One way to understand the mind of an exceptional businessman and investor is to study Warren Buffett’s book suggestions. Reading has been an integral part of Buffett’s life. He credits the ability to make informed investment decisions on the prodigious amount of reading he does, up to 1000 pages a day earlier in his career.
Such a list would be incomplete without starting off with <i>The Intelligent Investor</i> by Benjamin Graham. Read when he was all of 19 years old, Buffett says this book formed the framework for his investment approach going forward.
Though Buffett recommends new books in his Berkshire Hathaway shareholder letter every year, the following books are among his favorites:
Security Analysis (B. Graham, D. Dodd): Considered the bible of value investing, it was written in 1934, after the market crash. It promotes researching the value of the operating business instead of judging it solely by the price of the stock.
The Outsiders (W. Thorndike): Examines CEOs of several companies and their patterns of success.
Business Adventures (J. Brooks): Thoughtful and well-researched stories of business events, mostly from the mid-20th century, that illustrate the cyclical nature of history.
Common Stocks and Uncommon Profits (P. Fisher): Buffett says this book was instrumental in evolving his system of investment analysis. It advocates closely examining both a company’s management and financials before investing in it.
After a 70-year career, Buffett still spends a large part of his day reading and thinking. He feels he has made fewer impulse decisions in business because of this lifelong habit. In fact, when asked about the formula for his success he said,”Read 500 pages… every day. That’s how knowledge works. It builds up, like compound interest.”