Cover image: Jan Brueghel the Younger, Satire on Tulip Mania (c. 1640), Frans Hals Museum, Haarlem (Public domain — source)
Image in the original: Liar’s Poker by Michael Lewis
I recently came across an old Goldman Sachs recommended reading list.
At first, I expected what you might expect from one of the world’s best-known investment banks: books on valuation, economics, markets, and financial theory.
Those books are there.
Benjamin Graham’s The Intelligent Investor. George Soros’s The Alchemy of Finance. Peter Bernstein on risk and the intellectual foundations of modern finance.
But those were not the books that caught my attention.
What interested me were the failures.
Roger Lowenstein’s When Genius Failed, about the collapse of Long-Term Capital Management, is on the list. So is Michael Lewis’s Liar’s Poker, his famously unsentimental account of Wall Street culture.
There are books about bubbles, crashes, financial crime, hostile takeovers and crowd psychology.
Manias, Panics, and Crashes.
Extraordinary Popular Delusions and the Madness of Crowds.
Barbarians at the Gate.
Den of Thieves.
That raises a more interesting question.
Why would someone trying to understand finance need to read so much about things going wrong?
Markets are made of people
Perhaps because finance is never only about finance.
Markets may be expressed through prices, equations and models, but underneath them are human beings.
Human beings become afraid.
They become greedy.
They copy one another.
A run of success convinces them that they are unusually talented.
A sophisticated model can make uncertainty feel as if it has disappeared.
And intelligent people, placed inside a sufficiently confident group, can make remarkably unintelligent decisions.
Technology changes.
Financial instruments change.
Trading gets faster. AI will increasingly participate in decisions once made entirely by people.
But fear, greed, overconfidence and herd behavior have proved remarkably durable.
That is why history matters.
It gives us a library of situations in which human judgment has already been tested.
Success is not the only place to learn
We naturally gravitate toward success stories.
We read successful investors, successful CEOs and successful entrepreneurs because we want to know what they did right.
There is obvious value in that.
But success contains a difficult variable: luck.
Failure often exposes something more clearly.
We can watch confidence turn into overconfidence.
We can see incentives begin to distort judgment.
We can observe people explaining away evidence that contradicts what they already believe.
And, across very different periods of history, we repeatedly encounter some version of the same dangerous thought:
This time is different.
A history of failure is therefore not merely a collection of cautionary tales.
It is a library of decision-making cases.
Read your critics
There is another striking feature of the list.
Some of the books are hardly advertisements for Wall Street.
The document itself acknowledges that several popular works offer exaggerated portrayals of the industry’s darker side, but still recommends them because they convey something of the flavor of life on “The Street.”
I like that principle.
If you want to understand your profession, don’t read only people who admire it.
Read the critics.
Read the people who failed.
Read the outsiders.
Read the people who noticed things insiders preferred not to notice.
One of the best ways to understand a system is to read someone who does not entirely believe in it.
The professional should read beyond the profession
A small clarification is important.
This is not a current Goldman Sachs employee “required reading” list. The archived document is headed Goldman Sachs Recommended Reading List and carries the old gs.com/careers address. It was already circulating in 2010 as a Goldman Sachs reading list, including on the finance community QuantNet. The careful description, therefore, is an old recommended reading list associated with Goldman Sachs Careers—not a mandatory curriculum for Goldman bankers.
But that distinction does not diminish what makes the document interesting.
It may actually make it more interesting.
A reading list tells us something about the kind of mind an institution believes is useful.
And this one suggests that knowing finance requires more than knowing finance.
You need history.
Psychology.
Institutions.
Power.
Risk.
Failure.
And some familiarity with the uncomfortable stories your own profession tells about itself.
That lesson feels even more important in the age of AI.
Information is becoming cheap.
Technical explanations are becoming instantly available.
What remains scarce is judgment: knowing what matters, recognizing a familiar pattern, questioning an attractive explanation, and remembering the historical case that everyone else has forgotten.
Perhaps expertise has never really meant knowing more and more about a narrower and narrower subject.
Perhaps the better definition is this:
A real expert can look at their own field from the outside.
And sometimes the best way to learn how a system works is to read about the moment when it failed. ◾️
P. S.
https://x.com/f_compounders/status/2094726529422889105?s=46
Image in the original: my caption
First published on Substack on Oct 21, 2026 (JST). Archived here as part of the Fabio Caipirinha permanent archive (published on this site: Nov 4, 2026). Original: https://fabiocaipirinha.substack.com/p/why-great-financiers-read-about-failure