Most Important Lessons Buffett Learned from “The Intelligent Investor”

One of the best ways to learn how to be like Buffett is to read. Warren Buffett himself reads almost constantly and he has attributed his success to his love of reading. While it’s hard to pin down a specific book that is his absolute favorite, easily the book that he speaks most highly of is The Intelligent Investor by Benjamin Graham. In fact, it’s the No. 1 book on his list of 14 must-read books.

However, we don’t all have time to sit down and read 500 pages a day like Warren Buffett does (I know I certainly don’t). So, if you find yourself wanting to take a shortcut to learning about Warren Buffett’s methods for value investing, then here are some of the most important lessons that the Oracle of Omaha took from The Intelligent Investor:

  1. Think of a stock as part ownership of a business – Don’t buy stocks just to make a quick buck. You should only invest in things that you’re interested in owning and keeping. Stock are, by definition, a piece of a company and people tend to forget that. Taking ownership helps you be more invested in evaluating the business and making sure you’re getting the best value.
  2. The market is there to serve you, not instruct you – Don’t listen too much to what people say, as people are usually driven by fear. They are reactionary. Remember to make your own evaluations and always buy and sell wisely.
  3. Always require a margin of safety – To err is human, and it’s important to leave yourself room for error, imprecision, bad luck, or the natural swings and changes that happen in the stock market. It’s not a good deal if it leaves you and your entire company at risk.

With these three basic principles, Buffett has built up a sizable empire and a fantastic holdings company that, at the time of writing, was ranked sixth largest in the world.

If you’re interested in quickly reading The Intelligent Investor, you can pick up a copy here and check out chapters 8 and 20, which Buffett recommended more than any others during the 2008 Berkshire Hathaway Annual Shareholders Meeting.

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