Do you want to learn how to invest like Warren Buffett?
Warren Buffett, with a net worth of $84 billion, was listed in Forbes’ 2018 Billionaire List as the third richest man in the world behind Jeff Bezos and Bill Gates. This is pretty impressive company, to say the least. The 88-year-old Oracle of Omaha, so named for his Midas Touch with investing and his hometown in Nebraska, is known as the world’s greatest investor. Buffett was able to obtain this prestigious title over many years by continuously using the philosophy of value investing; he looks to purchase companies that are below their intrinsic value but have the potential to make money. Buffett is quoted for saying, “It’s better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Warren Buffett has never claimed to be the smartest man in the world. He has often credited his investment philosophy to his mentor Benjamin Graham. It’s an investment philosophy that can easily be followed and has been followed by many people creating thousands of other millionaires. By making a habit of investing in good, undervalued companies, and with the power of compound interest working in his favor, Buffett was able to turn his first $114 investment in the stock market in 1942 into a fortune.
Another thing Warren Buffet credits his success to is reading. Reading is a habit shared by many self-made billionaires. In fact, Warren Buffett and Mark Cuban agree this one habit is the key to success – and anyone can do it.
How Much Do Billionaires Read?
“I read more than three hours every day,” Cuban writes on his blog.
“I still probably spend five or six hours a day reading,” Buffett says in HBO’s documentary, “Becoming Warren Buffett.”
Books That Warren Buffet Recommends
If you are anything like me, you probably don’t have five or six hours a day to read. Nonetheless, reading is very important so it is important to find time to read good books; books that a billionaire investor recommends.
Here are 14 books that Warren Buffett highly recommends you read.
- The Intelligent Investor by Benjamin Graham. This classic text was written in 1949 and is focused on “value investing” which helps up-and-coming investors develop long-term strategies. Warren Buffett first read this book when he was 19, and he has often said that it was what gave him the framework which led him to become one of the top investors in the world.
- Business Adventures: Twelve Classic Tales from the World of Wall Street by John Brooks. This book explores several stories iconic companies and their defining moments in time, as well as delving into business and financial history with things like the market crash in 1962 and the attempt to save the British pound. This is reportedly one of Buffett’s favorite books, and when his friend Bill Gates asked him for a book recommendation, he suggested this book without hesitation. The book is a New York Times bestseller.
- Security Analysis by Benjamin Graham and David Dodd. This book is designed to help businessmen and investors learn how to evaluate the value of a company, see if anyone else has done the same, and make smart decisions with money.This book has several different editions, although the sixth edition features a foreword from Warren Buffett himself. First published in 1934, this is renowned as one of the most influential financial books ever written, and it is continually enhanced and updated with investor anecdotes and information.
- The Essays of Warren Buffett by Warren Buffett and Lawrence A. Cunningham. In this book, Warren Buffett outlines not only his thoughts on investing, but also gives information on Berkshire Hathaway’s no-dividend practice and provides plenty of anecdotes and autobiographical information as well.People are constantly trying to understand Warren Buffett’s process, thoughts, and investments—what better way than to read it from the great man himself?
- Common Stock and Uncommon Profits by Phillip Fisher. This popular book features information on what to look for in companies before investing, and how to make profits on innovative companies.Buffett frequently has endorsed this book, saying that he actually sought out the author after reading it and that the methods inside help make intelligent investments.
- Where Are the Customer’s Yachts? by Fred Schwed. One of the more lighthearted financial books on the list, this humorous novel features colorful anecdotes about Wall Street and plenty of great information about investing and financial advice.In his 2006 shareholder letter, Buffett praised the book as “The funniest book ever written about investing,” and said that it “lightly delivers many truly important messages on the subject.”
- Essays in Persuasion by John Meynard Keynes. Originally published in 1931, this book is required reading in many business courses and features information on the political economy of its time, including various issues of the day. It is regarded as one of the 100 best books ever written.Buffett has lauded this book, and once said, “Reading Keynes will make you smarter about securities and markets. I’m not sure reading most economists would do the same.”
- Warren Buffett’s Ground Rules by Jeremy C. Miller. This book is basically a compilation of Buffett’s letters sent to partners from 1956 – 1970 while he managed Buffett Partnership Limited. These letters give readers a glimpse into how Buffett designed his investing strategy from Graham’s Security Analysis.Buffett has praised this book as a great way to learn about investment theory and practice.
- Jack: Straight from the Gut by Jack Welch & John A. Bryne. This New York Times bestseller is an autobiographical look at the CEO of General Electric, Jack Welch, which looks at not only his life but also his business strategies.Buffett recommended this book in his 2001 shareholder letter, saying that Jack Welch was a terrific manager and that everyone could learn something from reading this book.
- The Outsiders by William Thorndike Jr. This book outlines the performance of various companies as a direct result of the enigmatic and unusual CEOs at the helms.Buffett listed this as the #1 book to read in his 2012 shareholder letter, and called it “An outstanding book about CEOs who excelled at capital allocation.”
- The Little Book of Common Sense Investing by Jack Bogle. This book features advice and thoughts on using common sense strategies to make investing work.“Rather than listen to the siren songs [of salesmen], investors – large and small – should instead read Jack Bogle’s The Little Book of Common Sense Investing,” Buffett said in his 2014 shareholder letter.
- Poor Charlie’s Almanac edited by Peter Kaufman. Featuring advice and biographical information, this novel focuses on Charlie Munger, vice chairman of Berkshire Hathaway.Buffett, a longtime friend of Munger, attributes much of the company’s success to Charlie. “You will never find a book with more useful ideas,” Buffett said.
- The Most Important Thing Illuminated by Howard Marks and Paul Johnson. Written by the chairman of Oak Tree Capital, this book features thoughtful information for investors based on the personal success and mistakes of Howard Marks.Warren Buffett reportedly called this book “a rarity, a useful book” and even wrote a dust jacket blurb for the first edition.
- Take on the Street by Arthur Levitt. This book is designed to help small investors navigate the complex and often intentionally confusing ways of Wall Street.Buffett called this book excellent and said it would help businessmen understand the erosion of accounting standards and the downfall of Arthur Andersen accounting, resulting in a better understanding of the business.