Charlie Munger on Mental Models, Wisdom, and Human Psychology

charlie munger mental models

Your brain is a roughly million-year-old piece of hardware – designed and built to operate in the world of hunting and gathering – where a dangerous animal may lurk behind the nearest bush. While our society has changed massively in the last 10,000 years (or even the last 500 years) – our brains have not had time to catch up.

You and I are equipped with a tool that – while wonderfully sculpted by evolution to thrive and reproduce in the world of hunter-gatherers – is riddled with shortcuts and processing errors that can manifest in mistakes, calamities, and all around terrible decisions.

Over the last year or so I have spent much time studying Charlie Munger – the billionaire “right hand man” of Warren Buffett. Charlie developed a rather unique worldview on human behavior and problem solving (that he dubs “worldly wisdom”) rooted in the idea fundamentally that you need a wide range of tools (what he calls mental models) to solve the many problems that life throws at you.

Among one of Charlie’s greatest insights were the combined notions that  (1) all academic disciplines must respect each other in order to be true and (2) that psychology underpins nearly all of them because it impacts and shapes human decisions.

What this means is that to think more effectively and achieve your goals you need to both master psychology and understand the mental models that underpin reality.

One of the most powerful things that you must understand about everything that I’m sharing with you here – these are not anecdotal observations or opinions – the decisions, mistakes, and behavior patterns that human engage in again and again, to their own determinant, are rooted fundamentally in science and proven repeatedly by numerous psychological studies.

Learning More About Charlie Munger’s Mental Models

As a starting point for that journey, I wanted to share with you several resources that I have learned from along the way.

I would absolutely start by watching (or listening to) this Youtube Video of Charlie Munger on “The Psychology of Human Misjudgment.” The video is priceless and I’ve listened to it 10+ times. Some of the examples are a bit dated because the speech is from 1995, but the message is timeless.

From there, I would recommend digging into a few books. I’ve put these in a particular order and suggest sticking to it – this will slowly introduce you to the topic and layer in key pieces of knowledge to build a more comprehensive understanding of Charlie Munger’s Mental Models and the Psychology of Misjudgment. [Click the titles for a link to Amazon]

Predictably Irrational by Dan Ariely

Predictably Irrational is absolutely the best starting place to dip your toes into this subject. It’s a quick read that is easy to grasp and has some great examples that will stick with you. I would compare this to Freakonomics in the sense it’s aimed at a popular audience and does a great job making the subject very approachable.

Influence by Robert Cialdini

In many ways the “bible” of this school of thought – Charlie Munger even mentions it several times in his speech on the psychology of human misjudgment. More technical than Predictably Irrational but a critical next step to go deeper on the topic.

Poor Charlie’s Alamanc by Peter Kaufman

Once you’ve completed your necessary psychology prerequisites – now its time to dig into the meaty stuff. This is a big book, I’m not gonna lie to you. Read every word. This is where Charlie Munger really starts laying out his framework for Worldly Wisdom and explaining in detail how to use psychology as well as mental models to think about the world. This book will explain how and why “worldly wisdom” and “mental models” are important, but does not go deep into actually explaining every mental model that governs reality.

Seeking Wisdom by Peter Bevelin

WARNING: DO NOT READ THIS FIRST. That said, wow. This book. I have never in my life underlined more phrases in a single book. This is probably the most information dense book I have ever read. It’s a treasure trove of information and can serve as a vital reference book for the rest of your life. You absolutely have to read the other books first or this will be like reading something written in Mandarin. This fills out an extremely detailed checklist of both the “Psychology of Misjudgment” and the “Psychics and Mathematics of Misjudgment” – replete with pages and pages of detail, studies, and information on a huge array of mental models.

Thinking Fast & Slow by Daniel Kahneman

Kahneman is a titan among research psychologists and in many ways the godfather behind many of these concepts – including being one of the founders of Prospect Theory, which uncovered many of these mental models and how they shape the world. This book is BIG and full of tough and often counter-intuitive mental models and psychological concepts, but this is the book you want to read to really dig into the core research that underpins much of these other books.

Podcasts on Mental Models

I wanted to share a few links to two Science of Success Podcast episodes where we also dig into these topics.

The Psychology of Making Better Decisions with Michael Mauboussin

How to Build a Toolbox of Mental Models to Understand Reality with Shane Parrish

Blog Posts on Mental Models

I also wanted to share a few links to two blogs that I particularly enjoy that both have wonderful and deep sections focusing on mental models.  Each of these are filled with dozens of mental models as well as examples and explanations to help better understand them.

Farnam Street – Mental Models

Joshua Kennon – Mental Models

Mental Model Checklist – Human Misjudgement

As a bonus for you – I’ve also included Charlie Munger’s (updated as per Seeking Wisdom) checklist of the standard causes of human misjudgment.

1)     Bias from mere association

2)     Underestimating the power of rewards and punishment

3)     Underestimating bias from own self-interest and incentives

4)     Self-serving bias

5)     Self-deception and denial  – distortion of reality to reduce pain or increase pleasure.

6)     Bias from consistency tendency – includes confirmation bias – looking for evidence that confirms our actions and beliefs and ignoring or distorting disconfirming evidence.

7)     Bias from deprival syndrome

8)     Status quo bias and do-nothing syndrome

9)     Impatience

10)     Bias from envy and jealousy

11)     Distortion by contrast comparison – also underestimating the consequences over time of gradual changes.

12)     Bias from anchoring – over-weighing certain initial information

13)     Over-influence from vivid or most recent information

14)     Omission and abstract blindness

15)     Bias from reciprocation tendency

16)     Bias from over-influence by liking tendency – includes bias from over-desire for liking and social acceptance

17)     Bias from over-influence by social proof

18)     Bias from over-influence by authority

19)     Sense making – construction explanations that fit an outcome – being too quick to draw conclusion, also thinking events that have happened were more predictable than they were

20)     Reason-respecting – complying with requests merely because we’ve been given a reason. Includes underestimating the power of giving people reasons.

21)     Believing first and doubting later

22)     Memory limitations

23)     Do-something syndrome – acting without a sensible reason

24)     Mental confusion from say-something syndrome

25)     Emotional arousal – hasty judgments under the influence of intense emotions. Exaggerating the emotional impact of future events.

26)     Mental confusion from stress

27)     Mental confusion from physical or psychological pain

28)     Bias from over-influence by the combined effect of many psychological tendencies operating together [lollapalooza]

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The Best Books I Read In 2013

 

I hope you like my new video content about the best books I read in 2013. Below is the list of books, the links are affiliate links to Amazon.

Paper Books

 

Kindle Books

 

Audiobooks

 

Here are a few other links to some of the other things I mentioned in my video. Hope you enjoy!

Really cool NPR interview with Paul Davies of Cosmic Jackpot.

Here is a link to Rob Kelly’s Blog (the book I was waving around at the start of the video).

My recent blog post about my favorite quotes from The Launchpad (yay Kindle).

Thanks again for reading my blog.

 

Social Media 101 – Your Social Media Reading Homework

Social media is the future of advertising and brand engagement and it can have a powerful impact on you and your business, but many people struggle to even understand its basics.

What most marketers don’t get is that the reason social media is powerful is not the platform itself – it is that unlike the era of mass media – social media lets you connect directly with the people.

That is its true strength. Seth Godin puts this perfectly into context in his blog post “What’s Your People Strategy?

Hard to imagine a consultant or investor asking the CMO, “so, what’s your telephone strategy?”

We don’t have a telephone strategy. The telephone is a tool, a simple medium, and it’s only purpose is to connect us to interested human beings.

And then the internet comes along and it’s mysterious and suddenly we need an email strategy and a social media strategy and a web strategy and a mobile strategy.

No, we don’t.

It’s still people. We still have one and only one thing that matters, and it’s people.

All of these media are conduits, they are tools that human beings use to waste time or communicate or calculate or engage or learn. Behind each of the tools is a person. Do you have a story to tell that person? An engagement or a benefit to offer them?

Figure out the people part and the technology gets a whole lot simpler.

Now its time for you to build your own people strategy. Here is a list of a few of my absolute favorite books on the subject. I’ve tried to keep this list as short and sweet as possible. It’s time to hit the stacks!

Core Curriculum

Crush It! (Amazon)

The seminal piece by social media legend Gary Vaynerchuck. You can probably read the entirety of Crush It in less than an hour. This book won’t wow you with a ton of never before seen social media secrets, but the raw power of Gary V’s enthusiasm, and the fact that he was one of the first people to realize the true potential of social media – make this book the starting place for any social media reading list.

If you consider yourself well versed in the basics – you can probably get away with skipping this one. But if you are clueless to social media and its potential – this is a mandatory starting place. This book answers the “Why” of social media. Here’s a picture of my favorite chapter in Crush It! (and one of the most important lessons in social media)

Smarter, Faster, Cheaper (Amazon)

I originally discovered David Siteman-Garland when looking around for website similar to Mixergy. He does a great web video / podcast series called Rise to the Top where he interviews entrepreneurs and talks about their success stories.

David’s first book – Smarter, Faster, Cheaper – is probably the book I most recommend to people who really want to dive in and learn how to build great content and develop the core of a successful social media strategy. I’ve given away several copies as gifts and lent my own copy out several times (still waiting to get it back from the latest friend I’ve lent it to). This book really delivers concrete actionable steps that can help you build a robust social media strategy based around rock solid content and execute it.  This book answers the “How” of social media.

Trust Agents (Amazon)

For the best summary of Trust Agents – check out my 23 Favorite Kindle Highlights from the book. Trust Agents is a lot like Smarter Faster Cheaper but with a business focus. Smarter Faster Cheaper is all about how to build and execute an effective social media strategy around you and your personal brand (a book for mediapreneurs as he calls it), Trust Agents focuses on doing it within the context of an existing corporation or business with a sales and customer service tint.

 

Extra Credit

These books don’t form the core of my thoughts on social media but I think each one really drills down on some of the foundations behind any successful social media strategy.

Never Eat Alone (Amazon)

Absolutely awesome book by Keith Ferrazi.  Never even mentions social media as this is a book about traditional networking, but this book redefines the entire concept. This book changed the way that I thought about networking and what it means – it’s not mashing your business card into as many hands as possible – it’s all about being a resource, helping other people become more successful, and giving more than you get. Turns out that is exactly how you succeed with social media.

Raving Fans (Amazon)

An oldie but a goodie. Written well before the time of social media this book is all about customer service. But the core message underlying the book should be the backbone of any social media plan. You have to care deeply about each one of your customers (or followers) and take the time to defy their expectations. This book is another quick read told through an easy to remember parable.

22 Immutable Laws of Marketing (Amazon)

Tim Ferriss called this one of his Top Five Must Read Books. Another one that you can get through in an hour or two. The core message here is that defining your own niche – or your own game as Trust Agents would say – is essential to any successful marketing strategy.

Linchpin (Amazon)

Seth Godin is widely regarded as one of the marketing geniuses of our time. Known for his pithiness, Godin’s book Linchpin can ironically ramble on at times.  I honestly wasn’t a huge fan of most of this book, but the single chapter titled “The Resistence” is worth the entire book and more. This chapter, riffing on the famous Steve Jobs line “Real Artists Ship” is all about overcoming your fears and objections and really putting yourself out there – an essential piece not only for social media success but for anyone who wants to achieve something big.

 

Bonus Blog Posts

Last but not least, I couldn’t help but include a few social media blog posts as well.

How to Build Great Content

1000 True Fans (by Wired founder Kevin Kelly)

How To Build a High Traffic Blog Without Killing Yourself

Three Minute Crash Course in Personal Branding

Giving is the core of any successful social media strategy.

Hope you enjoy this reading list and hit me up on Twitter!

Five Must Read Books On Entrepreneurship

“If I read a book that cost me $20 and I get one good idea, I’ve gotten one of the greatest bargains of all time.”  – Tom Peters

I am a sucker for cheesy and motivational business books and you can usually find me reading one (even on the beach). If I had to whittle my list of favorite business books down to just five selections that I would recommend to someone who is thinking about going out on their own and starting a business – these would hands down be the books that would make the cut. Warning – these books may make you want to quit your day job!! (The titles are affiliate hyperlinks if you want to check out their Amazon pages)

The Four Hour Work Week

The oddly titled book by controversial Silicon Valley personality Tim Ferriss (check out his blog here for some pretty interesting reading) is probably one of my favorite books of all time. I would say this book factored tremendously not only in my decision to ultimately leave my Wall Street job for more entrepreneurial pursuits but also in my own decision to write a book.  That said, take this book with a grain of salt. I think the message of the book is amazing – some of the concrete tips that Tim offers in the book are not entirely practical – but the framework that Tim uses to think about business and life is tremendously useful.

Tim’s biggest strength is his ability to think outside of the box. He really has an ability to see through all the preconceived notions and ideas that many people take for granted and turn them completely on their head.  Start with this book because it will get you fired up to really do something awesome – but after that are you going to need a little bit more substance.

The Personal MBA

This book is the meat and potatoes you’re gonna want after reading 4HWW.  Josh Kaufman absolutely crushes the fundamentals of business. Designed to be concise and information packed – this book tackles nearly every aspect of starting and running a business with amazing clarity. Josh read over 100 contemporary business books and synthesized them all into The Personal MBA. If you know nothing about business or think you know everything – I guarantee you will learn a tremendous amount from reading this.

This is the kind of book that you will want to keep in your bag because you keep taking it out and referencing different sections. This book focuses on teaching what Charlie Munger calls “mental models” – or “useful ways of thinking about the world that you can use to your advantage in a wide variety of situations” – giving you an arsenal of tools to tackle many different entrepreneurial problems.

The E-Myth Revisited

Michael Gerber draws on many of the themes from Personal MBA but really ties together the core of systematizing and documenting your business. The book is very straightforward and easy to follow because the core lessons follow the narrative of a fictional pie shop’s journey from disorganization to success. I’ve personally used dozens of the specific examples and lessons from this book to organize and streamline the operations of a mismanaged business. E-Myth combined with Personal MBA will give you a great foundation of business and operational knowledge to get you going.

Mindset

Mindset is the kind of book that will get you fired up to do absolutely anything. The crux of the book is that people fall into two camps – “fixed mindset” and “growth mindset” – and if you happen to be a fixed mindset thinker (I was in a lot of ways) – switching to the growth mindset can open up huge amount of opportunity for you. Mrs. Dweck delves pretty deep into the psychological foundation for which mindset you might find yourself in – but to sum up the basic tenants of the book:

“In the world of fixed traits – success is about proving you’re smart or talented. Validating yourself. In the [world of growth] – the world of changing qualities – it’s about stretching yourself to learn something new.”

Not trying to go quote crazy here but (I should probably write a whole post on this…) this quote defines how I thought about risk, success, and failure in many areas of my life before I read this book.

“Everything I was going through boiled down to fear. Fear of trying and failing… Nothing is harder than saying ‘I gave it my all and it wasn’t good enough.’ The idea of trying and still failing – of leaving yourself without excuses is the worst fear within the fixed mindset.”

“Instead of trying to learn from and repair their failures people with the fixed mindset may simply try to repair their self esteem… by assigning blame or making excuses.”

It’s impossible to learn from your mistakes if you deny them by blaming something else.

I will say – the one drawbook of this book is that it gets pretty repetitive towards the end – repeating the same lesson in several different contexts (business, parenting, sports etc) but the message is so powerful in my opinion that it outweighs the repetitiveness.

The Monk and The Riddle

“Imagine I have an Egg” – Mr Wizdom cups an imaginary egg in his hand –“and I want to drop this egg three feet without breaking it. How would I do that?”

If one book will push you over the edge and really give you the drive to strike out on your own – it would be this. A great (and quick) read about leadership, success, business, and life – this book is eerily timely in today’s technology world. Written and set in a pre dotcom bubble Silicon Valley – this book follows the fictional journey of Funerals.com and the not-so-fictional life of its author Randy Komisar.

“Instead of managing business risk to minimize or avoid failure, the focus here is on maximizing success… failure is an unavoidable part of the search for success. Silicon Valley does not punish business failure. It punishes stupidity, laziness, and dishonesty. Failure is inevitable if you are trying to invent the future.”

It’s really a book that makes you ask – “What do I want to do with my life?” – and forces you to think long and hard about the answer. This book is 90% inspiration 10% information – but it will fill you with the fire to take a risk, take charge of your life – and make it what you want it to be.  The quote I put at the beginning is the riddle – don’t try to answer it now. You have to sit with the riddle for a while and the answer will simply come to you.

The Books I Read To Make Over $1000 Playing Poker

Is that a fortune cookie?

Poker is one of my biggest hobbies and something I love playing. From blogs to books, I have read a tremendous amount about the game and I wanted to share my favorite poker books from my bookshelf with you.

BUILDING BLOCKS

The Pocket Idiot’s Guide To Texas Holdem (Burgess & Baldassarre)

This was the very first book I bought when I started to teach myself Texas Holdem. I already knew how to play but I wanted to round out the basics and make sure I had all my foundations covered. I think it never hurts to get a refresher and make sure your foundations are rock solid. This is my go-to for learning the rules, numbers, and basic odds.

STARTING OUT

Okay so now that you have the very basics down and know the rules. It’s time to start working on your strategy. These two books formed the core of my overall poker strategic thinking. Both books focus on all various forms of poker and aren’t limited just to Holdem. Great for building on the basics and getting onto more advanced strategic topics. Also useful if you like to mix it up at your home game and play a few hands of Omaha or Five Card Draw.

The Theory of Poker (David Sklansky)

This book really builds on the odds and fundamentals taught in the Idiot’s Guide. You start to learn more advanced topics like c-betting, implied odds, and semi-bluffing. This book builds your strategic understanding and poker vocabulary up so you can start to grasp some of the more advanced concepts in the deeper books.

Super System (Doyle Brunson)

Doyle Brunson – a poker icon – wrote this book many years ago and it was truly the first “poker book” ever created. The book features information packed chapters about various poker games, each chapter written by a respective expert in that particular form of poker. Great for rounding out your game and learning good solid aggressive poker from the Texas Dolly himself.

CASH GAMES

If you want to master deep stacked cash games – Dan Harringon’s series is considered the bible. This is mandatory reading for anyone who wants to take cash games seriously and learn advanced cash game strategies. In this two-part series Harrington walks through every poker play style and why they work and why they don’t. The books outline every street (from pre flop to the river) and how to play various hands and scenarios from every possible angle.

Harrington On Cash Games (Vol 1)

Harrington On Cash Games (Vol 2)

SIT N GOS

My personal favorite games to play are Sit N Gos (SNGS). These are small table tournaments from 2 player heads up to 9 player single table and sometimes even larger. These are quick and short mini-tournaments and offer a great way to make money playing poker. SNGs are easy to find online. Moshman himself has made hundreds of thousands playing online SNGs and he shares his wisdom in these two books.

Sit ‘n Go Strategy (Colin Moshman)

This book is awesome. This book hammers out all the key concepts of SNGs and gives you a full understanding of the math behind SNG play. A full breakdown how to play all the stages of Sit ‘N Gos from the start down to the most important part – the “bubble”- that determines if a player makes money or loses it.

Heads-Up No-Limit Hold ‘Em (Colin Moshman)

Heads up is such a drastically different game than almost any other form of poker that it requires an entirely different strategy. One of my personal favorite game modes because it is so aggressive and action packed – I found this book to be an invaluable resource. As you can see from the picture of my bookshelf, I’ve read through this one a number of times.

DIGGING DEEPER

Here are a few more books that I read to round out my game and dig a bit deeper. Not core by any means but good reads to sharpen up your poker mind.

Read ‘Em And Reap (Joe Navarro)

Really interesting book for finding tells and reads on your opponent. This book combines insights from Phil Helmuth and an FBI interrogator to give a list of concrete tells to look for in your opponents. Pretty advanced stuff and tough to pull off, but these reads can be valuable if you learn to make even a few of them.

Every Hand Revealed (Gus Hansen)

Get inside the head of a top pro player as he gives you his thoughts on every hand he plays over the course of a tournament he ends up winning. Gives you an awesome insight into how top pros read people’s hands. Great for adding another layer of depth to your game and learning to be aggressive in more spots than you think.

Zen and the Art of Poker (Larry W. Phillips)

Tilt’s a bitch. I’ve lost a bunch of money over the course of my poker career solely from tilting out and getting mad. This book encouraged me to step back and evaluate my game more objectively.  Part Sun Tzu and part poker playbook – this has some awesome quotes and some good philosophies for tilt management and staying objective about your game.

STORY TIME

Here are two books that don’t contain much poker strategy but are awesome true stories about poker players and their lives.

Education of a Poker Player (Herbert O Yardley)

I think this book is actually out of print but it’s an awesome read. Written in the 20s or 30s – the book reads a bit weird and can be slow at times. The best advice I have is to skip over the parts were he talks poker strategy and just stick with the stories. One of the craziest stories is how the author was a US spy in China and caught an enemy spy as a result of a poker hand.

The Professor, The Banker, and The Suicide King (Michael Craig)

Wild story about a businessman who tries to take on some of pokers top pros. The book is a bit dated now but still a pretty wild story. Shows you what life is like in the top circles of poker’s elite and how hard it is to find action sometimes.

PRACTICE MAKES PERFECT

Well – that’s my poker education in a nutshell. I’m sure you can find a few gems in there that would help your own game out. I think the biggest key to improving your poker game is just to play for real money. Play money is a joke and doesn’t teach you poker fundamentals at all.

I took 1000 play money chips in a couple weeks and made over 1mm play chips on Full Tilt when I was learning the game. I thought – wow if I can crush the play money games this hard, I can’t wait to start printing cash.

When I finally moved into playing real money games for the first time – I struggled to maintain my $100 bankroll for nearly 4 months – dipping down to at one point having my entire remaining $13 on one cash table and getting a lucky double up to keep my account from going busto.

Once I started delving into these books and really studying the game – I ended up making over $1000 playing $5 buy-in sit n gos. Poker is a tough game and the swings can be sick sometimes, but skill does win out over time.

Wall Street Crash Course – Books I Read To Land A Job On The Street

I majored in Political Science, so how did I parlay my seemingly unrelated major into a 2 year gig at Goldman Sachs? I read a ton of books about finance.  Here’s my full throttle finance crash course that took me from knowing literally nothing about the stock market to understanding derivatives, risk, and trading psychology.

I read books from across several business disciplines to round out my business knowledge. Think of this more as a menu of options than a concrete reading list if you want to learn about business in general and finance in particular.

FINANCE

The Neatest Little Guide To Stockmarket Investment (Jason Kelly)

This was my go-to guide for understanding the basics of the stock market. This book taught me how to think about and value stocks using basic industry terminology like growth stocks, dividends, PE ratios, etc. Great for a beginner to get a handle on the fundaments of equities.

 A Random Walk Down Wall Street (Burton G. Malkiel)

A classic book and solid foundation for understanding Wall Street. This book will give you a robust grasp of the fundamentals of stock market trends and analysis. The single best part of this book is the chapter explaining all of the bubbles in the history of the financial markets.

Reminiscences of a Stock Operator (Edwin Lefèvre and Roger Lowenstein)

The best book ever written on trading psychology. Written in the 1930s by a trading legend at the time, this book will teach you how to think like a trader, feel the market, and understand how markets act and react.

When Genius Failed: The Rise and Fall of Long-Term Capital Management (Roger Lowenstein)

Single best intro into the fixed income world you can find. This book provides a fascinating story that is also packed with information about bond markets and interests rates.

Liar’s Poker (Michael Lewis)

Required reading for anyone who wants to work in finance. Period. This book is hilarious and entertaining and gives you a great grasp of the psychology of working on Wall Street. People will expect that you have read this if you even consider a career in finance.

More Than You Know: Finding Financial Wisdom in Unconventional Places (Michael J. Mauboussin)

Really insightful read especially if you want to learn about finance from an outsiders perspective. This book is a cross-disciplinary analysis that brings in different fields and ideas and relates them back to finance. A good mix of psychology and statistics with a finance touch.

Lords of Finance (Liaquat Ahamed)

Amazing explanation of global economics and a surprising parallel to the mess we find ourselves in today. This book details the history and causes of the great depression. Excellent read that will really deepen your understanding of global economics and tell an interesting tale.

Black Swan (Nassim Taleb)

Honestly Taleb’s writing really bothers me and I think he’s intellectually arrogant and one of the most annoying and dense writers to read. Not a fan of his book or his writing. That said – you pretty much have to know what a Black Swan is to work or live in a post 2008 crisis world. You don’t have to read the whole thing but you better understand its core concepts.

ACCOUNTING

How to Read a Financial Report: Wringing Vital Signs Out of the Numbers (John A. Tracy)

Simple and easy to use book. This can make financial reports seem much less intimidating for someone with no experience using or understanding them. I still keep this book as a reference.

The Accounting Game: Basic Accounting Fresh from the Lemonade Stand (Darrell Mullis)

Hands down the best book I could ever recommend on learning or teaching accounting. This book takes a child’s lemonade stand and brings you along for the ride – balancing the books and doing all the financial reporting yourself with pen and paper as the lemonade business grows. It’s like an accounting coloring book. The hands on approach is unbelievably effective. I taught myself accounting with this book and later went on to get a near perfect grade in the two college level accounting classes I took at Richmond.

ECONOMICS & GAME THEORY

A Beginner’s Guide to the World Economy (Randy Charles Epping)

First book I read when I started out learning the basics of business. The book really rounded out my fundamentals and taught me basic economic things like how interest rates work, what GDP is, what inflation is, etc. Structured in short mini-chapters almost like blog posts – this book was exactly the tool I was looking for to teach myself the ground level economics I needed before moving on to more advanced reading.

Nonzero: The Logic of Human Destiny (Robert Wright)

One of my favorite books of all time. Regardless of all the tie-ins to economics – this book is a fascinating read that looks at the entire history of human technological and cultural development through the lens of game theory. This will teach you about society, economics, and a dash of game theory. Even if you don’t touch another business book I would pick this up anyway.

The Drunkard’s Walk: How Randomness Rules Our Lives (Leonard Mlodinow)

I used to dread stats class. This book completely changed the way I view statistics and opened my eyes to how powerful they are. A truly interesting history of statistics, randomness, and probability. Great math and econ background reading. This is what Black Swan should have been.

In Defense of Globalization (Jagdish Bhagwati)

This is the next step up from “A Beginners Guide To The Global Economy.” Taking a look at global economics and free trade on a much more detailed level and explaining how the global economy functions. Insightful book that delves into how free trade impacts everything from global capital flows to child labor or the environment.

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (Steven D. Levitt and Stephen J. Dubner)

This book has been widely popularized but I think it’s a good intro to economics for two reasons. One – it’s a fascinating read and the stories are truly interesting. Two – it shows you how economics break down and analyze date and how to think like an economist when you are trying to solve a problem.

Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life(Avinash K. Dixit, Barry J. Nalebuff)

A book for the game-theory nerds (myself included). If you want to delve into some deep analysis of game theory using real life examples from business and politics – this book is a fun read and will deepen your knowledge substantially.

STILL WANT TO WORK ON WALL STREET?

Getting a job on Wall Street isn’t easy. You have to work your ass off. I read more than 15 books just to learn the basics – that doesn’t count interview prep and everything else that went into my job search.

One last big piece of advice – if you’re looking to get a job on Wall Street you absolutely need to read the Vault Guide To Investment Banking. This will polish off your market and economic knowledge with a few key terms that you won’t find in finance textbooks or classes. The Vault guide helped me understand key market terminology and get that last little edge in my interviews.

Good luck and even if you have no desire for getting a job on Wall Street – there are still some gems in here that I would highly recommend picking up and reading.