The America Billionaire Oracle of Omaha Warren Buffett has recommends keeping a level head and picking up a copy of “The Intelligent Investor.”
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
in a video posted on Gates Notes, adding, “When I read this book, it changed my life.”
The investing manual is written by Buffett’s former teacher and mentor, Benjamin Graham. It outlines Graham’s philosophy of “value investing” — buying stocks when they are undervalued and holding them for a long period of time — which would become a hallmark of Buffett’s investment strategy.
Read Why Warren Buffett Is So Successful
Legendary Wall Streeter Benjamin Graham’s “Intelligent Investor.”
Buffett said, “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.”
He said, “One is to think of investing as owning a business and not buying something that wiggles around in price. The second one is your attitude toward the market. … The final one is on the margin of safety, which means, don’t try and drive a 9,800-pound truck over a bridge that says it’s, you know, ‘Capacity: 10,000 pounds.’ But go down the road a little bit and find one that says, ‘Capacity: 15,000 pounds.'”
Security Analysis’ by Benjamin Graham and David L. Dodd
Oracle of Omaha believe on “Security Analysis,” another groundbreaking work of Graham’s, had given him “a road map for investing that I have now been following for 57 years.”
The book’s core insight: If your analysis is thorough enough, 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, after only his father.
“Ben was this incredible teacher; I mean he was a natural,” he said.
‘Stress Test: Reflections on Financial Crises’ by Tim Geithner
Buffett says that the former US 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.”
The Outsiders’ by William Thorndike Jr.
In his 2012 shareholder letter, Buffett praises “The 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.
Business Adventures: Twelve Classic Tales from the World of Wall Street’ by John Brooks
In 1991, Bill Gates asked Buffett for his favorite book.
In 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 wrote:
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 in recent years; Slate wrote that it’s “catnip for billionaires.”
‘Where Are the Customers’ Yachts?’ by Fred Schwed
“The funniest book ever written about investing,” Warren Buffett proclaimed in his 2006 shareholder letter, “it lightly delivers many truly important messages on the subject.”
First published in 1940, the book takes its title from a story about a visitor to New York who saw the bankers’ and brokers’ yachts and asked where the customers’ were. Obviously, they couldn’t afford them — the people providing the financial advice were in a better position to splurge than the people who followed the advice.
The book is filled with irreverent wisdom and colorful anecdotes about Wall Street, and remains compelling even today.
‘Essays in Persuasion’ by John Maynard Keynes
This collection of writings by the legendary economist has remained a staple of financial literature since it was published nearly a century ago.
In Buffett’s opinion, it’s required reading.
“Reading Keynes will make you smarter about securities and markets,” he told Outstanding Investor Digest in 1989. “I’m not sure reading most economists would do the same.”
The collection includes the famous essay “Economic Possibilities for Our Grandchildren,” in which Keynes predicted that today’s generation would only work 15 hours a week.
‘The Little Book of Common Sense Investing’ by Jack Bogle
In his 2014 shareholder letter, Buffett recommended reading this book over listening to the advice of most financial advisers.
Based on his own experience working with Vanguard clients, Bogle attempts to help readers use index investing to build wealth.
Fans say it’s far from boring, and the stats and charts are balanced with anecdotes and advice.
‘Poor Charlie’s Almanack’ edited by Peter Kaufman
This collection of advice from Charlie Munger, vice chairman of Berkshire Hathaway, got the ultimate shout-out in Buffett’s 2004 shareholder letter.
“Scholars have for too long debated whether Charlie is the reincarnation of Ben Franklin,” Buffett wrote. “This book should settle the question.”
The book includes biographical information about Munger as well as summaries of his philosophy on investing and talks Munger gave at Berkshire Hathaway meetings and elsewhere.
One such talk is called the “Psychology of Human Misjudgment,” in which Munger writes about the cognitive traps that trip up investors.
Dream Big’ by Cristiane Correa
Here Correa tells the story of the three Brazilians who founded 3G Capital, an investment firm that joined Buffett in purchasing HJ Heinz in 2013.
Buffett recommended the book at the 2014 Berkshire Hathaway shareholder meeting.
In an interview with The New York Times, Correa highlighted the main principles of 3G’s management style — meritocracy and cost-cutting — that paved the way for their current success.
“They trust in people and they let their teams work,” she said.
‘First a Dream’ by Jim Clayton and Bill Retherford
Jim Clayton grew up the son of a sharecropper in Tennessee and eventually went on to found Clayton Homes, currently the largest producer and seller of manufactured housing in the US.
Buffett credits Clayton’s autobiography with inspiring him to invest in Clayton Homes in 2003. In his 2003 shareholder letter, he wrote that the book was a gift to him from students at the University of Tennessee. Buffett told the students how much he enjoyed the book, and they urged him to call Kevin Clayton, Jim’s son and the company’s CEO, to deliver the praise directly.
‘Take on the Street’ by Arthur Levitt
In Buffett’s 2002 shareholder letter, he explains “how accounting standards and audit quality have eroded in recent years.” Specifically, he cites the downfall of Arthur Andersen accounting.
“The details of this sordid affair are related in Levitt’s excellent book, Take on the Street,” Buffett writes.
A former chairman of the US Securities and Exchange Commission, Levitt not only includes candid anecdotes, but also offers everyday investors ways to protect themselves from Wall Street.
‘Nuclear Terrorism’ by Graham Allison
According to Allison, founding dean of Harvard’s modern John F. Kennedy School of Government, a nuclear attack on the US is inevitable — unless we change our political strategy.
He argues that the new international security order must be built upon “three No’s”: no loose nukes, no new nascent nukes, and no new nuclear states.
In his 2004 shareholder letter, Buffett called it a “must-read for those concerned with the safety of our country.”
“Soon thereafter, I made an offer for the business based solely on Jim’s book, my evaluation of Kevin, the public financials of Clayton,” and his experience buying “distressed junk” from Oakwood Homes, a retailer of manufactured homes that he later purchased after it filed for bankruptcy.
It’s worth noting that Fast Company reported the deal between Berkshire Hathaway and Clayton Homes was a little more complicated than that.
In his “rags to riches” tale, Clayton shares lessons on business and leadership for current and aspiring entrepreneurs.
‘The Most Important Thing Illuminated’ by Howard Marks
Marks, chairman and cofounder of Oak Tree Capital, intended to wait until he retired to write this book, as noted in a 2011 Barron’s review. But Buffett so admired Marks’ client memos that he offered to write a dust-jacket blurb if Marks would publish the book sooner.
The result is “a rarity, a useful book,” Buffett reportedly said.
Marks aims to help investors achieve success by putting more thought into their decisions, drawing heavily on his own mistakes and what he learned from them.