Investment banking is a complex and professional field. For novice investors who want to understand investment banking, reading some classic and practical books is very important. These books introduce the basics of investment banking, help investors establish a systematic framework, and provide a wealth of practical case studies. By reading these practical books, investors can understand the core ideas and basic operations of investment banking, familiarize themselves with financial derivatives, valuation methods, risk management, and lay a solid theoretical foundation. This will help investors make wise investment decisions in the future. The following recommended books are the best choices for learning investment banking.
Liar’s Poker – reveals the true inside story of Wall Street
Liar’s Poker, written by Michael Lewis, gives a vivid account of the author’s personal experience on Wall Street in the 1980s. Through the description of his work and life at the Salomon Brothers investment bank, readers can understand the true inner workings of Wall Street banks, and the greed and corruption in the trading departments. The book reveals how traders use financial derivatives and leverage to conduct speculative and risky arbitrage trading, in order to make huge profits. Lewis believes Wall Street’s lucrative profits often come at the expense of clients. This book allows readers to understand the problems in the investment banking industry.
The Intelligent Investor – teaches defensive investment strategies
The Intelligent Investor, written by Benjamin Graham, is known as the bible for investors. Graham profoundly revealed that investments need to be made based on objective facts and data analysis, rather than guesses, conjectures or herd mentality. The core idea of this book is defensive investment, which refers to adopting strategies that can limit investment risks rather than pursuing high returns. It teaches investors how to analyze the value of stocks, avoid overpaying when buying securities, and build a rational and cautious investment portfolio. The rational spirit embodied in Graham’s philosophy is still applicable today, and has had an important guiding significance for Warren Buffett’s investment philosophy.
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Security Analysis, also written by Benjamin Graham, is a companion to The Intelligent Investor. Security Analysis provides a more comprehensive and in-depth discussion of value investing theory, research methods and analysis techniques. Graham systematically teaches how to read financial reports, make reasonable estimates of intrinsic value, and buy stocks that are significantly undervalued by the market. In-depth case studies are also included. Security Analysis establishes many classic principles of value investing, and lays the foundation for investors to adopt a disciplined approach based on fundamentals.
Too Big to Fail – reveals how Wall Street was rescued during the 2008 financial crisis
Too Big to Fail, written by Andrew Ross Sorkin, provides an authoritative and detailed account of the 2008 financial crisis that shocked Wall Street and the world. The book focuses on how the Federal Reserve, Treasury Department, and Wall Street financial giants joined together to rescue the collapsing financial system. It reveals the intense negotiations behind the scenes, the political wrestling, and the decision-making process of the Wall Street bailout plan. Readers can understand the root causes,key events, and profound impact of this economic crisis. The book shows how unrestrained greed on Wall Street, excessive debt leverage, and lack of regulation can cause catastrophic consequences. Too Big to Fail sounds the alarm about systemic risks.
The above books reveal the real inside stories and operation logic of Wall Street from different angles. For readers who want to learn investment banking, these practical books can help establish a knowledge framework, cultivate rational investment philosophy, and avoid risks. Investment novices can gain precious experience from these books.