History of the Stock Market
Learning to invest in the stock market is like learning to play a sport at a professional level. It takes a tremendous amount of dedication, hard work, and practice.
It frustrates me to see all these YouTube videos about how someone earned $10,000 a month day trading and other click-bait nonsense. The reality is that that is a very difficult, if not nearly an impossible task for a beginner. A bit like winning a pro golf tournament the first time swinging a club. Just not reality. But it is possible with years of hard work and dedication to the profession, to learn how to trade consistent and profitably.
I know of a few who have quit their day jobs after learning to trade for a few years. It replaced their daily income, and changed their lives. I also know of a few who have lost a small fortune. The latter is more common. Refer to the old saying “a fool and his money are soon parted”
Don’t expect to master the art of trading stocks in a few weeks or months. It takes time and practice. You need to start somewhere….
The best place to start learning about the markets is the beginning. I have found some great reads for beginners.
This list is weighted to the aspiring stock investor. I am going to start you with the historical reads. Why? Because those before us have a lot to teach us, we can learn from their failures and successes. History is a great place to build your foundation about the world of financial markets. Some of the characters that have shaped the world of finance and trading still have influence on it today.
Here are my top 5 recommended stock trading books. (available on amazon, links provided**)
- The Creature from Jekyll Island by G. Edward Griffin
Where does money come from? Where does it go? Who makes it? The money magician’s secrets are unveiled….
An inside look at how the American Federal Reserve came into existence. If you are curious about the Federal Reserve and how a super power nation can have a currency system based on a private sector banking system and that is not controlled by the Government, this is the book for you. It’s an amazing story of power and greed and is still very relevant today. One of my personal favourites.
2. Reminiscences of a Stock Operator by Edwin Lefevre
First published in 1923, Reminiscences of a Stock Operator is the fictionalized biography of Jesse Livermore, one of the greatest speculators who ever lived. A must read for anyone curious about the early days of stock trading and speculative investing. It’s a favourite read of newer and experienced traders alike.
3. The Complete Turtle Trader by Michael W. Covel
An amazing real life story which some say inspired the movie “Trading Places with Eddie Murphy and Dan Aykroyd (1983)”
The story suggests that a trend trading system can be developed so that almost anyone can trade it profitably. To this day, many have adopted variations of this method and created profitable trading systems. The story does not go into detail about how to create any of these systems however.
Warning – This is not a magical get rich system. But you can find ideas on how and why it worked back then. Blogs such as BabyPips.com and others claim to have the rules. But I caution you, I have back-tested them and found that with today’s fast paced systems and volatility, it doesn’t work without extensive additional rules, which I never figured out. It’s still a mystery on how to turn it into a profitable trading system with today’s crazy volatile and extremely unpredictable market conditions. Some of the original turtles have done very well, and have kept the secrets to themselves. But it’s a great read and makes your imagination wonder about how to build an ideal rule based trading system.
4. The Trend Commandments by Michael W. Covel
A more in depth look at Trend Trading inspired by his passion about the turtle trading system.
Some excellent advice on how to separate the white noise of news and “talking heads” from what is actually happening in the markets. Very much a philosophical look at trend trading. You won’t find systems or rules, it’s main thread is about the psychology of a serious trend trader. An important read for the serious aspiring trend trader. (This book had a heavy influence on my trading style and how I view today’s markets. )
5. Market Wizards: Interviews with Top Traders by Jack D. Schwager
What separates the world’s top traders from the vast majority of unsuccessful investors? In this iconic financial classic, Jack Schwager sets out to answer this question in his interviews with superstar money-makers….
This is a great collection of stories of the best traders from the early days of the market. Many lessons are hidden in the subtext of each story. You will read this one over a few times.
This is a great start to your library, and now you should have a pretty good idea what it was like in the early years of the market, how wall street was formed, and all the characters that helped build the financial institutions that are major players in today’s markets.
Things are very different today. You can self-manage your own accounts, trade currencies, cryptocurrencies, ETF’s, Options… and that’s just the beginning. I hope the above books have sparked your interest and excitement.