Warren Buffett, often referred to as the “Oracle of Omaha”, is celebrated not only for his unparalleled investment skills but also for his insatiable love of reading. His literary recommendations provide invaluable insight into the principles that shaped his illustrious career. Sources such as the Wall Street Journal highlight Buffett’s literary knowledge, demonstrating his belief that knowledge is a cumulative asset.
Below, we explore five timeless books that Buffett swears by, offering lessons in investing, business and financial history.
1. The intelligent investor By Benjamin Graham
Buffett has repeatedly described The Intelligent Investor as “the best book on investing ever written.” Written by his mentor Benjamin Graham, this classic lays the foundation for value investing—a strategy focused on identifying undervalued stocks with long-term growth potential. The book emphasizes the importance of a disciplined approach, a margin of safety, and resisting emotional impulses in the market.
Key measures:
- Focus on intrinsic value rather than market estimates.
- Develop a rational investment approach.
- Treat market volatility as an opportunity rather than a threat.
- Buffett attributes much of his success to the principles in this book, making it essential reading for aspiring investors.
2. Common Stock and Extraordinary Gains By Philip Fisher
Philip Fisher’s seminal work highlights the qualitative aspects of investing. While Graham emphasized numbers, Fisher explored the importance of company management, innovation and growth prospects. This blend of perspectives deeply influenced Buffett’s investment philosophy.
Key measures:
- Look beyond the financial statements; Evaluate the company’s leadership and vision.
- Invest in businesses with significant growth potential over the long term.
- Be patient and allow the investment to compound.
- Buffett once remarked that Fisher’s insights into evaluating a company’s management are as relevant today as ever.
3. Business Adventures: Twelve Classic Stories from the World of Wall Street By John Brooks
Described by Buffett as “the best business book I’ve ever read,” Business Adventures collects fascinating case studies from the financial world. From the Ford Edsel fiasco to the stock market crash of 1962, these stories provide timeless lessons in the successes and failures of major corporations.
Key measures:
- Understand the human element behind corporate decisions.
- Learn from historical successes and mistakes.
- Adapt to a changing business environment.
- Bill Gates, another avid fan of the book, shares Buffett’s sentiments, stressing his ability to capture the complexities of the corporate world.
4. Security analysis By Benjamin Graham and David L. Dodd
Another masterpiece by Benjamin Graham, co-authored with David Dodd, Security Analysis is a dense but rewarding read. This book is a cornerstone of value investing, providing detailed methods for assessing a company’s financial health and uncovering undervalued securities.
Key measures:
- Do a thorough fundamental analysis before investing.
- Prioritize long-term value creation over short-term profit.
- Balance the risk with adequate research and preparation.
- Buffett regards the book as a manual for serious investors, and he has revisited it many times throughout his career.
5. The Great Crash of 1929 By John Kenneth Galbraith
In The Great Crash of 1929, Galbraith describes the events leading up to and following one of the most devastating economic crises in history. Buffett recommends this book to understand the consequences of speculation, greed, and lack of regulatory oversight.
Key measures:
- Identify the dangers of speculative bubbles.
- Learn from historical market crashes to navigate future uncertainties.
- A price regulatory framework that promotes market stability.
- Buffett admires Galbraith’s analytical storytelling, which serves as a cautionary tale for generations of investors.
Why these books are important
Buffett’s literary recommendations aren’t just a glimpse into his reading habits—they’re a roadmap to understanding the principles of success and sound decision-making. Each book offers unique perspectives, from the technical aspects of analyzing securities to the broader lessons of financial history. Together, they provide an excellent education for anyone aiming to build wealth and achieve long-term success.