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The Art of Value Investing: How the World's Best Investors Beat the Market


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Click here and here to see Warren Buffett's and Charlie Munger's book recommendations over the years.

Poor Charlie's Almanack, edited by Peter Kaufman (originally published in 2005). Former Wesco board member and fellow Charlie admirer, Peter Kaufman came up with the brilliant idea of putting together a book that would honor Charlie and capture all of the wisdom he's shared over the years in one place, so the maximum number of people might benefit from it. He asked me to help him with it and it took me 3 milliseconds to agree. In addition to doing a lot of editing, I wrote chapter three, " Mungerisms: Charlie Unscripted" (subtitled: " Highlights from Recent Berkshire Hathaway and Wesco Financial Annual Meetings" ), which captures the highlights from my notes of what Charlie said at five Berkshire and Wesco meetings.

The book is incredible! At about 400 pages with thick, glossy paper and lots of pictures, it's coffee-table quality. And the content is great (no, not just my chapter! ;-) -- most importantly, it has transcripts of Charlie's 11 major speeches/writings over the past 20 years, plus the story of Charlie's life and a chapter on "The Munger Approach to Life, Learning and Decision-Making."

The book was first made available at the 2005 Berkshire annual meeting and is now in its third edition (and has even been translated into Chinese!). To learn more about the book and buy it, click the link above. I hope you have as much fun reading the book as I had helping Peter with it!


The Intelligent Investor, Benjamin Graham (first published in 1949; this link is to the 2003 edition, with updates by Jason Zweig). Graham was Warren Buffett’s teacher at Columbia Business School and lifetime mentor. I agree with Buffett that this is the best book ever on investing. If you want something more in-depth, try Graham and Dodd’s classic, Security Analysis (1934), though at 725 pages it's not for the faint of heart.

Buffett: The Making of an American Capitalist, Roger Lowenstein (1996). This was the first in-depth book on Buffett, covering his entire history. For the most up-to-date (and fun) book on Buffett, I recommend Of Permanent Value: The Story of Warren Buffett by Andrew Kilpatrick, which is updated every year or two. The 2011 edition can be ordered here . Weighing in a nearly nine pounds and 1,250 pages, it's full of entertaining and educational stories (if you're a true Buffett junkie anyway).

The Superinvestors of Graham & Doddsville, Warren E. Buffett (1984). This is an edited transcript of a talk given at Columbia University commemorating the fiftieth anniversary of Security Analysis. Buffett shows how Graham's disciples have used Graham's value investing approach to realize phenomenal success in the stock market.

The Essays of Warren Buffett: Lessons for Corporate America, Lawrence Cunningham (revised 2013). This book organizes Buffett’ s brilliant annual letters to shareholders (which are available for free on Berkshire Hathaway's web site) by topic— a far more efficient (albeit slightly more expensive) way to read them.

Margin of Safety, Seth Klarman (1991). Klarman, the manager of Baupost Group since 1983, is a value investing legend who has compiled a spectacular track record. The book is almost impossible to find so it sells for around $1,000, but someone posted a scanned .pdf that can be found if you Google “seth klarman margin of safety pdf”.

Confidence Game, Christine Richard (2011). The riveting story of Bill Ackman’s battle with MBIA and other bond insurers.

Fooling Some of the People All of the Time , David Einhorn (2010). The equally riveting story of David Einhorn’s battle with Allied Capital.

The Big Short, Michael Lewis (2011). Lewis profiles some of the money managers who identified the housing bubble and make billions when it burst.

Common Stocks and Uncommon Profits, Philip Fisher (1958). Fisher, regarded as one of the pioneers of modern investment theory, may be the most underrated investment thinker of all time. He focuses on identifying growth stocks that can be held for the long run.

Why Smart People Make Big Money Mistakes, Gary Belsky and Thomas Gilovich (1999). An outstanding, entertaining book on behavioral finance, which examines how people's emotions affect their investment decisions and performance. This area has critical implications for investing; in fact, I believe it is far more important in determining investment success (or lack thereof) than an investor’s intellect.

Influence, Robert Cialdini (1993). Charlie Munger raved about the book and after reading it, I know why. Cialdini explains the six psychological principles that drive our powerful impulse to comply with the pressures of others and shows how we can defend ourselves against manipulation (or put the principles to work for our own interest). While not aimed at investors, the lessons that can be drawn from Influence, like Why Smart People Make Big Money Mistakes, have critical implications for rational investing.

Money Masters of Our Time, John Train (2000). 17 chapters, covering 17 of the world's great investors (Buffett, Fisher, Graham, Templeton, Rainwater, Neff, Robertson, Soros, Steinhardt, Lynch, etc.).

You Can Be a Stock Market Genius, Joel Greenblatt (1999). You've probably never heard of him or his book, but Greenblatt has compounded money at over 40% annually for the past 17 years, primarily by investing in special situations like spin-offs, restructurings and rights offerings. Incidentally, Greenblatt is the founder of the ValueInvestorsClub.com web site, which I highly recommend.

Click here to read my Motley Fool column with additional reading recommendations.

 
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