Warren Buffett’s philosophy and investing strategies have been widely written about in many Warren Buffett books, both by himself and several other authors, including his daughter-in-law of twelve years Mary Buffett. The famous Omaha investor became a billionaire through what is now known as ‘value investing.’ Now, anyone willing to put some time into studying and practice can develop an understanding of value investing concepts with the books listed here.
Warren Buffett’s Books
Warren Buffett has produced countless annual letters, but relatively few books. As a result, some of his most popular writings were published in book form.
-‘The Essays of Warren Buffett’ which cites him as an author is a compilation of writings and wisdom by the multi-billionaire. Edited and presumably co-authored by Lawrence A. Cunningham, the book picks letters written to owners of stock in the Berkshire Hathaway fund. The content spans several decades and is intended to entertain and demonstrate the practical application of good business according to Warren. The style is informal, and knowledge is derived through careful attention to the thought-provoking insights written therein.
Readers will be exposed to a value investor’s perspective on topics such as:
-Out-of-proportion executive pay and compensation
-The history of Berkshire’s management of derivative investing vehicles.
-Discussion of potential dangers of such derivative instruments.
-The U.S. deficit and growth of foreign currency.
-Future management of Berkshire Hathaway.
-Corporate taxation and charitable contributions.
The ‘Essays’ are an excellent reference guide for some quick inspirational investment or business wisdom; or just as an invigorating read.
-‘The Intelligent Investor’ is a classic read for shareholders and was originally written by The Oracle of Omaha’s mentor, Benjamin Graham. In a revised edition Warren E. Buffett collaborates with his teacher and Jason Zweig to make this ‘a book of practical counsel’ about value investing. The first publishing was in the late forties, but the knowledge it imparts regarding what makes a business and its stock valuable are timeless. The book is the original basis for the philosophy which encourages finding sound companies at a discounted price for gains over the long term.
The newest edition covers new financial vehicles in the market and discusses how value investment strategies work with them. Analytical instruction is combined with timeless wisdom and the result is a more comprehensive and contemporary volume. In ‘The Intelligent Investor’ short term profits are disregarded in favor of minimizing losses by choosing the right stocks up front. The authors hope to teach their readers how to build a logical portfolio and a long term plan for the stocks they own.
Books on Warren Buffett
Several volumes have been written to explain, evaluate and praise Mr. Buffett’s life’s work. The most notable are two biographies intermixed with investment advice.
-‘Buffett: The Making of an American Capitalist’ was written by Roger Lowenstein and attempts to showcase the complex strategies used by the man at Berkshire Hathaway. Lowenstein illustrates the willingness of Mr. Buffett to use conservative or contrary thinking wherever appropriate to be successful. This is not a play-by-play analysis of value investing, but a good read to understand the philosophy behind it.
-The ‘Snowball Effect’ is a book about the man and his reflections on ‘the business of life.’ Author Alice Schroeder was chosen by the Berkshire Hathaway founder to write his biography, and put together an insightful work about his personal and public life. Ms. Schroeder writes about his evolution from an ‘apprentice’ to Benjamin Graham to the multi-billionaire he is today.
Full of ‘Buffetisms’ on investing and interesting facts about his family and relationships, Ms. Schroeder is given rare inside access to Mr. Buffet’s life. The book’s detail is so extensive that some readers may be put off by how lengthy it is; over 900 pages. However, for the true fan this may be the best literature available.
Many authors have written about the methods which brought such unrivaled success to the Berkshire Hathaway fund. While these works were not written by the icon, they analyze and expound upon his background and approach to buying businesses.
-The ‘Warren Buffett Way’ is a work written by Robert G. Hagstrom. In it, he leans on the wisdom of Ken Fisher and Bill Miller. The pages follow his rise from a humble student of value investing with a few thousand dollars in his pocket, to the humble master worth over $8 billion dollars today. While this work did not involve Warren himself, the authors clarify the techniques used to purchase and hold good businesses. The authors pick quotes from the fund’s annual reports to illustrate Buffett’s disdain for analyzing the market at the expense of examining the management and intrinsic value of the business.
Mr. Hagstrom writes from his experiences at a Philadelphia financial firm, dissecting Warren’s use of teachings from Ben Graham and Philip Fisher in some of his major investments. Mr. Hagstrom also runs his own fund, and the book demonstrates his understanding of these principles for picking solid businesses.
-‘Warren Buffett Speaks’ is a hardcover volume written by Janet Lowe. Lowe has a background in business and economics and is a popular speaker at investment events. She has written extensively on value investing with books on Charlie Munger and several articles in major publications. In this biography she uses a compilation of selected quotes and letters to define the man in a light other than that of the successful investor. The work focuses in part on his straightforward wit and wisdom, and in part on his investing philosophy. The book is intended to be a short collection of insights into his methods and thinking and is not a detailed volume of business strategy.
-‘Buffett Beyond Value’ is written by Pram Jain and explores the reasons expert management and growth are important when researching a company to invest in. Mr. Jain writes from a well-educated and experienced background. He attended the Wharton School and is currently a Professor of Accounting and Finance at the Georgetown University. Mr. Jain uses Warren’s letters to Berkshire Hathaway shareholders and the fund’s financial statements to analyze Mr. Buffett’s investments. He distills the logic behind the purchases the firm has made over the last fifty years. The analysis attempts to go deeper into the role CEO’s play in determining the value of a company, Buffett’s thinking about diversifying portfolios and the investor mindset.
The financial analysis in this book may be oriented to people who understand the language and principles of finance and business. Regardless of a person’s background, the book imparts profound insights the reader can apply to their investments or business.
Learning Value
Investors who wish to learn about value investment strategies will want to start with the revised edition of the ‘The Intelligent Investor.’ The teachings of Ben Graham laid the foundation for the fortune Mr. Buffett acquired over the years. The latest edition of this particular Warren Buffett book puts lessons in a modern context, detailing the process of determining a company’s intrinsic value.
A person can get a well-rounded education by reading a volume or two of quotes and letters about life, business and investing strategies from the Omaha guru. In addition, students of ‘Buffetology’ will benefit from reading the definitive work by Pram Jain and keeping it handy as a reference guide. Learning the philosophy while putting the lessons into action will have a significant impact on future stock picks.
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