If we have an interest in what is happening today in the stock market and our economy, then these books should be on the top of our reading list:
1. Americas Great Depression by Murray N. Rothbard. Written in 1963, Murray N. Rothbard disputes the belief that Herbert Hoover and the Federal Reserve of the time did not do enough to stay off the depression. In “Americas Great Depression”, Rothbard chronicles the actions taken by the government to stay off the impending Depression. What makes this book so interesting is how similar Herbert Hoover’s actions are to the current government playbook. This book made me start to question of whether the credit market or government intervention caused the Great Depression.
2. The Dow Theory by Robert Rhea. Published in 1932, Robert Rhea organized and summarized Charles Dow’s theory from his editorials in the Wall Street Journal. Charles Dow never applied his theory to interpret the stock market. William Hamilton successfully implemented the Dow theory and predicting markets with great accuracy for decades until his sudden death only months before the 1929 crash, which he also forecasted. Robert Rhea used many quotes and references from William Hamilton’s book “The Stock Market Barometer” printed in 1922. “The Dow Theory” simplifies market cycles and lets us understand what really drives market and economic forces. Today the moving parts may be different but the logic is enlightening.
3. How to Trade Stocks by Jessie Livermore. Printed in 1940, Jessie Livermore detailed his method of trading stocks that made him one of, if not the best, trader in the 1930’s. His method of trading stocks is not what makes this book so special, it’s his subtle comments about the “way it used to be”. The markets changed so much from the “traders market” of the 1930s that he actually committed suicide very shortly after the book was printed. Jessie Livermore’s method of trading no longer worked when he wrote this book because markets where so much smaller.
Just a couple of the many shoulders I stood on to write “The Art of Expectations“.