Two books recommended by Warren Buffett for learning all about investing

Two books recommended by Warren Buffett for learning all about investing
24 July 2013

Most people will read a book about Warren Buffett and begin to think that there is only one way to really do investing. That kind of thinking really limits you. 

However, Buffett has possibly been the most successful stock market investor of the modern day so it is good to read and listen to what he says.

Rather than read a book ‘about’ Warren Buffett’s investment style the better option is to read his annual letters to shareholders – there you will discover the way Warren and his long-term partner Charlie Munger think about investing.

In addition to reading Warren’s letters there are two books, which Warren and his partner Charlie recommend for novice and professional investors.

The Intelligent Investor by Benjamin Graham

When legendary investor Warren Buffett was asked what the best money advice he ever received, he replied: “by far the best book on investing ever written,” The Intelligent Investor, by Benjamin Graham.

Buffett was a student of Graham’s at Columbia and subsequently worked for him before breaking off on his own. Here’s what Buffett says about the book:

“Chapters 8 and 20 have been the bedrock of my investing activities for more than 60 years. I suggest that all investors read those chapters and reread them every time the market has been especially strong or weak.”

At the Berkshire Hathaway 2013 shareholder meeting a shareholder asked Warren Buffett and Charlie Munger which 10 books they've read that have influenced them the most that weren't written by Ben Graham or Phil Fisher (see below). In typical Buffett style he had to change the rules and pointed out just how much Graham's The Intelligent Investor meant to him as an investor, saying: “The Intelligent Investor changed my life.”

“Graham's book gave me a bedrock philosophy on investing that made sense... he taught me how to think about a stock and how to think about a stock market.”

Common Stocks and Uncommon Profits and Other Writings by Philip Fisher

Philip Fisher was a pioneer of Growth Investing.  Perhaps the best-known of Fisher's followers is Warren Buffett who has said on some occasions that "he is 85% Graham and 15% Fisher."

Philip Fisher was one of the most influential investors of all time. His investment philosophies, recorded in his investment classic, Common Stocks and Uncommon Profits are still relevant today and are widely studied and applied by investment professionals. It was the first investment book ever to make the New York Times bestseller list.

Fisher’s philosophy can be summed up as: “I don't want a lot of good investments; I want a few outstanding ones.”

Charlie Munger, Buffett’s partner said: "Phil Fisher believed in concentrating in about 10 good investments and was happy with a limited number. That is very much in our playbook. And he believed in knowing a lot about the things he did invest in. And that's in our playbook, too. And the reason why it's in our playbook is that to some extent, we learned it from him."

If you do read these two books please come back and share your thoughts and remember you only really learn and improve by doing and thinking for yourself.

What books have you read that have helped to improve your investing?

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Author
Head of Behavioral Finance
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