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The world of high finance is murky and treacherous to navigate. Like any other industry with copious amounts of wealth floating around, banking is full of intriguing stories and grand-standing characters. From banking behemoths that control most of the world’s productive output to multilateral financial institutions that even nation states bow down to, there is nothing that is boring about this world.
Whether you are an aspirant looking to make your mark in the world of high finance or just someone interested in demystifying one of the most complex machinations of the modern age, this list of essential reads shall enlighten you.
1. Barbarians at the Gate (1989) by Bryan Burrough
The book that tells the story of RJR Nabisco, a massive profitable corporation, and its successful leveraged buyout by a much smaller entity. “The most hostile of takeovers” backed by the most fearsome financial force of the day – Kohlberg Kravis Roberts. It is a David versus Goliath tale and when news spread, all the wall street sharks came nipping at the mighty industrial giant and its embattled CEO. A story of corporate excesses, white knights, high stakes bravado and eventually, humility in the face of an unrelenting force!
2. The Predators’ Ball (1988) by Connie Bruck
Some considered it to be the most disruptive force in finance whilst others referred to it as the Robin Hood of high finance. Whichever side you may lean towards, Drexel Burnham was the undoubted pariah of the financial world in the 80s. As Michael Milken, the firm’s head of high yield bonds, plowed through corporate America, spreading his gospel and converting numerous apostles, he essentially created a new industry – the issuance and trading of Junk Bonds. He shook the corporate world to the core by funding impossible takeovers of huge industrial houses by much smaller entities who would then rapaciously cut and dissect them like a tiger making it’s was through an elephant’s decaying carcass.
3. The Quants (2010) by Scott Patterson
A relatively modern look at the key players in the hedge fund industry. The narrative starts at the annual high stakes poker match between some of the biggest money managers in the world. The key players, from Citadel to Renaissance and from Deutsche Bank to Morgan Stanley, converge at a single location to do what they do best – gamble. There’s a bit of jargon which would probably whet the appetite of an aspiring fund manager. Today’s market place is ruled by such quants, the so-called mathematical whiz kids, and this is probably your best bet at knowing how they think.
4. The Ascent of Money: A Financial History of the World (2008) by Niall Ferguson
An essential historic journey through the world of debt. This epic saga takes us from the invention of the coin, through the period of dominance of the Medici family, and onwards towards the colonization of the World funded by the Rothschilds! The journey takes you all the way to the modern age, eventually covering more visible developments like the stock market, the world of insurance and globalization. Buckle-up for an enlightening passage and understand how the man-made concept of money has grown to become the most powerful force in the World.
(Note: There is also a 6-part documentary on this which you can watch for free at PBS! Don’t worry, it doesn’t spoil the book as the documentary is what prompted me to get the book in the first place.)
5. When Genius Failed: The Rise and Fall of Long-Term Capital Management (2000) by Roger Lowenstein
The story of the rise and rise of LTCM, a Connecticut based hedge fund which was founded by none other than the pioneer of fixed income arbitrage, John Meriwether, along with probably the best mathematical minds of the time (which included two Nobel laureates, obviously). The fund posted impressive returns and even the founders had most of their own money invested in the fund. But when turbulence hit, the trillion-dollar quagmire began to unravel. LTCM’s collapse was expected to have global financial implications – and hubris turned to fear as the fund began to bleed billions monthly and eventually closed down.
This story, in my opinion, is the most humbling of all. It’s like when Icarus flew too close to the sun!
6. Traders, Guns, Money (2006) by Satytajit Das
Some people* think that stock and bond trading is illusory, a sham without any tangible value-addition to the real world. Wait until you dive deeper into the world of derivatives! These instruments derive their value from an underlying asset – it may be a stock, it may a pool of home loans, it may even be the weather forecast. The world of derivatives trading dwarfs nearly all other types of financial transactions today in terms of sheer volume. Nobel prizes have been awarded to academics who have dared to demystify this world. If you want to be taken seriously in the world of finance, you must understand how this stuff works!
*Some people. Not me.
7. Lords of Finance (2009) by Liaquat Ahamed
Winner of the 2010 Puiltzer Prize for History – the inclusion of this book in the list was a no-brainer. Read through this epic saga to find how the heads of the worlds four largest central banks steered the global economy from the Great War to the Great Depression. Discover the legend behind John Maynard Keynes who was often at odds with these policies to reshape the late industrial World. A story of inflated egos and how the decisions of a few powerful men pushed to the World towards Total War and sealed the socio-economic fate of the modern world.
8. Monkey Business (2001) by John Rolfe, Peter Troob
An unadulterated, candid look inside the working of a financial juggernaut. This book captures the daily struggles of two young individuals who find themselves thrust into the high-octane world of Investment Banking. The daily drudgery of work is punctuated by nights filled with models, bottles and company sponsored limousines. This is a bottoms-up look, from the troops on the ground. If you ever wondered if you had “the right stuff” to break into the world of high finance, this book shall answer your question. It’s not just about a high IQ, but a lot more, as you shall find out.
9. On the Brink: Inside the Race to Stop the Collapse of the Global Financial System (2010) by Henry M. Paulson
If you like post-apocalyptic fiction and wonder how the World can get that way, read this book! Learn how superheroes struggle against all odds to save the world form evil bankers! The superheroes being Henry Paulson, the US Treasury Secretary at the time of the global financial crisis and the evil Bankers being his ex-colleagues from Goldman Sachs (where he was earlier the CEO and Chairman) and other no-good, greedy, bad people. But in all seriousness – this will give you an insight into the role of the Government during the 2008 crisis from the perspective of the US Treasury Secretary.
10. Market Wizards by Jack D. Schwager
This is a set of three books from the 90s which contains interviews with some of the top traders in America. Although some of the trading strategies may be dated by now and the technology obsolete, there is one thing that remains unchanged between then and now – the appetite for risk and the will to persevere. Use these to set your compass straight as you learn from the successes and failures of some the biggest names in trading.
(Note: Some of these interviews were covered in a documentary as well but I can’t find it anywhere on the interwebs anymore)
11. Liar’s Poker (1989) by Michael Lewis
This book essentially defined Wall Street in the 90’s and created a vivid public image that still remains relevant to this day. It chronicles the work life of a Bond Salesman in the powerhouse that was Salomon Brothers, and it’s larger than life CEO, John Gutfreund. The title refers to a high stakes gambling game and the book sets the stage for a match between Gutfreund and Meriwether, his chief trader and the future founder of Long Term Capital Management.
I guess the biggest selling point of this book is that it’s not just useful for those interested in finance, but would be a great addition in the library of a casual reader as well.
(Note: This is the same guy who wrote “The Big Short” that got turned into a movie in 2015. And there are plans for yet another movie based on one of his other books. This is why I recommended him even to casual readers as his books are written in a way that they appeal even to non-bankers.)
12. Den of Thieves (1992) by James Stewart
A tale of excesses on Wall Street. How some used fraud, racketeering, insider trading to amass great wealth, the race to catch the perpetrators and how it finally ends. Michael Milken (I talked about him in another recommended book on this list – The Predator’s Ball) is also at the center of the story in this one along with Ivan Boesky.
13. King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (2010) by David Carey, John Morris
Schwarzman and Blackstone are names that you should be all too familiar with already. Blackstone quickly rose to dominance using a more calculated and modern approach to risk management and investment. Gone are the days of Barbarians at the Gate. There is little drama in this book and that is a good thing as far as I am concerned.
14. Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System – and Themselves (2010) by Andrew Ross Sorkin
Another book on the 2008 financial crisis, but this time from the perspective of one of America’s most respected financial journalists. Whereas my previous recommendation (On the Brink) provides an insider’s look from Secretary Paulson, this one is probably more impartial while still benefiting from access to insiders and the people who actually had to deal with the mess.
15. What It Takes: Lessons in the Pursuit of Excellence (2019) by Stephen A. Schwarzman
We meet Schwarzman again, but this time in an autobiography. This is his take on how great financial institutions should be built – with robust risk management, a merit based and systematic investment analysis process, and hiring talented people. This is modern financial practice at it’s finest.
16. Invested: Changing Forever the Way Americans Invest (2019) by Charles Schwab
Schwab is undoubtedly a successful company and a household name in America. This is the story of how Charles Schwab brought Wall Street to Main Street, allowing the average worker to also invest in the company that he or she was laboring for. It has quite a few interesting tales about the company’s LBO and major events like the 1987, 2000 and 2008 crashes. An interesting read all throughout.
17. The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution (2019) by Gregory Zuckerman
I like to say that geeks shall inherit the Earth. Simons – a mathematician and code breaker – runs one of the most successful investment vehicles with an unmatched track record. He is essentially a scientist who has used data driven, algorithmic approaches, AI, pattern recognition and complex new derivatives to outsmart his peers.
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