On Investment Books and Emotion

Let me be clear: I do not think all books on investing are a waste of time; I just think most of them are, and I have more grave concerns about the existence of so many books on investing but I will come to that later. There are some very good, fundamental, Biblical, books relevant to investing - The Intelligent Investor by Benjamin Graham is the example I like to use. But there will naturally be lots of other books that simply aren't worth your time. As a result, I recommend that as a general rule, people should steer clear of any books they stumble upon or, worse, are marketed to by a YouTuber or TikTok influencer.

This blog piece is not here to name and shame any particular book (or influencer), and it certainly isn't here to say "do not read about investing outside of the internet." As I said, there are lots of good books, however, at times the temptation to buy books on investment can be very strong. This temptation may be stronger at different times; for example, when you're not feeling pleased with your portfolio's performance, or you're just starting, or you feel overwhelmed by the amount of information online. In moments like these it is easy to believe that a single book will hold the key to your success.

Unfortunately, no single book will solve your problems and make you a great investor. Each book varies from another and all of them run the risks of excessive theory, survivorship bias, outdated strategies, or they may push you towards day-trading. Simply put, buying books to solve your feelings about investing is not the solution and the biggest risk is that such books may distort your original priorities and philosophy. Tread carefully and come up with your own strategy.

Of course, coming up with your own strategy requires information and input to influence your perspective. So, why not buy some books?

You certainly could do that, however, we now come on to another reason why people should be wary of books promising to level up your portfolio: opportunity costs of time and money. Let's say you accumulate ten books over six months from each time you stress about your long-term strategy. Assuming that every book costs an average of £15 and only one of those ten books is genuinely helpful, then you've wasted £135. You've given money that could have been put into expanding your portfolio instead to some author who, in hindsight, you aren't sure if they are all that qualified to write on this topic. Not only that, you've probably wasted time looking for these books, reading them only to be disappointed.

That's a great shame because you don't need to buy endless quantities of books to find investment ideas, strategies, or advice. It's highly likely that YouTubers have already done reviews on these books, or that someone has written reviews, summaries, or rounded up the key principles about these books. Even for the one book I suggest people read, there are many précis online and you certainly do not need to buy it; especially if you're only buying as a result of emotion. If you're really tempted, just go to a library and try before you buy.

In sum: read books, yes; compulsively buy investment books - absolutely not. The chances that a book you randomly buy is going to materially help your portfolio is slim. As with stocks, buying anything based on emotion on a whim can lead to poor investments and buyer's remorse. There are plenty of resources for free online that almost certainly summarise these books anyway. At the same time, when you are solicited a book by an influencer, do your own due diligence; neither authors nor their marketers are interested in your portfolio performance. They exist to make money by convincing you that you will lose out by not buying their work. Fair play, but there's an obvious ulterior motive.