I liked 1 2 3.

Play on your strengths - if you don't like programming just get a basic idea of how C++ work, and learn a lot of stochastic calculus if that's what you like. Eventually you should identify 1 or 2 areas which you like most and become strong in those. It's better to be so-so in some of the areas of the books above but beyond their level in 1-2 areas than being quite good at all of them but excel in none. Don't completely neglect any topic though - if you have no idea what a call option or a pointer are, you'll be in trouble. Don't neglect brainteasers.

Certain interesting areas are surprisingly ignored by those books, for example econometrics and machine learning. Good luck!

I have an eccentric obsession with the oil/energy industry. Some of these books were mentioned already, but below are my absolute favorites:

• The Prize
  
• The Frackers
  
• Oil 101
  
• The Big Rich
  
• The King of Oil
  
• Fundamentals of Investing in Oil and Gas
  
• The Smartest Guys in the Room
  
• The Moral Case for Fossil Fuels
  
  If you're looking for a history of oil and gas check out The Prize, and The Frackers covers the more recent energy revolution. Oil 101 and Fundamentals of Investing in Oil and Gas deal more with the technical side.

I'm sure there are some good books on the matter, and hopefully someone else in this sub will have some recommendations for you as well.

Politics and economics make terrible bedfellows, but if you would like to know about policy making some historical books would probably be in order.

Lords of Finance

Piketty's Capital

Sorkin's Too Big to Fail

And most readers of this sub know that nearly anything by Michael Lewis is good, if a bit dramatized.


Really though, economic policy making is done mostly by politicians, or politically motivated economists. The politicians don't have a clue about economics, and the economists tend to be picked by the politicians for saying what the politicians like to hear.

This is more a political question than a finance question. The guys in finance don't really care who's in office as long as regulatory capture is still around.

I recommend you read this book.

Call it what you want. "Bullshit" or whatever. I don't disagree with Buffet btw, on a total return basis it's hard to beat the market. But if you care about other metrics, and you have access to cheap funding, and you're trying to preserve capital, then it's not "bullshit". There's a reason good pension funds are heavily diversified.

But yes, let's be abrasive because people don't agree with you.

This book looks like a good read; should I get a kindle I'll make sure to pick it up. But what about This Time Is Different? It seems like another good book to get some relative history on economic collapse and recovery.

This Time it's Different: 8 Centuries of Financial Folly is pretty freaking awesome and is very detailed plus look at the cool cover.
book

https://www.amazon.com/So-you-FLUNKED-7-exam/dp/1489526196

(Get this book).

Congrats, and good luck!

Heard on The Street is a great book to prepare for interviews. ^^Psst, ^^up ^^here, ^^there's ^^a ^^free ^^pdf ^^if ^^you ^^search ^^on ^^google.

Ross is the highest ranked author on Amazon.com for the topic of Corporate Finance.

The Brealey book is probably fine. I would personally give Berk DeMarzo a look, because it is pretty widely used.

I see Berk/Demarzo and Ross books the most among MBA level corp finance.

[This] (https://www.amazon.com/Investment-Banking-Valuation-Leveraged-Acquisitions/dp/1118656210) Rosenbaum and Pearl text is widely considered the handbook of IB and does an excellent job of covering the day to day tasks of an analyst / associate.

http://www.amazon.com/gp/product/0132992477/ref=oh_details_o09_s00_i00?ie=UTF8&psc=1 This is my book this semester. It's pretty expensive. I just rented it. Maybe go with an older edition? I think that would be what you are looking for.

The richest man in Babylon by George S. Clason

[Only textbook I have ever enjoyed reading] (http://www.amazon.com/Investment-Banking-Valuation-Leveraged-Acquisitions/dp/1118656210/ref=sr_1_4?ie=UTF8&qid=1413934924&sr=8-4&keywords=valuation)

Daniel Yergin's The Prize: The Epic Quest for Oil, Money, and Power

Historical account of the oil industry, which is particularly relevant in today's markets.

Part finance, part economics, I highly recommend Lords of Finance (https://www.amazon.com/Lords-Finance-Bankers-Broke-World/dp/0143116800). It discusses the actions of several key people and subsequent events in the banking sector leading up to the Great Depression. Largely shaped our world today.

Expected Returns

AQR publications (Cliff Asness / Antii Ilmanen): https://www.aqr.com/library

Other than that, CFA material. The CFA stuff that is relevant is golden, the rest of it is just good to know. If you don't want to be a charterholder, you can still find sets of the books for $180 or so.

> I'm looking at jobs in quantitative software engineering roles, like Jane Street, DE Shaw and Two Sigma.

Then brush up on your probability and statistics brainteasers. That, and algorithmic brainteasers (like things to do with linkedlists, arrays, etc).

Sample book is Heard on the Street by Crack or Quant Job Interview Questions and Answers by Joshi et al.

You don't need to know finance for Jane Street. They emphasize that...

You can be a stock market genius https://www.amazon.com/You-Can-Stock-Market-Genius/dp/0684840073

Deep Value https://www.amazon.com/Deep-Value-Investors-Contrarians-Corporations/dp/1118747968/ref=sr_1_1?s=books&ie=UTF8&qid=1482441120&sr=1-1&keywords=deep+value

You need this right here-- http://www.amazon.com/So-you-FLUNKED-Series-exam/dp/1489526196

totally worth it because you will ace every option question, allowing you to focus on other things like munis and shit. I wouldn't have passed mine if it weren't for this book. follow the recipe inside. Plus the author is real cool and is reachable on Facebook.

Is this a good book for learning investing? It was recommended by the investment club I am in at uni.

This list should give you a good start.

“Day Trading with Short-term Price Patterns and Opening Range Breakout” by Tony Crabel

Trader Vic: Methods of a Wall Street Master

You should probably read most of the books in this link.

Evidence Based Technical Analysis

And for the masochists, Reading Price Charts Bar by Bar

Expected Returns by Antti Ilmanen

http://www.amazon.com/Expected-Returns-Investors-Harvesting-Rewards/dp/1119990726

[Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions] (http://www.amazon.com/Investment-Banking-Valuation-Leveraged-Acquisitions/dp/1118656210/)

Heard on the Street

Without knowing exactly what you want to learn about within M&A -- tough to say, but Rosenbaum & Pearl's Investment Banking is generally regarded as the classic.

Current multiples are normally behind a pay wall. Commonly followed sector specific multiples can be found in this Book

/r/SecurityAnalysis maintain a decent reading list.

The following is taken from it:

History

• A History of Financial Speculation - Edward Chancellor
  
  
• A Short History of Financial Euphoria - Kenneth Galbraith
  
  
• Barbarians at The Gate - Bryan Burruough
  
  
• Irrational Exuberance - Robert Shiller
  
  
• Liar's Poker - Michael Lewis
  
  
• Manias, Panics and Crashes - Charles Kindleberger
  
  
• Money of the Mind - James Grant
  
  
• Oil 101 - Morgan Downey
  
  
• The Box - Marc Levinson
  
  
• The Prize - Daniel Yergin
  
  
• The Big Short - Michael Lewis
  
  
• The Great Crash of 1929 - Kenneth Galbraith
  
  
• The Panic of 1907 - Robert Brunner
  
  
• The Predators Ball - Connie Bruck
  
  
• This Time Is Different - Rogoff & Reinhart
  
  
• Too Big to Fail - Andrew Ross Sorkin
  
  
• US Bank Deregulation in A Historical Perspective - Charles Calomiris
  
  
• When Genius Failed - Roger Lowenstein