Three investment books are so sought after, yet so rare, that second-hand copies sell for hundreds of dollars on the Internet. If you see any of these books in second-hand bookshops, buy them immediately.
The Secrets of Professional Turf Betting, by Robert Bacon, is one. Used copies sell for $180 on Amazon.
This is one of the best books on speculation ever written. It explains how to win money at the horse track. But the advice Bacon gives in this book also applies to the stock market and all other forms of speculating in public markets. Famous speculator Victor Niederhoffer requires all his traders to read this book before he'll allow them to work for him.
I once found two copies of this book in a bookstore in Nashville, Tennessee for $30 each.
Margin of Safety, published in 1991 by Seth Klarman, is another collectible book. Brand new copies of this book sell for $2,300 on Amazon. Used copies sell for $700.
Seth Klarman manages the Baupost Group, one of the most successful value investing mutual funds in history, returning close to 20% per year over the last 25 years. He doesn't use debt or leverage and follows strict value investing principles in the same vein as Warren Buffet or Benjamin Graham. This book is a description of Klarman's investment strategy.
I've never seen a copy of this book... only an illegal photocopy.
The final book I want to mention today is the most relevant to the financial world right now. Not one person in a thousand understands what this book talks about. This ignorance is why millions of Americans are in dire financial straits. I think it's absolutely crucial to your family's future that you understand what is in this book.
The book is Murray Rothbard's The Mystery of Banking, published in 1983. First editions sell for as much as $600 on Amazon.
I read The Mystery of Banking this week. It's a sublime read, simple to understand and thorough. The book covers the function of money, it explains how the Federal Reserve system works, and describes how our financial system generates inflation. Chapters 6,7, and 8 are the best explanation of how a bank works I've ever read.
A new edition just came out this year. It's selling for $20. You can get this book free by following this link: http://mises.org/mysteryofbanking.pdf.
If you've never understood how the Fed's discount window works or what the newspapers mean when they talk about the Fed's "open market operations," you need to read this book.
But above all, this book is important because it explains the terrific efficiency of the American banking system when it comes to inflation.
It's horrifying. The free market has several checks and stops in place to prevent inflation and bad banking. But Rothbard shows, one by one, how our leaders have figured out how to skirt them, outlaw them, and turn the banking system into a ruthless inflation machine certain to collapse.
Deposit insurance is one device Rothbard discusses. The FDIC now insures deposits up to $250,000. So no matter where you park your money, as long as the bank is a member of the Fed banking system, your money is 100% guaranteed by the government in the event of a bank collapse.
Rothbard shows that every bank in America is insolvent. If even 20% of a bank's customers asked to withdraw their cash at the same time, the bank would have to shut its doors. The FDIC is the government's way of stopping bank runs in a world of insolvent banks.
Deposit insurance gives bank customers a false sense of security so they don't try to discriminate between risky banks and prudent banks. The boxer who doesn't feel pain is a good analogy. He may win a few fights. But in the long run, he's guaranteed to become a vegetable.
Without FDIC insurance, bankers would have a strong incentive to behave prudently or risk losing their business. Reputations would be cultivated over hundreds of years, good banks would prosper, bad banks would fail. Newcomers would have to offer higher deposit rates to make up for their unproven track record.
Any good banker should hate FDIC insurance. When Roosevelt first introduced deposit insurance in 1933, it caused uproar in the banking community.
I highly recommend you take the time to read this book by Rothbard. You'll never look at your bank in the same way again. But beware: It'll probably make you want to own gold.
Good investing,
Tom
