Aaron Pressman

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Best books for investors to read in 2010

January 7, 2010

25937734[1]The credit crisis and resulting cascade of market crashes around the world have now produced a torrent of new books seeking to explain what went wrong. But how to sort the wheat from the chaff? I did an informal survey of some savvy and well read professional investors and academics to come up with a few recommendations. I asked for books read last year though not necessarily published last year.

Yale professor and economist Robert Shiller, who was among the most vocal sages predicting the real estate bust, said of all the books he read last year, only a few were sufficiently serious. “Too many of the books about the crisis are fluffy,” he says. One he appreciated was This Time is Different, a history of 800 years of financial schemes-gone-wrong written by University of Maryland economics professor Carmen Reinhart and Harvard professor Kenneth Rogoff.

Eugene Stone, PNC’s chief investment strategist, said the crisis sent hom back to his bookshelves to find his copy of the 30-year-old classic Manias, Panics and Crashes: A History of Financial Crises.

The book, by the late MIT professor Charles Kindleberger, is a study of common elements that helped inflate financial bubbles from the 18th century South Sea Company scandal to more recent meltdowns like the emerging market debt defaults of the 1990s. Stone said he remains worried that the low federal funds rate could spark yet another bubble, despite recent experiences with overvalued real estate and technology stocks. “A refresher course offered by this book might be a useful New Year’s resolution,” Stone says.

For some more recommendations, see my longer story.