July 12, 2021
Books recommended by Warren Buffett
Berkshire Hathaway, a multinational conglomerate holding company, is headed by CEO Warren Buffett, whose investment history has proven great success. So much so that he gained the nickname Oracle of Omaha, after the town in which he was born in Nebraska. It’s not all for personal gain, though: he is one of the world’s greatest philanthropists, after pledging that more than 99% of his wealth would go to philanthropy during his life or at death. He has previously donated to the Gates Foundation, as well as charities run by his family and children.
In this book, Buffett’s fellow Columbia Business School graduate Graham ignores the current market and instead focuses on generating steady, long-term profits by picking companies with high intrinsic value. In 1949, he wrote down the key principles of investing, which went on to form this book that Buffett calls the best book ever written around investing.
Three key things that an intelligent investor will always do are: analyse the long-term evolution and management principles of a company; protect themself from loss by diversifying investments; and focus on safe and steady returns. “Rule number one: never lose money. Rule number two: never forget rule number one,” says Warren Buffett. We’re reminded that stocks fluctuate, and even experience depressions, but that we should look beyond these hiccups. In other words, remove yourself emotionally from any investment and stick to a strict formula. Take action by being consistent, and allowing investments to build gradually, organically, and safely.
He may be known for his relationship with investing, but he is also a magnate in the business world. This book explores both of these aspects, and more. It’s a book not just favoured by Warren Buffett, but Bill Gates, too. You can read more about books recommended by Bill Gates here. Brooks is keen to point us in the direction of the three-day crash and recovery of the stock market in 1962. Stocks are volatile, and the Flash Crash caused a sudden $20 billion drop before soon returning to original values.
Of course, investing is one part of business, but this book by Brooks explores other aspects, too, including the importance of staying current. Current doesn’t necessarily mean right now - developing and launching a car can take years, and “current” in this instance should be the projected launch date. Ford failed to look ahead when launching the Edsel - an answer to the growing demand in more expensive cars. A slowing economy soon halted the Edsel in its tracks, and Ford lost millions. Avoid nasty surprises by keeping one eye on the climate - tendencies and trends are evolving every minute and considering this is key to any success in business.
Credited with creating the first index fund and founder of Vanguard Group, John C. Bogle was best known as an investor. Breaking through the noise and hussle at the time, Bogle wondered: why not just mimic what the indexes are doing and not manage anything? Past success doesn’t guarantee future success; only 34 of 1970’s 355 mutual funds still exist today, that’s less than 10%.
While looking at previous profits can be a great place to start, this is not how investments should be calculated. His no-fuss technique is to place most of your money into safe, low-cost index funds. That way, you are likely to see a slow and steady, but sustained, growth. Another top tip is to go with the cheapest fund. While differences may be tiny percentages, you’ll be in it for the long run, and these will soon add up and cost you money. Look after the pennies, and the pounds will look after themselves. Take action by starting out cheap, going with index funds, and following your instincts over trends.
Fellow businessman, once 15th-richest man on the planet, and founder of one of the world’s most iconic brands, Phil Knight, reflects upon how his brand became so profitable. The brand in question: Nike. The company was born when Knight asked himself, can Japanese sports shoes do to German sports shoes what Japanese cameras did to German cameras? There was only one way to find out, and through his determination, he succeeded.
Before great success must come struggle, and we’re rarely presented with chances to start something crazy. As a result, he says to go broke trying when you’re young, before you’re too old. Don’t go it alone, though. Find someone who can be your partner, or mentor. Build a strong and varied network of people who either believe in you or have valuable skills that you may one day need. Together, we are stronger, so before telling someone how to do things, tell them what you want, and be surprised by their results.
Warren Buffett’s Ground Rules, by Jeremy Miller
Harking back to the days before Berkshire Hathaway, when Buffett operated more like a hedge fund manager, this book explores some of the keys to his successes. It delves into how we can assess and predict stocks, and how compound interest will help us continue to reinvest.
In fact, Buffett was convinced by his mid-twenties that compound interest would make him rich. To judge the performance of an investment, a test should be carried out over at least three years, and ideally five.
Warren Buffett is considered to be the most successful investor of the 20th century. In fact, he is today worth an estimated $101 billion. It’s no surprise, then, that many of his books explore how to maximise profits and minimise risks when starting out with investments.
The key takeaway from any literature that Buffett recommends is that the tortoise wins the race in the end. Focus on slow and steady investments that grow organically. Long-term beats short-term every time.
To learn more about the key insights and actions from these books, and so many more, head over to the homepage of Uptime, or search for a topic, to begin a five-minute Hack.