Monday, March 12, 2018

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Warren Buffet’s Favorite Books

What are Warren Buffet's favorite books?

‘The Intelligent Investor’ by Benjamin Graham

Considered one of the luckiest moments of his life, Warren Buffet attributes Benjamin Graham’s “Intelligent Investor” for providing him with the intellectual framework for investing.

The book outlays Graham’s philosophy of “value investing” which describes the strategy of shielding investments from substantial error and teaches how to develop long-term strategy. Buffet is a testimony to this and states, “To invest successfully over a lifetime does not require a stratospheric IQ… what’s needed is a sound intellectual framework or making decision and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must provide emotional disciple.”

‘Stress Test: Reflections on Financial Crises’ by Tim Geithner

Buffet lauds the former Secretary of the Treasury’s book about the financial crisis and states that it is a must-read for any manager.

The book is acclaimed because it provides a first-hand account of steering a wing of government through an economic catastrophe. Self-described as a fairly ordinary person thrust into a great many extraordinary situations, Geithner takes readers behind the scene of the crisis and explores the choices and politically challenging climate on the road to repairing the financial system and preventing the further deterioration of the economy. Additionally, Geithner touches on his childhood as an American abroad and ultimately shares a hopeful story about public service.

‘The Outsiders’ by William Thorndike

Taking the top spot on Warren Buffet’s recommended reading list at one point, “The Outsiders” details the extraordinary success of CEOs who chose to take their respective companies on a radically different path that was different from conventional approaches to corporate management. Berkshire Hathaway, the conglomerate that Buffet leads, takes center stage with Thorndike dedicating a chapter to director Tom Murphy who Buffet describes as the best business manager he has ever met.

The definition of a successful CEO can be found in a plethora management books but quite simply, Thorndike says a truly exceptional CEO performs in a way that delivers long-term return and value for shareholders. The book looks at patterns of success from top executives at companies such as The Washington Post, Ralston Purina, and Teledyne among many others.

‘The Clash of the Cultures’ by John Bogle

Bogle’s book “The Clash of the Cultures” was a recommended read to shareholders by Buffet in 2012 and remains a popular book by the American business magnet. The author—creator of the index fund and of the Vanguard Group—says long-term investing has been side-lined in favour of the aggressive, value-destroying culture of short-term speculation that is now so prevalent.

Bogle has bared witness to this shift of culture in the financial sector and argues for a return to the more common sense principles of long-term investing. The book ends with ten simple rules that will aid those looking to meet their financial goals. His views on politics and the failures in corporate governance are conspicuous throughout the book and gives readers a refreshingly candid and proactive take on issues relevant to investors big and small.

If you liked this post, maybe you'd also like to read about Stephen King's favorite books.

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