KEY FINANCIAL CONCEPTS
10/
Chris Chatfield earned his BSc and PhD from Imperial College London, before going on to pursue a career in academia.
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Although the most recent edition of his book, published in 2019, incorporates aspects of the programming language R; for anyone that is interested in a concise and clear text that introduces the reader to time series analysis, Chatfiled's third edition book is ideal. In the text, Chatfield covers the primary topics in time series analysis including an introduction to descriptive techniques in time series, probability models, estimation, forecasting, and many more.
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For anyone that is beginning to study time series the first half to two-thirds of the book is sufficient for everything that will be required for the purpose of economics/ finance.
The Analysis of Time Series: An Introduction
by Christopher Chatfield
9/
Marek Capinski is an academic at AGH University of Science and Technology in the Faculty of Mathematics; likewise, Tomasz Zastawniak is an academic at the University of York.
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Their book, Mathematics for Finance, is a fantastic book for anyone that is studying financial economics, finance, or financial mathematics, as it covers everything that is relevant for both undergraduate- and graduate-level. In particular, the authors cover introductory topics including the time value of money and dedicated chapters on more complicated subjects such as derivatives, portfolio management and optimisation, binomial models, and much more.
Overall, this is a great text with plenty of worked examples and exercises throughout the book to test the reader on the topics covered.
Mathematics for Finance
by M. Capinski and T. Zastawniak
8/
Aswath Damodaran is Professor of Finance at New York University's Leonard N. Stern School of Business.
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In his book, The Little Book of Valuation, Damodaran provides an extensive introduction to security valuation. He includes the fundamental principles, vital valuation multiples and formulas, as well as difficult valuation cases such as cyclical companies and businesses with large intangible assets.
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Overall, this is a great introductory book to students that are just beginning to study finance/ economics; or, those that are interested in gaining an insight into the world of security valuation.
The Little Book of Valuation
by Aswath Damodaran
7/
Warren Buffet Accounting
by Stig Brodersen and Preston Pysh
Despite the arguably flashy title, Warren Buffet Accounting is, in fact, a very insightful book for developing an understanding of how to analyse financial statements for the purpose of investing.
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In the book, the authors cover a basic introduction to investing in general and value investing in particular. From there, they demonstrate to the reader how to analyse the three main financial statements from the perspective of a value investing; in terms of what to look for, determining whether the numbers in the financial statements are positive or negative, and ratio analysis. Overall, this book a great introductory text to those that have a limited understanding of accounting; or for readers that are particularly interested in understanding the relevance of accounting in a value investing context.
6/
Patrick Gaughn is a professor of economics and finance at the Silberman College of Business, Fairleigh Dickinson University. Additionally, Gaughn is the President of Economatrix Research Associates, Inc., an economic and financial consulting firm that serves a large number of Fortune 500 companies. Accordingly, his book, Mergers, Acquisitions, and Corporate Restructurings gives insight from both an academic and practical perspective.
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The book begins with an overview of M&As, including the history of M&As and merger strategy. Gaughn then explores hostile takeovers, including takeover tactics and anti-takeover measures; leveraged buyouts, including the private equity and junk bond markets; and, finally, corporate restructurings, including bankruptcy and valuation. Overall, this is a very in-depth text for anyone that is interested in M&As and the surrounding topics including valuation, corporate governance, and several other topics.
Mergers, Acquisitions, and Corporate Restructurings
by Patrick A. Gaughan
5/
Fooled by Randomness
by Nassim Nicholas Taleb
Nassim Nicholas Taleb is a Lebanese-American former options trader and academic specialising in statistics and financial mathematics (although, he prefers to think of himself as more aligned to philosophical methods of thought, as opposed to the robust/ scientific nature of mathematics).
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Taleb's book, Fooled by Randomness, is the first of a five-volume philosophical work on risk and uncertainty, titled Incerto. Like the other volumes in Incerto, Fooled by Randomness is a wealth of knowledge, covering numerous topics from the broader philosophical aspects of probability to more specific examples of human biases that are prevalent when interpreting data. Although Taleb's way of thinking can be seen as philosophical in nature (yet, I'm confident he is very technically gifted given his success as a derivatives trader and his career in academia), he approaches his subject from a very applied perspective. That is, he is concerned with what works in practice and includes numerous examples and thought experiments to illustrate to the reader the importance of the points that he is trying to convey.
4/
Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions
by Joshua Rosenbaum and Joshua Pearl
Joshua Rosenbaum and Joshua Pearl are both investment bankers with years of experience originating, structuring, and executing transactions. Accordingly, their book is less theory-focused and more practical/ applied.
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I would argue that their text, Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions, is the definitive book on understanding investment banking valuation methodologies. The authors cover the core valuation methodologies including comparable companies analysis, precedent transactions analysis, leveraged buyouts, and discounted cash flow. Moreover, they cover sell-side and buy-side M&A including motivations, strategies, and other relevant topics.
3/
Tim Steer began his financial career as a Chartered Accountant with Ernst & Young, before becoming one of the UK's top-ranked fund managers. Published in 2018, his book, The Signs Were There looks at contemporary examples of public companies that have experienced a sharp fall in their share price, and highlights how investors could have foreseen the collapse by analysing the annual reports of the companies involved.
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Each chapter focuses on different key aspects of financial statements (exempli gratia, goodwill, accruals, current asset quality, et cetera), combined with case studies, that Steer uses to demonstrate what to look out for and red flags. Every case study has the relevant sections from the company's financial statements that enables the reader to see practical examples of the message that Steer is trying to communicate. Overall, I think it's a great book that highlights the importance of analysing financial statements and some vital points to keep in mind when contemplating whether to invest in a company.
The Signs Were There
by Tim Steer
2/
The Art of Company Valuation and Financial Statement Anlaysis
by Nicolas Schmidlin
Nicolas Schmidlin studied Business Administration at Goethe University before going on to study MSc Investment Management at Cass Business School, University of London. Schmidlin is the founder of a valuation-driven investment advisory firm.
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In his book, The Art of Company Valuation and Financial Statement Analysis, Schmidlin illustrates to the reader how to approach financial statement analysis from the perspective of a value investor. Schmidlin introduces the reader to ratio analysis, company valuation, and value investing, in general. In summary, this is a great book for anyone that is interested in investing and gaining an in-depth/ intuitive understanding of ratio analysis and how it's applied in value investing.
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1/
Super-Forecasting: The Art & Science of Prediction
by Philip Tetlock and Dan Gardner
Philip Tetlock is a Canadian-American political scientist that earned his undergraduate degree from the University of British Columbia and his PhD, in 1979, from Yale University. Currently, he is the Annenberg University Professor at the University of Pennsylvania.
Tetlock's book, Super-Forecasting, has potentially influenced my views and way of thinking more than almost any other book. Although the title suggests the book is concerned with being able to accurately predict future events, it is more concerned with forecasting and predictions in general. The super-forecasting aspects refers to work with the U.S. Intelligence Agencies that Tetlock was involved in, which ultimately led to the creation of the Good Judgement Project - where ordinary people were collectively able to outperform intelligence analysts.
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In his book, Tetlock covers a variety of topics on the subject of forecasting: from the flaws made by politics commentators and analysts more generally that result in extremely innacurate predicitons; to the key attributes of individuals that are able to more accurately predict future events. More importantly, I would argue, the book demonstrates that mindset and techniques required to rationally interpret data and information - which can have positive impacts on all subjects and areas in life.