For the personal investor in the States and in Canada now going into a long summer weekend, here are a few reading ideas for the hammock.

Reminiscences of a Stock Operator. This pseudo-autobiography of a great early 20th Century investor is one that every Wall Street trader has read at least once. Here’s a free copy online and here’s a sample of the ideas within.

Before he become a tragic victim of all-consuming political passions - let’s call that condition “political psychosis” - George Soros described an interesting idea called “reflexivity” in a book called The Alchemy of Finance. It tries to explain some kinds of instability in financial markets and represents a deep critique of Modern Portfolio Theory (MPF). MPF so pervades the individual investor’s life that this contrary view is a must-read.

The co-inventor of fractal geometry, Benoit Mandelbrot, has developed his own critique of MPF in The (Mis)behavior of Markets, one that shows a consistent misrepresentation of stability and normalcy by financial professionals. You don’t have to be mathematically gifted to enjoy this eye-opening work, co-authored by a financial journalist.

The observations of Nicholas Taleb will make a good dessert if you have time: this lifelong trader gives them in a wonderful read titled Fooled by Randomness, in which he argues we humans are completely biased toward normalcy and perennially unprepared for surprises (”black swan events”). Taleb folds Soros’s and Mandelbrot’s observations into his own.

If you’re looking for tips these books won’t help. If you’re looking for a new way to understand what has happened to you in markets past, have fun.

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