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The ETF Book: All You Need to Know About Exchange-Traded Funds by Richard Ferri

The ETF Book is a good, thorough reference for ETF investors. First published in December 2007, the 2009 updated edition addresses ETFs within a larger context of exchange traded products (ETPs). The concept of Index Strategy Boxes is introduced (which is similar to Morningstar), and the exercise of index construction is addressed.

This book gives a good overview of asset allocation using ETFs and discusses both passive and active portfolio strategies (as well as combos). Specific ETF strategies are also entertained such as sector rotation, market timing, and buy and hold.

All About Exchange Traded Funds by Scott Frush

All About Exchange Traded Funds (2011) is a solid reference for investors. The explanations of ETFs and their history, structure, growth, and evolution are well laid-out and there is also an entire section devoted to tax treatment for both exchange traded funds and exchange traded notes.

For a beginning investor, this book is helpful toward understanding investment metrics such as Sharpe Ratio and Book Value, as well as more complex ideas like commodity indexes, market price return, and growth measures.

The Black Swan by Nassim Nicholas Taleb

The Black Swan is a follow-up to Taleb's other acclaimed book, Fooled by Randomness. This book is a good one too; in The Black Swan he gives us 19 chapters of history, philosophy, and interesting thought experiments regarding the impact of the highly improbable. And the book is intellectually fun to read along the way!

Quoting illuminaries such as Popper, Marx, Mandelbrot, and Wittgenstein the author leads us through a logical dissection of the mis-used applications of probabilities, from Las Vegas casino procedures to modern portfolio theory and its serious drawbacks. Or Long Term Capital Management (LTCM) and how they enlarged the ludic fallacy to "industrial proportions."

If only the world were as neat and predictable as Plato would have desired! Taleb exposes for us the concept of Platonic confirmation, where you look for examples that confirm your belief or model, and discard (or hope never to find) the examples that contradict your belief or model. He also addresses the fallacy of silent evidence, that is, looking back at history and not seeing the full story.

If you have been lulled into the hypnotic, reductionist world of the bell curve then you may not want to read this book. Otherwise you will find this book to be an inspiring and fascinating guide to understanding the importance of improbable events and their impact on investing.

Market Wizards by Jack D. Schwager

Market Wizards has become a classic for traders. Schwager goes one-on-one with legendary traders like Paul Tudor Jones and Michael Steinhart to deliver their individual styles, trading passions, and of course, success stories.

This is one of those books that makes a great gift. My preference has always been for the soft cover, but there is a hard cover edition as well.

Investing with Exchange-Traded Funds by Marvin Appel

Investing with Exchange-Traded Funds is a must read for investors. In addition to discussing ETFs and providing a program for ETF portfolio sontruction, Appel addresses interest rates and their critical influence on stock market performance over time. He explains how the yield curve works and its impact on stock market performance during yield curve inversion. Once the rate trend is established as rising or falling, the other key piece of information is whether the U.S. Treasury is borrowing short-term or long-term.

Dr. Marvin Appel is the son of Gerald Appel who developed the MACD indicator.