COURTESY :BUSINESS INSIDER
When Warren Buffett
started his investing career, he would read 600, 750, or 1,000 pages a day.Even now, he still
spends about 80% of his day reading."Look, my job is
essentially just corralling more and more and more facts and information, and
occasionally seeing whether that leads to some action," he once said in an
interview."We don't read
other people's opinions, “he says. "We want to get the facts, and then
think."To help you get into
the mind of the billionaire investor, we've rounded up his book recommendations
over 20 years of interviews and shareholder letters.
1."THE INTELLIGENT INVESTOR " by Benjamin Graham
When Buffett was 19
years old, he picked up a copy of legendary Wall Streeter Benjamin Graham's
"Intelligent Investor."It was the one of the
luckiest moments of his life, he said, since it gave him the intellectual
framework for investing."To invest successfully
over a lifetime does not require a stratospheric IQ, unusual business insights,
or inside information," Buffett said. "What's needed is a sound
intellectual framework for making decisions and the ability to keep emotions
from corroding that framework. This book precisely and clearly prescribes the
proper framework. You must provide the emotional discipline."
2."SECURITY ANALYSIS" by Benjamin Graham
Another
groundbreaking work of Graham's, Buffett said that "Security
Analysis" has given him "a road map for investing that I have now
been following for 57 years."
The book's core
insight: If you do a thorough enough of analysis, you can figure out the value
of a company — and if the market knows the same.Buffett has said that
Graham was the second most influential figure in his life, only after his
father."Ben was this
incredible teacher, I mean he was a natural," he said.
3."COMMON STOCKS AND UNCOMMON PROFITS" by Philip Fisher
While investor Philip
Fisher — who specialized in investing in innovative companies — didn't shape
Buffett in quite the same way as Graham did, he still holds him in the highest
regard.
"I am an eager
reader of whatever Phil has to say, and I recommend him to you," Buffett
said.In "Common
Stocks and Uncommon Profits," Fisher emphasizes that fixating on financial
statements isn't enough — you also need to evaluate a company's management.
4."STRESS TEST : REFLECTIONS ON FINANCIAL CRISES" by Tim Geithner
Buffett says that the
former Secretary of the Treasury's book about the financial crisis is a
must-read for any manager.
Lots of books have
been written about how to manage an organization through tough times. Almost
none are firsthand accounts of steering a wing of government through economic
catastrophe.
"This wasn't
just a little problem on the fringes of the U.S. mortgage market,"
Geithner writes. "I had a sick feeling in my stomach. I knew what
financial crises felt like, and they felt like this."
5. "THE ESSAYS OF WARREN BUFFETT"
If you want to get to
know the way Buffett thinks, go straight to the Sage himself.
In this collection,
he keeps it very real — in his signature folksy-intellectual fashion.
"What could be
more advantageous in an intellectual contest — whether it be chess, bridge, or
stock selection —than to have opponents who have been taught that thinking is a
waste of energy?" he asks.
6.
"JACK :STRAIGHT FROM THE GUT " by Jack Welch
In his 2001
shareholder letter, Buffett gleefully endorses "Jack: Straight From The
Gut," a business memoir of longtime GE exec Jack Welch, who Buffett
describes as "smart, energetic, hands-on."In commenting on the
book, BloombergBusinessweek wrote that "Welch has had such an impact on
modern business that a tour of his personal history offers all managers
valuable lessons."
Buffett's advice:
"Get a copy!"
7. "THE OUTSIDERS" by William Thorndike, Jr.
In his 2012
shareholder letter Buffett praises "Outsiders" as "an
outstanding book about CEOs who excelled at capital allocation."Berkshire Hathaway
plays a major role in the book. One chapter is on director Tom Murphy, who
Buffett says is "overall the best business manager I’ve ever met."The book — which
finds patterns of success from execs at the Washington Post, Ralston Purina, and
others — has been praised as "one of the most important business books in
America" by Forbes.
8."THE CLASH OF THE CULTURES " by John Bogle
Bogle's "The
Clash of the Cultures" is another recommendation from the 2012 shareholder
letter.In it, Bogle —
creator of the index fund and founder of the Vanguard Group, now managing $2.0
trillion in assets — argues that long-term investing has been crowded out by
short-term speculation.But the book isn't
all argument. It finishes with practical tips, like:
a)
Remember reversion to the mean. What's hot today isn't likely to be hot tomorrow.
The stock market reverts to fundamental returns over the long run. Don't follow
the herd.
b)
Time is your friend, impulse is your enemy. Take advantage of compound interest
and don't be captivated by the siren song of the market. That only seduces you
into buying after stocks have soared and selling after they plunge.
9. "BUSINESS ADVENTURES :TWELVE CLASSIC TALES FROM THE WORLD OF WALL STREET" by John
BrooksBogle's "
The Clash of the Cultures" is another recommendation
from the 2012 shareholder letter.
Back in 1991, Bill
Gates asked Buffett what his favorite book was.To reply, Buffett
sent the Microsoft founder his personal copy of "Business
Adventures," a collection of New Yorker stories by John Brooks.Gates says that the
book serves as a reminder that the principles for building a winning business
stay constant. He writes: For one thing, there's an essential human
factor in every business endeavor. It doesn't matter if you have a perfect
product, production plan and marketing pitch; you'll still need the right
people to lead and implement those plans.The book has become a
media darling as of late; Slate wrote that it's "catnip for
billionaires."
