Investing/Trading Rules, Aphorisms & Books (Summer 2014)

A few years ago, I started pulling together my favorite Trading Rules & Aphorisms. It turned out to be a popular post, and so we added “Rules” as a new category. Since then, I have taken to updating this sporadically (see this).

We are overdue for an update.  What follows are the smartest and most insightful perspectives from traders, analysts, economists and investors on what to do — and what not to do — when it comes to markets that have been previously published on TBP.

Here is the latest update:

Trading & Investing Rules, Aphorisms & Books

• Jeremy Grantham: Investment Lessons Learned Over 47 Years (Mistakes Were Made)

• Sir John Templeton 16 Rules For Investment Success

• Bernard Baruch: 10 Rules of Investing

• 10 Lessons from 1987 Market Crash

• Livermores Seven Trading Lessons

• Bob Farrell’s 10 Rules for Investing

• James Montier’s Seven Immutable Laws of Investing

• Byron Wien’s 20 Rules of Investing & Life

• Richard Rhodes’ 12 Trading Rules

• John Murphy’s Ten Laws of Technical Trading

• Six Rules of Michael Steinhardt

• Warren Buffett Favorite Investing Quotes

• Nassim Taleb’s 5 Rules of Volatility

• Morgan Housel’s 9 Financial Rules

• Arthur Zeikel’s Investing Rules

• David Merkel: The Eight Rules of My Investing

• Art Huprich’s Market Truisms and Axioms

• DENNIS GARTMAN’S NOT-SO-SIMPLE RULES OF TRADING

• Rosie’s Rules to Remember

• Louis Ehrenkrantz’ 7 Golden Rules for Investing

• In Defense of the “Old Always” (Montier)

• Lessons from Merrill Lynch

• Gerald Loeb’s Market Wisdom

• Lessons Learned from 37 Years of Futures Trading

• Richard Russell’s The Power of Compounding

• Doug Kass: 10 Laws of Stock Market Bubbles

• The golden rules of investing (India)

• 25 Common Sense Money Tips

• Dan Bunting’s Laws of Investing

• Cassandra’s (Not so) Golden Rules About Investing (& Not Investing)

These are more general rules, not necessarily about investing:

• 50 Cognitive Distortions

• Todd Harrison’s 12 Cognitive Biases That Endanger Investors

• Lefsetz’s Business Rules

If you have any suggestions for any good lists of rules I may have missed, please link to them in comments. If they are worthy, they will get added to the list.

My own trading rules and favorite Trading Books are after the jump

My (Ritholtz) own rules

• 12 Rules of Goldbuggery

• Ritholtz’s Dozen Rules for Investors

• Lessons from 2012 Election

• 10 Ways to Simplify Your Investing

• 10 Errors and Checklist for Investors

• Lessons the Guys Who Wrote Dow 36,000 Should Have Learned

• Rules for Shorting

• 15 Inviolable Rules for Dealing with Wall Street

• 10 Psychological, Valuation, Adapative Investing Rules

• The Zen of Trading

All of the books ever mentioned on The Big Picture can be found by clicking the Bookshelf link. But you can see our major overviews on investing related books in these lists:

• 10 Behavioral Economics/Psychology Books for Investors

• Reading Is Fundamental

• More Reading Ideas

Newbies: Anyone who is interested in finance as a career, I suggest these two books as a starter — they cover trading and markets generally:

• Bull: A History of the Boom and Bust, 1982-2004, What drove the Breakneck Market — and What Every Investor Needs to Know About Financial Cycles by Maggie Mahar

The best book about the 1982-2000 market, bar none. There are a surprising number of lessons buried in these pages that will reward the careful reader. I found it both fascinating and informative.

• Stock Market Wizards : Interviews with America’s Top Stock Traders by Jack D. Schwager

Schwager interviewed market legends at the height of their success. What makes the book so worthwhile are the consistent themes that evolve from currency traders, mutual fund managers, commodities traders, hedge fund managers. Regardless of what is being traded, there are related motifs that run throughout. What results is not a “How to trade” book; instead, it is a book about “How to think about trading.”

If you want some book ideas for Technicals, have a go at these:

• Technical Analysis of the Financial Markets by John J. Murphy.
• Technical Analysis from A to Z by Steven B. Achelis;
• Encyclopedia of Chart Patterns by Thomas N. Bulkowski;
• Japanese Candlestick Charting Techniques by Steve Nison;

Don’t think you need a full reference library; any pair of these books should do.

I am working on a few new book lists, and they will get published over time.