No. of Recommendations: 6
Book lists are like a pair of worn gloves or shoes. They're familiar, comfortable, and meaningful to the person who owns them, but generally don't fit well anyone else. So this list is more a record of the paths I've walked than a map for your own journey. But some generalities can be offered.
The definitional stuff and the tiny bit of basic math needed to understand bond prices can be found in dozens of places. My favorite is Sharon Saltsgiver Wright's, 'Getting Started in Bonds' (either edition), and I like the book because it does cover the basics as well as lends itself to rereading a couple months later when you discover just how shrewd many of her observations really were that went by you the first time through. For sure, there are other intros. But they mostly offer trivial coverage, based on obviously limited experience, and they aren't worth even a glance. So, if learning about bonds interests you, do buy a copy of Wright's book and do some web searches, reading the articles you'll find at places like Investopedia.
At the intermediate level, I used to suggest Barnhill's book on high yields, and if you can get a hold of a copy without having to buy it, do so. Ditto Fabozzi's book. Both are fun to dip into. As for the advanced level stuff, such as is found in the professional journals, skip it. It's likely to be more (unnecessarily) mathematized than you can manage, as well as deal with issues that you as a retail investor aren't likely to encounter because you aren't running a multi-million (or multi-billion) dollar portfolio and don't have clients with lawyers whom you have to fend off when things don't go well. (Rewatch 'The Big Short'.)
If you're going to buy corporates and you're already a competent stock analyst, you've got nothing new to learn, because it's the same underlying company that issues both, with this difference. For a stock investor to do well, the company has to do well. For a bond investor to do well, the company just has to survive. OTOH, if you don't know your way around 10Qs well enough to pull out the relevant facts, you've got no business buying stocks or bonds. Sorry. That's just the way things are. Fix that problem and then let's talk, though here's a workaround. If you want to bypass the green eye shade stuff, then become a chartist and trade bond funds technically. (More on that in another post.)
One set of books whose concepts you do have to master are those that seemingly have nothing to do with bonds, but everything to do with them, which is/are those dealing with 'risk management'. That's what's going to make or break you and get you thrown out of the game or not before you've even had a chance to learn it. But here is where things break wide open, and Chef's Choice rules the day. Like Talib? Go for it. Like Pirzig's 'Zen and the Art of Motorcycle Maintenance'? Go for it. How about the MENSA book on casino gambling? Go for it.
But one book I would recommend is Justin Mamis', 'The Nature of Risk'. Though it's really about stock investing --and technically-based stock investing at that--, its key insight about the tradeoff between 'information risk vs 'risk price' is crucial to understand and to come to terms with (which Rickards agreed with in a recent video in which he discussed 'The Kissinger Cross'). Whether it's buying a stock or a bond or just crossing the street, there's always risk and always a tradeoff between waiting to gather more information versus seizing the opportunity before it fades.
Another set of concepts you need to master is who you are temperamentally and how you deal with Fear and Greed, Hope and Despair. Any intro to Jung's personality theory as popularized by Meyers-Briggs will serve. Those concepts and that knowledge is the third leg of Alex Elder's 'Money, Mind, Market' trio that becomes your tool box for making decisions under conditions of uncertainty such that you can stick with the investing game long enough to learn a version of it that suits your means, needs, goals, interests, and opportunities.
To sum things up. What's really needed isn't a lot of reading, but a lot of thinking and then running small experiments to test your ideas. But the good news is the market herself, by saying Yea or Nay, will teach you what you need to know if you just have the humility to listen to what she says and then the discipline to do it, and for that reason, I'd add the 'Tao Te Ching' to the reading list or Sun Tzu's classic on the art of war.
