The 15 Academic Papers That Will Make You a Better Investor

The best academic papers to sharpen your thinking and improve your investing (with all the links)...

Apr 21, 2025

Hi, Investor 👋

I’m Jimmy, and welcome to another free edition 🔓 of our newsletter.

If you're the kind of investor who believes that reading sharpens judgment, you’ll love this one. I’ve pulled together 15 of the most insightful academic papers that shaped how we understand markets, risk, behavior, and value (with all the links).

Each one comes with a quick, no-fluff summary and a direct link - so you can explore further, reflect deeper, and ultimately make better decisions.

In case you missed it, here are some recent insights:

Subscribe now and never miss a single report:

🧠 Behavior & Reflections on Investing:

Prospect Theory – Kahneman & Tversky (1979)
This paper revolutionized how we think about decision-making under uncertainty. It shows that people value gains and losses differently — we hate losing more than we love winning, leading to irrational investment choices.
Investor Psychology and Asset Pricing – Hirshleifer (2001)
The author introduce a model where cognitive biases (like conservatism and representativeness) drive asset mispricings. It’s a cornerstone in behavioral finance, explaining why markets aren’t always rational.
Noise Trader Risk – De Long et al. (1990)
Not all market participants are informed — and these "noise traders" can push prices away from fundamentals. Their influence can persist and even hurt rational investors.
Behavioral Portfolio Theory – Shefrin & Statman (2000)
Investors don’t build portfolios like machines. Instead of optimizing risk and return, we mentally divide our wealth into layers — for safety, dreams, and speculation — making decisions that aren't purely rational.
Boys Will Be Boys: Gender, Overconfidence and Common Stock Investment – Barber & Odean (2001)
Overconfident investors trade more frequently, thinking they know more than they actually do — and as a result, they usually underperform. A cautionary tale for active traders.

Kahneman and Tversky | Source: AI Generated, 2025.

Found this content valuable? Share it with your network! Help others discover these insights by sharing the newsletter. Your support makes all the difference!

The Cross-Section of Expected Stock Returns – Fama & French (1992)
A classic. This study shows that size and value (book-to-market) better explain stock returns than the traditional CAPM model. It laid the foundation for factor investing.
Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers – Piotroski (2000)
Piotroski introduces a simple accounting-based scoring system (F-Score) to separate strong from weak firms within the value stock universe. The research demonstrates how investors can significantly enhance returns by applying quality filters to value strategies.
Value vs. Growth: International Evidence – Fama & French (1998)
Value stocks don’t just outperform in the US — it’s a global phenomenon. This study confirms that the value premium is persistent across countries and markets.
Contrarian Investment, Extrapolation, and Risk – Lakonishok, Shleifer & Vishny (1994)
Investors chase recent winners and ignore fundamentals. This paper argues that value investing works not because of higher risk, but because markets overreact to recent trends.
Do Stocks Outperform Treasury Bills? – Bessembinder (2018)
Surprisingly, most individual stocks underperform T-bills over the long term. Just a tiny fraction of stocks generate all the market's gains — which shows how important stock selection is.

Warren Buffett and Charlie Munger | Source: AI Generated, 2025.

Enjoying the content? Don’t miss out on more exclusive insights and analyses. Upgrade to paid now and stay updated.

🌀 Cycles, Crises & Broader Reflections:

This Time Is Different – Reinhart & Rogoff (2009)
Across 800 years of financial history, one thing is clear: economic elites repeatedly think "this time is different" — right before crises hit. Debt, euphoria, and denial are timeless ingredients for disaster.
The Limits of Arbitrage – Shleifer & Vishny (1997)
Even when prices are irrational, arbitrage doesn’t always fix it. Short-term pressure, investor redemptions, and career risk can force rational investors to exit too soon — allowing mispricing to persist.
The Economic Consequences of Noise Traders – De Long, Shleifer, Summers & Waldmann (1990)
This paper explores how irrational or "noise" traders can influence asset prices for extended periods, creating both opportunities and risks for rational investors. A foundational read for understanding how crowd behavior impacts markets.
Reflections on the Efficient Market Hypothesis – Malkiel (2003)
Malkiel revisits the efficient market hypothesis after decades of data. While markets are mostly efficient, he admits that human behavior and anomalies challenge the theory more than ever.
The Fundamental Law of Active Management – Grinold (1989)
This paper offers a simple formula: performance = skill × breadth. In short, if you’re skilled and make many independent bets, you can outperform — but it’s harder than it looks.

Found this content valuable? Share it with your network! Help others discover these insights by sharing the newsletter. Your support makes all the difference!

Buffett’s 1989 Letter to Shareholders – Berkshire Hathaway
In this legendary letter, Buffett explains why buying a "wonderful business at a fair price" beats a "fair business at a wonderful price." He also introduces the concept of "economic moats" - durable competitive advantages that protect long-term profitability.
The Psychology of Human Misjudgment – Charlie Munger (1995, Harvard Speech)
A masterclass on mental models and behavioral traps. Munger explores the 25 most common cognitive biases that affect decision-making - from incentive-caused bias to social proof - and how they wreak havoc on investors’ judgment.

These papers won’t hand you stock picks - but they will sharpen how you think, which is way more powerful.

The best investors rely less on fancy tools and more on clear thinking, sharp questions, and a deep respect for uncertainty.

If any of these ideas challenged your thinking or sparked a new insight, I’d love to hear it. Hit reply or drop a comment - let’s keep the conversation going.