Daniel Loeb Advice: Essential Reading

For most investors, reading may not seem to be all that important when approaching the markets. However, as the best investors know, having information and knowledge is the most important asset. Daniel Loeb, hedge fund manager at Third Point, recently created a list of investment books that will prove to be essential for those investors seeking outsized returns in the market. Whether you’re an experienced professional money manger or a novice to the investment world, these books will prove pivotal to your success in navigating the market.

Trend is your friend. Loeb recommends beginning your investment education with Edwin Lefevre’s seminal Reminiscences of a Stock Operator. This classic enables readers to enter into the mind of a trader with a bevy of wisdom, insight and compelling stories from a legendary speculator. The piece advises you on how to stick with winners and cut losers, all the while reinforcing the notion that the trend is your friend.
Event-Driven, Special Situation. According to Loeb, Joel Greeblatt’s You Can Be a Stock Market Genius, may well be the best book ever written for an investor. The piece explores the pertinent mechanisms related to financial investment such as risk arbitrage, spin-offs, bankruptcies and mergers. Greeblatt also exhibits how savvy investors can capitalize on market inefficiencies.

Know your Account. Howard Schilit’s Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud takes an in-depth look into accounting fraud and the signs to look for if you suspect wrong doing. The book is a great read and resource for those entrusted to manage large portfolios and balance sheets.

Valuation and Bubble. In Kathryn Stale’s The Art of Short Selling, Loeb encourages readers to learn of how to exploit over-valuations in a variety of markets from equities to commodities. Though short-selling sometimes receives a bad reputation, Stale illustrates how this practice is health for correcting poor pricing the marketplace.

Attitude is Key. In addition to finance and investments, Loeb also recommends a non-investment title that may prove beneficial to those seeking to bolster their confidence and psychology when navigating the markets. He recommends Jim Loehr’s The Power of Story because the book explores how to change your destiny in business and in life generally. Happy reading!

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