Strategy
Written by Drake Baer
2014-09-02T15:25:00Z
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When Warren Buffett started his investing career, he would read600, 750, or 1,000pages a day.
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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.
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"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, because 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."
Buy it here >>
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"Security Analysis" by Benjamin Graham
Buffett said that "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.
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"Common Stocks and Uncommon Profits" by Philip Fisher
Whileinvestor Philip Fisher — who specialized in investing in innovative companies — didn't shape Buffett in quite the same way as Graham did, he still holds himin 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.
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"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."
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"The Essays of Warren Buffett" by 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.
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"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, whom Buffett describes as "smart, energetic, hands-on."
In commenting on the book, Bloomberg Businessweek 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!"
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"The Outsiders" by William Thorndike, Jr.
In his 2012 shareholder letter Buffett praises "Outsiders" as "an outstanding book about CEOs who excelled at capitalallocation."
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 evermet."
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.
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"The Clash of the Cultures" by John Bogle
Bogle's"The Clash of the Cultures" is another recommendation from the2012 shareholder letter.
In it, Bogle — creator of the index fund and founder of the Vanguard Group, now managing$2 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:
1. 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.
2. 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.
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"Business Adventures: Twelve Classic Tales from the World of Wall Street" by John Brooks
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."
Buy it here >>
Now, check out books by successful execs:
11 Books By CEOs That Will Teach You How To Run The World>>
Editor-at-Large
Drake Baer is Insider's first editor-at-large, working across the newsroom to help produce ambitious journalism. For two and a half years before that, Baer served as deputy editor, overseeing a team of 20+ reporters and editors who cover the future of work, real estate, and small business. The fast-paced team was behind some of Insider's major packages in the last few years, including a state-by-state look into unemployment during the first year of the pandemic and in-depth profiles of "niche famous" characters such as real estate media tycoon Brandon Turner and HR icon Johnny C Taylor. They shed new light on big names, like Joe Biden, America's imperfect leader. He also cultivated thesis-oriented ideas journalism, whether it be on why "'diversity' and 'inclusion' are the emptiest words in corporate America" or why it's actually a horrible time to buy a house. (No, really, it is.) Before editing, his byline as a reporter was on the masthead for Fast Company and New York Magazine, covering the many intersections of social science, business, and economics. Baer has interviewed some our time's leading minds, including philanthropist Bill Gates, FiveThirtyEight founder Nate Silver, NBA champion and investor Steph Curry, "growth mindset" psychologist Carol Dweck, the rapper Q-Tip, Nobel laureate Daniel Kahneman, and the man who gave a name to "disruptive innovation," the late Clay Christensen. Baer has published two books, the most recent being Perception: How Our Bodies Shape Our Minds, with Dennis Proffitt. In 2014, New York Times bestselling author and Wharton professor Adam Grant highlighted his first book, Everything Connects, as one of the 12 business books to read that year. He has been featured as a speaker at the Aspen Ideas Festival, presented at TedX Princeton, and moderated many panels. Fun facts? He's meditated every day for over a decade, except for the days he hasn't. He circumnavigated the globe before turning 25. He loves and can advocate for just about every food except grapefruit. And at 35, he is just now learning to draw.
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