If we asked the living legend of investing today what the best books for learning to invest are, Warren Buffett would give us four timeless recommendations.
The world has changed, the way we do business has changed, the way we communicate has changed, and we might make the mistake of thinking that investing has changed too, when the truth is that good investing (the kind that pays off in the long run) hasn’t changed at all.
Some time ago, over dinner, Trey Lockerbie, CEO of the kombucha company Better Booch, took the opportunity to ask Warren Buffett about investing, as he explained on a podcast. Lockerbie is an investor who trades through options; in other words, his investment method carries more risk than investing purely in stocks.
He asked Buffett whether the books of Benjamin Graham (Warren Buffett’s mentor) still held up today. Remember that Security Analysis was written in 1934 and The Intelligent Investor in 1949. A lot of water has passed under the bridge since then, in the markets and in the economy. The way people trade has also changed a great deal, given that any small investor today can buy and sell shares from their smartphone.
The answer from Buffett, who is considered the greatest living investor, was a resounding yes. Buffett acknowledges that for decades he has used the same value investing strategy that Benjamin Graham taught throughout his life.
Buffett stressed that every investor should read and reread, above all, the chapters in which Graham discusses the psychology of investing.
Which books does Warren Buffett recommend for learning to invest?
Benjamin Graham’s books
Security Analysis
Written in 1934 by Columbia Business School professors Graham and David Dodd, this book stresses the great importance of value investing: buying shares and holding them for a long period of time.
In fact, it was the publication of this book that led Warren Buffett to apply to Columbia University. Buffett was clear that he wanted the authors of this book to be his teachers. The rest is history. Benjamin Graham would play an essential role in the life of the young Warren Buffett.
The Intelligent Investor: the most recommended book for learning to invest in the stock market
This is without doubt the book Buffett has recommended most throughout his life to anyone who wants to learn to invest in the stock market.
In Buffett’s words, of all the investments he ever made, buying Graham’s The Intelligent Investor was the best investment he could have made.
This book offers a deep dive into the value investing process. If anyone thinks it might be out of date because of when it was written, that person has quite possibly forgotten the fundamentals of stock market investing that actually make you money.
Goodman’s books (the most overlooked modern classics of investing)
The Money Game
Everything suggests these books were written by George J.W. Goodman, even though they are signed with the pseudonym Adam Smith.
See also: The 10 best books on financial education
Sadly, this modern classic is hard to find in Spanish. It has been praised by many figures, including the Nobel laureate in economics Paul A. Samuelson, who acknowledged that it simplifies complicated concepts astonishingly well, so that anyone can understand the rules of the money and investing game.
Buffett himself said of Goodman that he knew how to point out things no one had identified before, and that he stuck to the facts but made them far more interesting.
So it’s a good book for learning to invest, with a strong dose of humour and reality.
Supermoney
This book was published in 1972 and focuses on the stock market of the 1970s. Interestingly, it already talked about Warren Buffett.
It’s another modern classic that, I would venture, is more relevant today than when it was written.
The best stock market investing and finance books of all time
In case Warren Buffett’s recommendations aren’t enough for you, we have also published what, in my personal opinion, could be the only two books you need to understand stock market investing (once you’ve finished The Intelligent Investor).
And finally, I also published the 13 best stock market and finance books of all time. They are all timeless books with invaluable investing lessons. In fact, I would venture that no current investing book, however innovative it’s considered, has anything that the old-school authors haven’t already explained better.
Remember: almost everything has changed today. Investing hasn’t.
Featured image: ajay_suresh, CC BY 2.0, via Wikimedia Commons.
.jpg){kind=link}