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5 Finance Books From Warren Buffett’s Bookshelf

5 Finance Books From Warren Buffett’s Bookshelf

If you’re into investing, you know how successful Warren Buffett is. The investing genius is now worth an estimated $65 billion, and his Berkshire Hathaway is an international conglomeration with investments in nearly any industry you can think of. A Buffett investment can send shocks running throughout the investing world, which can be demonstrated by Berkshire Hathaway’s surprising decision to invest in Apple Inc.

How has Buffett come so far? Some of it is just a knack for business which he has shown since he was a young boy. But a huge part of Buffet’s success is his voracious appetite for books. When a student asked Buffett how he could prepare for an investing career, Buffet told him to read 500 pages every day. Some of it is the standard stock information, but much of Buffet’s reading has taken the form of financial and investing books.

A total Buffet book list could last for pages, but here are five books which have played a key role in Buffet’s life and what an ordinary investor could take away from them.

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1. The Intelligent Investor by Benjamin Graham

Graham, an investor and educator at the Columbia Business School, had a huge influence on Buffett’s life. Buffett enrolled in Columbia Business School because Graham taught there, and a roommate observed that Buffett treated Graham’s book “like a god.”

The Intelligent Investor’s key lesson is about the importance of staying calm in the volatile world of investing, a trait which Buffett believes is more important than inside information or mere intelligence. If you give in to the mob and buy what everyone else buys, you will end up in trouble. You need a solid, intellectually justifiable reason to jump in on a stock. And never get emotionally caught up in whether your stock does well or not.

2. Common Stocks and Uncommon Profits by Philip A. Fisher

Fisher may not be as well known as Graham, and he may not have had an as big influence on Buffet’s life as Graham. But Buffett still enthusiastically recommends Fisher, stating that he was “an eager reader of whatever Phil has to say.” Fisher’s work is well known for how it values senior management over looking at financial statements.

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In addition, Fisher like Graham also stresses the importance of a strong will and learning to zag when the crowd zigs. Another thing that he points out is that owning a stock is owning a part of the company – and if you cannot understand the company’s business, you cannot understand the stock you own. This is something which Buffett follows very heavily, as shown by his well-known lack of interest in tech companies.

3. The Outsiders by William Thorndike Jr.

In his 2012 letter to shareholders, Buffett recommended The Outsiders, calling it “an outstanding book about CEOs who excelled at capital allocation.” He also noted how it praised Berkshire Hathaway director Tom Murphy, who Buffett called “the best business manager I’ve ever met.”

The Outsiders has become a prominent hit in the business community, as Thorndike spent years profiling CEOs he viewed as particularly successful. He came to the conclusion that the best CEOs are not necessarily charismatic, but instead are “pragmatic, flexible and opportunistic, frugal and patient.”

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4. Poor Charlie’s Almanack by Peter Kaufman

This book is a collection of speeches and talks by Charles Munger, the vice chairman of Berkshire Hathaway. Buffett has always praised his fellow Omaha boy, calling him, observing that they have always been able to get along despite disagreeing on certain business decisions.

Poor Charlie’s Almanack lists Munger’s investment strategies, along with his emphasis on personal finance models. Munger observes that if you only have one strategy or worldview in investment, you will twist reality to fit that worldview. By constantly having multiple models (and multiple means 80 to 90), you will be able to keep yourself grounded, which is how Munger has helped Buffett when Buffett has had some of his wackier schemes.

5. Business Adventures by John Brooks

In 1991, Bill Gates asked Warren Buffett what his favorite business book was. Buffett recommended Business Adventures without a second thought and the book today is also one of Gates’s favorites.

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Business Adventures was published more than four decades ago, but its stories are just as relevant today. Brooks avoids summing up his stories with neat business lessons, letting the readers draw their own conclusions. But one running theme throughout the book is how executives can get complacent with their own success and fail to innovate.

The story of Xerox, which revolutionized offices in the 60s but failed to adapt to the rise of the computer, is relevant here. Buffett has always stayed on his toes and is willing to try new things, as his recent investment in Apple shows.

As noted above, these are just a few of the books Buffett recommends. Here is an additional list from Business Insider of Buffett-recommended books which can improve your investment abilities.

Featured photo credit: sher xia via flickr.com

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Last Updated on June 26, 2020

10 Things To Remember When Everything Goes Wrong

10 Things To Remember When Everything Goes Wrong

Problems and heartaches in life are inevitable. However, there are some things to remember when you’re right in the thick of it that can help you get through it. When everything seems to be going wrong, practice telling yourself these things.

1. This Too Shall Pass

Sometimes life’s rough patches feel like they’re going to last forever. Whether you’re dealing with work-related issues, family problems, or stressful situations, very few problems last for a lifetime. So remind yourself, that things won’t be this bad forever.

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2. Some Things are Going Right

When things are going wrong, it’s hard to recognize what is going right. It’s easy to screen out the good things and only focus on the bad things. Remind yourself that some things are going right. Purposely look for the positive, even if it is something very small.

3. I Have Some Control

One of the most most important things to remember is that you have some control of the situation. Even if you aren’t in complete control of the situation, one thing you can always control is your attitude and reaction. Focus on managing what is within your control.

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4. I Can Ask for Help

Asking for help can be hard sometimes. However, it’s one of the best ways to deal with tough situations. Tell people what you need specifically if they offer to help. Don’t be afraid to call on friends and family and ask them for help, whether you need financial assistance, emotional support, or practical help.

5. Much of This Won’t Matter in a Few Years

Most of the problems we worry about today won’t actually matter five years from now. Remind yourself that whatever is going wrong now is only a small percentage of your actual life. Even if you’re dealing with a major problem, like a loved one’s illness, remember that a lot of good things are likely to happen in the course of a year or two as well.

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6. I Can Handle This

A lack of confidence in handling tough times can add to stress. One of the best things to remember is that you can handle tough situations. Even though you might feel angry, hurt, disappointed, or sad, it won’t kill you. You can get through it.

7. Something Good Will Come Out of This

No matter how bad a situation is, it’s almost certain that something good will come out of it. At the very least, it’s likely that you will learn a life lesson. Perhaps you learn not to repeat the same mistake in the future or maybe you move on from a bad situation and find something better. Look for the one good thing that can result when bad things happen.

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8. I Can Accept What’s Out of my Control

There are many things that aren’t within your control. You can’t change the past, another person’s behavior, or a loved one’s health issues. Don’t waste time trying to force others to change or trying to make things be different if it isn’t within your control. Investing time and energy into trying to things you can’t will cause you to feel helpless and exhausted. Acceptance is one of the best way to establish resilience.

9. I Have Overcome Past Difficulties

One of the things to remember when you’re facing difficulties, is that you’ve handled problems in the past. Don’t overlook past difficulties that you’ve dealt with successfully. Remind yourself of all the past problems you’ve overcome and you’ll gain confidence in dealing with the current issues.

10. I Need to Take Care of Myself

When everything seems to be going wrong, take care of yourself. Get plenty of rest, get some exercise, eat healthy, and spend some time doing leisure activities. When you’re taking better care of yourself you’ll be better equipped to deal with your problems.

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Featured photo credit: NeONBRAND via unsplash.com

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