(Excerpt from The Books That Help Explain Every Market Cycle of the Past 80 Years by Ben Carlson)
1940s: Where Are the Customers’ Yachts? by Fred Schwed
Schwed did a wonderful job exposing Wall Street and its customers alike for taking things too far in the run-up to the Great Depression.
1950s: Security Analysis by Benjamin Graham & David Dodd
Benjamin Graham’s tome on fundamental analysis helped usher in a new era on Wall Street. The entire industry was finally beginning to become more professional.
1960s: The Money Game by Adam Smith
If the 1950s ushered in a new era of fundamental investors, the 1960s took it to another level.
The star mutual fund manager was born in the 1960s and Smith documents many in his book.
1970s: The Go-Go Years by John Brooks
Inflation ran just 1.9% per year from 1949-1968 but jumped to an annual rate of 6.3% from 1969-1979. So nominal returns were lower but real returns were negative. It was a brutal stretch for investors in both stocks and bonds.
Brooks was right about Wall Street in the 1970s when he wrote, “Wall Street is heading toward transforming itself into an impersonal national slot machine — presumably fairer to the investor but of much less interest as a microcosm of America.”
1980s: Liar’s Poker by Michael Lewis
Inflation slowed, interest rates began to fall, high yield bonds came into vogue, LBOs made private equity titans wealthy, the stock market took off again and Gordon Gekko became a national hero for a certain group of people.
1990s: One Up on Wall Street by Peter Lynch
The share of U.S. households that owned stocks was less than 20% in the early-1980s. By the end of the 1990s that number shot up to 50%.
Peter Lynch’s “buy what you know” strategy was a fitting mantra for all of these first-time newbie investors.
2000s: The Intelligent Investor by Benjamin Graham
The late-1990s was dominated by growth stocks but the dot-com bust saw the tech-heavy Nasdaq fall more than 80% in the ensuing crash.
That sent investors into the loving arms of Warren Buffett and his mentor Ben Graham’s book. Although The Intelligent Investor was originally published in 1949 it still sells.
2010s: Thinking, Fast and Slow by Daniel Kahneman
The bull market in behavioral finance played a role in moving trillions of dollars into index funds and ETFs, a huge win for individual investors.
2020s: Sapiens by Yuval Noah Harari
The secret was probably the appearance of fiction. Large numbers of strangers can cooperate successfully by believing in common myths…
How can you explain fake internet money creating trillions of dollars in wealth out of thin air?
Story-telling.
How do meme stocks add billions of dollars for no reason?
Collective action.
How did Tesla defy the odds to become one of the biggest companies in the world?
Tesla supporters are about as close to a religion as it comes for a stock.
Why are JPEGs selling for millions of dollars?
We’re status-seeking creatures.