When Buffett was 19, he picked up a copy of legendary Wall Streeter Benjamin Graham's "The Intelligent Investor."
It was one of the luckiest moments of his life, he said, because it gave him the intellectual framework for investing.
"To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information," Buffett said. "What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must provide the emotional discipline."
If you want to get to know the way Buffett thinks, go straight to the sage himself.
In this collection, he keeps it real — in his signature folksy-intellectual fashion.
"What could be more advantageous in an intellectual contest — whether it be chess, bridge, or stock selection — than to have opponents who have been taught that thinking is a waste of energy?" he asks.
In his 2001 shareholder letter, Buffett gleefully endorses "Jack: Straight from the Gut," a business memoir of long-time GE executive Jack Welch, whom Buffett describes as "smart, energetic, hands-on."
In commenting on the book, Bloomberg Businessweek wrote that "Welch has had such an impact on modern business that a tour of his personal history offers all managers valuable lessons."
In it, Bogle — creator of the index fund and founder of the Vanguard Group, now managing upward of $3 trillion in assets — argues that long-term investing has been crowded out by short-term speculation.
1. Remember reversion to the mean. What's hot today isn't likely to be hot tomorrow. The stock market reverts to fundamental returns over the long run. Don't follow the herd.
2. Time is your friend, impulse is your enemy. Take advantage of compound interest and don't be captivated by the siren song of the market. That only seduces you into buying after stocks have soared and selling after they plunge.
In reply, Buffett sent the Microsoft founder his personal copy of "Business Adventures," a collection of New Yorker stories by John Brooks.
Gates says that the book serves as a reminder that the principles for building a winning business stay constant. He wrote:
For one thing, there's an essential human factor in every business endeavor. It doesn't matter if you have a perfect product, production plan and marketing pitch; you'll still need the right people to lead and implement those plans.
The book has become a media darling in recent years; Slate wrote that it's "catnip for billionaires."
"The funniest book ever written about investing," Warren Buffett proclaimed in his 2006 shareholder letter, "it lightly delivers many truly important messages on the subject."
First published in 1940, the book takes its title from a story about a visitor to New York who saw the bankers' and brokers' yachts and asked where the customers' were. Obviously, they couldn't afford them — the people providing the financial advice were in a better position to splurge than the people who followed the advice.
The book is filled with irreverent wisdom and colorful anecdotes about Wall Street, and remains compelling even today.
'The Most Important Thing Illuminated' by Howard Marks
Marks, chairman and cofounder of Oak Tree Capital, intended to wait until he retired to write this book, as noted in a 2011 Barron's review. But Buffett so admired Marks' client memos that he offered to write a dust-jacket blurb if Marks would publish the book sooner.
The result is "a rarity, a useful book," Buffett reportedly said.
Marks aims to help investors achieve success by putting more thought into their decisions, drawing heavily on his own mistakes and what he learned from them.
'First a Dream' by Jim Clayton and Bill Retherford
Jim Clayton grew up the son of a sharecropper in Tennessee and eventually went on to found Clayton Homes, currently the largest producer and seller of manufactured housing in the US.
Buffett credits Clayton's autobiography with inspiring him to invest in Clayton Homes in 2003. In his 2003 shareholder letter, he wrote that the book was a gift to him from students at the University of Tennessee. Buffett told the students how much he enjoyed the book, and they urged him to call Kevin Clayton, Jim's son and the company's CEO, to deliver the praise directly.
"Soon thereafter, I made an offer for the business based solely on Jim's book, my evaluation of Kevin, the public financials of Clayton," and his experience buying "distressed junk" from Oakwood Homes, a retailer of manufactured homes that he later purchased after it filed for bankruptcy.
It's worth noting that Fast Company reported the deal between Berkshire Hathaway and Clayton Homes was a little more complicated than that.
In his "rags to riches" tale, Clayton shares lessons on business and leadership for current and aspiring entrepreneurs.
In a 2016 Politico Playbook interview, Buffett said he loves reading political books, especially this Pulitzer Prize-winning classic published in 1961. (White also published three sequels.)
White chronicles the 1960 race for the presidency that John F. Kennedy ultimately won, from the primaries to the general election. In its attention to detail and to the candidates' personal struggles, the book can read more like a novel — a style of political reporting that at that time had never been seen before.
Writing in The Wall Street Journal, political reporter David M. Shribman said the book "stands out as the most influential political chronicle of the 20th century, perhaps of all time."
'Limping on Water' by Phil Beuth and K.C. Schulberg
This recommendation from Buffett's 2015 shareholder letter tells the story of Phil Beuth's 40-year career with Capital Cities/ABC-TV. It's a personal recounting of Beuth's journey from a boy afflicted with cerebral palsy, his family struggling to make ends meet, to a top media executive.
“Cap Cities will forever represent the gold standard for ethical corporate behavior accompanied by incredible financial performance. Tom Murphy and Dan Burke [former Capital City/ABC-TV executives] were the architects of these two achievements. Phil Beuth gives you a ringside seat to view this remarkable story.”
'Warren Buffett's Ground Rules' by Jeremy C. Miller
Another recommendation from Buffett's 2015 shareholder letter, this book is a compilation of Warren Buffett's letters — specifically, those he sent to his partners while managing Buffett Partnership Limited between 1956 and 1970. Readers get a glimpse into how Buffett built his investing strategy off the teachings of legendary investor Benjamin Graham.
Buffett gave Miller's work a glowing review:
"Mr. Miller has done a superb job of researching and dissecting the operation of Buffett Partnership Ltd. and of explaining how Berkshire’s culture has evolved from its BPL origin. If you are fascinated by investment theory and practice, you will enjoy this book."