Warren Buffett, the most famous investor of our time, is constantly being looked to for what stocks to invest in and general advice. He freely offers it up, letting us all learn from him, but what about Mr. Buffett— who did he learn from?
While there have been a lot of people who have had an impact on Buffett, the short answer to this is simple: Benjamin Graham.
“Graham obviously had more influence on me… I worked for Ben, I went to school under him, and the three basic ideas: look at stocks as businesses; have a proper attitude toward the market; and operate with a margin of safety–they all come straight from Graham.”
Graham is considered by many to be the father of value investing, a strategy that focuses on buying undervalued stocks. Graham taught this investment approach at Columbia Business School in 1928, while writing his famous novel Security Analysis though it was a different novel that caught Buffett’s eye.
Graham is also the author of The Intelligent Investor which was published in 1949. Warren Buffett read this novel when he was only 19, and credits it for sparking his interest in investing. It’s a fairly well-known fact that Buffett actually recommended this book to his good friend, Bill Gates. More than that, though, this novel is what made him enroll in Columbia Business School to study under Graham.
Buffett must have learned a lot from Graham, as he credits him for his own “sound intellectual investment framework” and says that Graham is the second most influential person from his life, behind only his father. And, according to Buffett, Graham always said “I wish every day to do something foolish, something creative, and something generous,” and now Buffett tries to do the same.
“You don’t need another Ben Graham. You don’t need another Moses. There were only Ten Commandments; we’re still waiting for the eleventh. His investing philosophy is still alive and well. There are disciples of him around, but all we are doing is parroting.”
Buffett has also said that the education required to get started with investing is pretty minimal— you really only need two lessons; how to value a business and how to think about mistakes. He recommends that you start small, with your circle of competence, and look for businesses that are selling for less than their value.
“The process, the whole game, didn’t interest him more than a dozen other things may have interested him. With me, I just find it interesting, and therefore I’ve spend a much higher percentage of my time thinking about investing, and thinking about business. I probably know way more about business than Ben ever did.”
While Buffett did learn a lot from Benjamin Graham, and learned his basis for investing, he recognizes that he surpassed Graham. In order to be successful, and I mean really successful like Buffett, you’ll have to focus and genuinely have an interest for what you are doing.