Holiday Stocking Stuffers for Investors

You can hardly be blamed for feeling that you've seen enough financial headlines and market volatility this past year to last a lifetime. The Volatility Index hit an all-time high in early October, which means that we are witnessing the most volatile and uncertain environment since its launch in 1993.

We thought that now would be an ideal time to recommend for the avid readers in your life some new business books that may help place the current events in context. All of these books have two traits in common: They are thought-provoking, and they offer various perspectives on the financial crisis.

In addition to the list below, if you are interested in a reading list geared toward new investors, please check out David Kathman's article earlier this year on that topic. For a list of classics, that list should help you get started.

Authorized Biography
The Snowball: Warren Buffett and the Business of Lifeby Alice Schroeder
There has never been an authorized biography of Warren Buffett, CEO of Berkshire Hathaway--until now. Buffett handpicked Schroeder, a former managing director at Morgan Stanley, and the result is the most detailed review of Buffett's life, both personal and business, to date.

It is no secret that many of us at Morningstar are big fans of Buffett. We consider his leadership on issues such as CEO pay and corporate governance to be as impressive as his stock-picking abilities. His prescient warning about derivatives being "financial weapons of mass destruction" is included here and is worth rereading, and so are his thoughts on philanthropy. There is sure to be something for everybody in this book. One warning: At more than 800 pages, this book requires a sizable time commitment.

There are a few other alternatives worth considering as well. Those looking for an abbreviated read that covers much of the same material can't go wrong with Roger Lowenstein's book, Buffett: The Making of an American Capitalist. If you are looking for a financial textbook written by Buffett, the closest you will get is the updated compilation of his shareholder letters, edited by Lawrence Cunningham. Finally, the two most important books to Buffett's investment career, written by his mentor Benjamin Graham, are always good choices: The 6th edition of Security Analysis with a forward by Buffett was released in September, and Buffett called Chapters 8 and 20 of The Intelligent Investor "the two most important essays ever written on investing."

Analyzing America's Balance Sheet
I.O.U.S.A.: One Nation. Under Stress. In Debt. by Addison Wiggin, et al.
This book is a companion to the documentary film released earlier this year with the same title. The book explores the United States' balance sheet and, particularly, the outstanding public debt that is reaching new records even as you read this. With a $1 trillion (yes, trillion) budget deficit forecast next year, this book is timely. The authors explain why the U.S. is moving toward a real disaster if our unfunded liabilities (namely Medicare, Medicaid, and Social Security) are not reformed to meet actuarial solvency.

We would recommend this book even to those who have seen the documentary. Extended interviews with Warren Buffett, former Treasury secretary Robert Rubin, former Federal Reserve chairmen Volker and Greenspan, and former comptroller general David Walker add meaningful detail to the topics in the movie. There are also numerous thoughts on what this situation means for U.S. businesses and investors. It explores a serious topic for those who are unwilling to look the other way.

A Little Book Filled with Big Ideas
The Little Book of Bull Moves in Bear Markets: How to Keep Your Portfolio Up When the Market Is Down by Peter D. Schiff
Many of you may be familiar with Wiley's Little Book, Big Profits series. My colleague Pat Dorsey published a Little Book of his own earlier this year that focuses on the economic moats of businesses and how investors can profit from analyzing them. Schiff's book explains why the American economy is poised for a decade-long bear market. While we don't agree with all of Schiff's conclusions, we would be foolish not to consider the forecasts of one of the few people who predicted the current market turmoil in his best seller that came out in early 2007.

This book is all about preserving assets. It includes many tips for confronting an inflationary environment, which many experts besides Schiff believe the Unites States will see sometime in the next few years. For those worried that inflation, interest rates, and commodity prices will soar after the U.S. emerges from this recession, this book should make for a worthwhile read.

Measuring a Life's Work
Enough: True Measures of Money, Business, and Life by John C. Bogle
John Bogle, founder and former CEO of Vanguard and one of the most vocal proponents of index fund investing, offers his thoughts on a multitude of subjects in this book, which should interest investors and noninvestors alike. His attack on the lack of stewardship in the mutual fund industry will be familiar to those who have read any of his past books. But there are new topics here as well.

Bogle considers what "enough" means as it relates to money, business, and life. He offers advice not only for investors, but also for business owners, managers, and employees (he referred to them as crew members at Vanguard). His ideas on executive pay are unique and compelling. And his thoughts on the difference between success (a word he's never liked) and character are timeless. The book also recounts the author's own life and triumphs, which have quite possibly made all investors better off.