FocusInvestor.com: Recommended Reading

Quick links to the book recommendation sections:
Classic Investment Books
Charlie Munger Book Recommendations
Warren Buffett Book Recommendations
Books & Videos about Warren Buffett and Berkshire Hathaway

Modern Investment Books
This list includes all the modern classic investing books that I recommend focus investors read. A careful examination of these books will certainly help you achieve your goal of becoming a better investor. Please note that this Internet site has a revenue sharing agreement with Amazon.com and thus receives a small commission on the majority of books purchased through the links posted below.

Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
(Edited by Peter D. Kaufman)
480 pages

A Focused Must Read!
This is the book that all of us that us who love the wit and wisdom of Mr. Munger have been waiting for. It's an absolutely first class production that contains biographical information on Mr. Munger and, most importantly, finally allows all of us to read and study Mr. Munger's works in one volume. As an added bonus Chapter 10 includes new material written by Mr. Munger especially for this book. I strongly recommend that you read and study this book!


The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
(William Thorndike)
272 pages

Kindle Edition

A Focused 2012 Must Read!
A great book that shows just what tremendous shareholder appreciation can result when management possesses superior capital allocation skills. Warren Buffett and Thomas Murphy are just two of the eight CEOS profiled.  It has been recommended by Mr. Buffett (2012 Berkshire Shareholder Letter) and Mr. Munger (2013 Daily Journal Annual Meeting). I thoroughly enjoyed the book and you can see my review of the book in the Blog section of this site.

 


The Most Important Thing: Uncommon Sense for the Thoughtful Investor
(Howard Marks)
180 pages

Kindle Edition

A Focused Must Read!
A book destined to be one of the classic investment texts of our generation. Warren Buffett: "This is that rarity, a useful book." Seth Klarman, President, The Baupost Group: "The Most Important Thing, Mark's insightful investment philosophy and time-tested approach, is a must read for every investor."

 


Thinking, Fast and Slow
(Daniel Kahneman)
499 pages

Kindle Edition

A Focused Must Read!
Mr. Kahneman, a winner of the Noble Prize in Economics, explains how the mind tends to divide processing tasks into two systems. One is called System 1 which tend to makes decisions in a quick, intuitive and emotional manner while System 2 is the thought process that is much more deliberate, slower and logical. Kahneman than takes us on a whirlwind tour of how those two systems can wreck havoc on our decision making skills. Nassim Taleb proclaims that "This is a landmark book in social thought, in the same league as Adam Smith's The Wealth of Nations and Sigmund Freud's The Interpretation of Dreams."

 


Templeton's Way with Money: Strategies and Philosophy of a Legendary Investor
(Alasdair Nairn)
272 pages


Alasdair worked with Mr. Templeton for ten years and distills his investment stratedgy and philosphy from the prespective of an individual who worked with him. They were able to access his historical letters to shareholders and other material that have not been made public previously. From the front cover flap: "Part biography, part investment advice, Templeton's Way with Money skillfully dissects Templeton's life, career, investment philosophy, and the track record of his first mutual fund, and sketches out the opportunities open to investors for following in his footsteps. The authors conclude by using Templeton's methods to offer a compelling analysis of the threats and opportunities facing investors as they seek to make more informed investment decisions in today's troubled financial environment."

 


Buffett: The Making of An American Capitalist
(Roger Lowenstein)
474 pages
1995 Doubleday
A Focused Must Read!

This very well written book follows Mr. Buffett's life, and is the definitive biography of the man, and as such it is a must read for all interested in his path through life. The book clearly explains how (and why) Mr. Buffett is such a special human being and a spectacular investor.


Snowball: Warren Buffett and the Business of Life
(Alice Schroeder)
832 pages, 2009

Kindle Edition

The official biography written by Alice Schroeder. Alice was given unprecedented access by Mr. Buffett.


Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger
(Janet Lowe)
294 pages
2000 John Wiley
A Focused Must Read!

Mr. Charlie Munger, Vice-Chairman of Berkshire Hathaway, is the partner/sidekick of Mr. Warren Buffett and is considered the man behind the scenes at Berkshire Hathaway. Charlie is a very entertaining guy, and this book shows why Warren Buffett calls him "one of a kind." Janet Lowe provides readers with an in-depth look at the full and interesting life of Mr. Munger. Many useful lessons on life and investing can be uncovered by a thorough reading of this excellent book.

The book also includes two excellent speeches by Mr. Munger in the appendix: Multidisciplinary Skills: Educational Implications and Practical Thought about Practical Thought?


The Rediscovered Benjamin Graham: Selected Writings of the Wall Street Legend
(Janet Lowe)
283 pages
1999 John Wiley
A Focused Must Read!

A great collection of original writings by Benjamin Graham which were originally published in various formats. The material includes writings, lectures, speeches, and interviews from Mr. Graham that date from the 1930s to the 1970s.


The Essays of Warren Buffett (2008 Edition)
(Lawrence A. Cunningham)
224 pages, 1997,1998,2000,2001
A Focused Must Read!

This book is a great, well organized compilation of Mr. Buffett's famous "Letters to Shareholders" which appear in the annual reports of Berkshire Hathaway. It has been recently updated to include the letters to shareholders written since the book was first released in 1996, a new introduction has been written, and a new, tougher, blue cover has been added.

Mr. Buffett advised shareholders at the 1999 & 2000 Berkshire Hathaway annual meeting if he had to pick a single book describing his methods, this would be the one. It is a great tool to use when trying to compile Mr. Buffett's comments on a particular subject since it is organized by subjects he has discussed in his letters over the years. Trying to find all of his comments on a particular subject throughout the annual reports is a time consuming task when you have to look through many years of annual reports. Mr. Cunningham has made this task much simpler with this book.


Value Investing: Tools and Techniques for Intelligent Investment
(James Montier)
414 pages, 2009
A Focused Must Read!

Kindle Edition

Review pending.


The Little Book of Behavioral Investing
(James Montier)
219 pages, 2010

A Focused Must Read!

Kindle Edition

"In investing, success means being on the right side of most trades. No book provides a better starting point toward that goal than this one." Bruce Greenwald, Professor at Columbia Business School


Moneyball: The Art of Winning an Unfair Game
(Michael Lewis)
320 pages, 2004

Kindle Edition

"...will go down as a definitive book on investing." Seth Klarman, Baupost Group, LLC.


Applied Value Investing
(Joseph Calandro)
271 pages, 2009

Kindle Edition

"This thought-provoking work takes value investing to the next level." Seth Klarman, Baupost Group, LLC.


The Ten Commandments for Business Success
(Donald Keough)

190 pages, 2008

Kindle Edition

"He is on my board at Berkshire Hathaway because he is one of the very few guys I feel I can hand the keys over to." Warren Buffett from the foreword he wrote for the book.

This book was a great learning experience and I believe it follows a formula Charlie Munger would love by not writing about the secrets of business success but instead writing about what causes business failure.


Speculative Contagion
(Frank Martin)
316 pages, 2005

A Focused Must Read!

"What a unique opportunity to traverse the Bubble and post-Bubble years with Frank Martin, exactly as he described them to his clients in real time. Here is market history from the disciplined perspective of a value investor, as he wrestles with the financial beast. Speculative Contagion is sure to enlighten aspiring value investors for years to come." Seth A. Klarman, Baupodt Group


Mr. Market Miscalculates: The Bubble Years and Beyond
(James Grant)
414 pages, 2009

Kindle Edition

James Grant is a superb writer and this book won't disappoint. The book includes articles that first appeared in Grant's Interest Rate Observer and discusses the forces behind the bubble years in the stock market. Seth Klarman also recommended at the 2010 CFA Institute Annual Conference in Boston that you should read everything Mr. Grant writes.


How to think like Benjamin Graham and invest like Warren Buffett
(Lawrence A. Cunningham)
224 pages, 2001 McGraw-Hill

Mr. Cunningham has provided the investing community with a true gem on investing with his latest book. His effective style makes the wisdom of his comments easily apparent to both novice and experienced investors.

The book is organized into three parts with the first covering the question of market efficiency. Mr. Cunningham does a masterful job of describing the pros and cons of the Efficient Market Theory. The second section of the book deals with how an investor can beat the return of the overall stock market. This section contains an impressive and instructive parable of a man who wants to sell his apple tree. The third section of the book deals with corporate governance, an important part of investing since management has such in influence on the direction of the company, its capital allocation procedures, and its core values.


Outsmarting the Smart Money
(Lawrence A. Cunningham)
288 pages, 2002 McGraw-Hill

"Like it or not, most investors are their own worst enemies. They buy only when glowing reports and rumors have bid stocks to outlandish, unsupported price levels; sell only when bad news has left stock prices at or near their bottoms; and ignore reams of independent research and data to bet thousands of dollars on a coworker's hot stock tip."


" Is it any wonder that stock investing, which should represent one of the easiest and most straightforward paths to long-term wealth, has instead become a hotbed of wasted hours, lost opportunities, and outright misery?"


" Lawrence Cunningham's Outsmarting the Smart Money outlines where most investors go wrong and explains how to approach the markets with self-knowledge, intelligence and, most of all, calm. It examines the cognitive biases that afflict most investors, discusses how professional money managers are trained to take advantage of these biases (and the pricing inefficiencies that regularly result), and reveals how investors can help themselves by steering clear of the "smart money" to adopt a long-term, value-oriented investment philosophy. "


The Detective and the Investor
(Robert Hagstrom)
240 pages, 2002 Texere, LLC

"The investigative methods and mental habits of such legendary sleuths as Edgar Allan Poe's Auguste Dupin, G. K. Chesterton's Father Brown, and, of course, Sir Arthur Conan Doyle's genius of Baker Street, Sherlock Holmes, deliver new insights to investors."


"Both detectives and investors must gather information, analyze the facts logically, sort through conflicting and often unreliable data, and factor in human psychology in order to come to the right conclusion about the perpetrator of a crime or the value of a company's stock. The great detectives don't rely on mere luck or intellectual prowess to solve these puzzles; their mental disciplines can be learned and put into practice by anyone."

"The author brings to life the intellectual principles of his fictional detectives by pairing them with real-life contemporary sleuths such as investigative financial journalists and extraordinary securities analysts. And he illustrates his story with compelling examples from the financial pages: Sunbeam, Dell Computers, AOL, and Microsoft."


Latticework: The New Investing
(Robert Hagstrom)
256 pages, 2000 Texere, LLC
A Focused Must Read!

A good book always makes you think about its particular subject in a new way. Robert Hagstrom's new book, Latticework: The New Investing will definitely have the reader thinking about investing differently. The book develops the notion of combining insights from many different disciplines (biology, physics, and literature to name a few) to develop worldly wisdom.

If the investor develops their own mental models (and understand how the interact with one another) they can develop a competitive advantage over most investors. Mr. Munger, Vice Chairman of Berkshire Hathaway, has endorsed this mental models concept in two separate speeches he has given.


The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy
(Robert Hagstrom)
246 pages, 1999 Wiley & Sons
A Focused Must Read!

Kindle Edition

Mr. Hagstrom views on portfolio diversification match my own. This book is a great read for all investor who wish to learn more about focus investing. Charles Munger (Vice Chairman of Berkshire Hathaway) describes the book as "a well-written contribution to human thought on the investment process" and recommended that it be read. Charles Munger also described it as a "good book". I can't think of a bigger endorsement coming from him.


The Warren Buffett Way, 2nd Edition
(Robert Hagstrom)
272 pages, 2005 Wiley & Sons

Kindle Edition

This book provides some details on what Mr. Hagstrom considers Mr. Buffett's investment strategy and stock selection philosophy to be. The book is written in an easy to follow format and is his book, The Warren Buffet Portfolio, is a good companion piece .


The Money Masters
(John Train)
301 pages
1980 Harper & Row

Mr. Train does an exceptional job describing the approaches of these investment masters. Describes how great investors (Benjamin Graham, Philip Fisher, Warren Buffett, Sir John Templeton, and Paul Cabot among others) built their enviable track records.


Wall Street on Sale: How to Beat the Market as a Value Investor
(Timothy Vick)
288 pages
1999 McGraw-Hill

Timothy Vick provides us a very good book on value investing and it is an excellent starting place for beginners. I would strongly advise reading this book in addition to the Intelligent Investor and Common Stocks and Uncommon Profits. I would especially recommend reading Chapter 14: Assembling a Portfolio: The Subsidiary Approach.


How to Pick Stocks Like Warren Buffett
(Timothy Vick)
277 pages
2000 McGraw-Hill

Mr. Vick has once again provided his readers with an excellent treatise on how Mr. Buffett's investment style works. Chapter 18 of the book entitled, Warren's Secret Weapon, is an excellent analysis of how Mr. Buffett used arbitrage opportunities to increase his return when the assets involved were much smaller than what he deals with today. Mr. Vick also does a great job covering many of the focused investing principles. This book is a must read for all investors that have an interest in Mr. Buffett and Mr. Munger's investment style.


Of Permanent Value: The Story of Warren Buffett (2010 Edition)
(Andrew Kilpatrick)
2,000 pages
2010 AKPE

This three volume set will provide any information you would like to know concerning Mr. Buffett, his life, and Berkshire Hathaway. It has many great pictures and stories that are near impossible to find elsewhere. Written by a very dedicated Berkshire Hathaway shareholder! Thanks so much Pat for letting him spend his time working on it!.


The Warren Buffett CEO
(Robert P. Miles)
308 pages
2001 John Wiley & Sons
A Focused Must Read!

Kindle Edition

I have always had a strong passion for reading biographies. I think what attracts me to them is the lessons that the reader can take away and apply to their own lives.

I found the book to be an extremely enjoyable read. It provides a richness of detail and previously unavailable insight on the mangers that make the subsidiaries of Berkshire Hathaway such a remarkable group of exceptional performers. It was also refreshing to see Mr. Buffett receive credit for being the outstanding manager he truly is. Almost all of the attention he receives focuses on his investment prowess and disregards completely his abilities as a manager. As this book will show you he is simply a tremendous manager who is able to inspire his mangers to continue working to produce results that will make him, and Berkshire shareholders, proud. He is able to achieve this even when the majority of the managers certainly no longer have a financial need to continue working.

Mr. Miles has provided us all with an excellent tool that provides many insights into what it takes to be a good manager, the dedication and drive it takes to succeed, and what to focus on when trying to create, and grow, an enduring customer centered business.

Here is a link to a Q&A session with Mr. Miles on the Motley Fool site.


Common Sense on Mutual Funds: Updated 10th Anniversary Edition
(John Bogle)
622 pages
2009 John Wiley
A Focused Must Read!

Kindle Edition

"Cogent, honest and hard-hitting -- a must read for every investor." is what Mr. Warren Buffett has to say about this book.

It provides us all with a great look at how expensive most mutual funds really are. It also makes us take a long, hard look at mutual fund performance and how expenses can dramatically alter their performance. Mr. Bogle makes a persuasive argument on why the majority of investors would be better off investing solely in index funds.


The Millionaire Next Door
(Thomas J. Stanley and William D. Danko)
272 pages, 1998
A Focused Must Read!

This book spells it out on what wealth really is, assets, not income. I believe most people share a common misconception, they think if someone earns $100,000 a year they are wealthy, I say they need to have assets (built by a long term saving and investment plan) behind the income stream. The authors determine that most wealthy people become wealthy by under spending their income in conjunction with a long term saving/investment plan. This book is a must read for all!


Devil Take the Hindmost: A History of Financial Speculation
(Edward Chancellor)
386 pages, 1999 FSG
A Focused Must Read!

Mr. Chancellor provides us all with a look at the history of speculative manias and the mass delusion that surrounds them. All of us should read this book so we can understand what caused past speculative manias and not doom ourselves to repeat the same mistakes.


Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing
(Hersh Shefrin)
368 pages, 2000 Harvard
A Focused Must Read!

Kindle Edition

This very interesting book examines human behavior and identifies how an individuals behavior pattern can affect investing performance. It examines fundamental assumptions that individuals have about the stock markets and describes how these assumptions may prevent you from obtaining bigger returns on your investments.


The Financial Numbers Game: Detecting Creative Accounting Practices
Eugene E. Comiskey, Charles W. Mulford
407 pages
2002 John Wiley & Sons
A Focused Must Read!

Kindle Edition

From the inside cover:

"To hide falling profits, some managers ply the flexibility found in accounting principles to alter their financial reports. Others go further and use fraud in their deception. It is vitally important that investors, analysts, and other users of financial statements detect these creative accounting practices as early as possible in order to avoid negative earnings surprises and potential share-price declines. The Financial Numbers Game identifies the steps businesses may take to misstate financial performance and helps its readers to identify those situations where reported results may not be what they seem. Authors Mulford and Comiskey also describe the flexibility built into the GAAP principles and discuss ways companies can take advantage of that flexibility while remaining within the rules of proper reporting. The role of the SEC in enforcing securities laws is explored, as are the specific statutes the SEC uses to prosecute those it deems to have gone too far. The Financial Numbers Game presents an expert analysis of creative accounting procedures, as well as:

  • Real-world examples of aggressive and fraudulent financial reports
  • What signs to look for in detecting earnings manipulation Ready-made checklists for detecting accounting misdeeds
  • Advice from such experts as analysts, CFOs, and CPAs
  • Help for anyone interested in understanding true financial performance

The Financial Numbers Game offers all users of financial statements a comprehensive resource for understanding, detecting, and avoiding the vast assortment of creative accounting techniques found in practice today."


Guide to Financial Reporting and Analysis
Eugene E. Comiskey, Charles W. Mulford
624 pages
2000 John Wiley & Sons
A Focused Must Read!

Kindle Edition

Have you often wondered how to determine what a company is really earning after taking into account all the special, non-recurring (though it may seem that companies take these charges yearly) charges that companies seem to have taken so many of lately. If you think of yourself as a serious investor who thinks it is worthwhile to understand what earnings a company is really making this book is a must read! It also provides useful examples based on real company financial statements which aid in understanding the concepts being covered.

Book Description from the back cover of the book:

" Due to the intricacies of contemporary business transactions, the numerous standards issued by the FASB, and the many and varied accounting and disclosure practices and differences in terminology employed by reporting companies, financial statements and related disclosures have become very complex. This complexity can impede the work performed and the decisions reached by all users of financial statements, and especially the book's primary audience--equity and credit analysts. This book is designed to be the practical guide analysts need for accurate financial reporting and analysis."


Financial Warnings
Eugene E. Comiskey, Charles W. Mulford
478 pages
1996 John Wiley & Sons

Kindle Edition

This book is very similar to the author's other book Guide to Financial Reporting and Analysis which has more updated examples.


Financial Shenanigans
Howard Schilit
304 pages, 2010

A Focused Muse Read!

Kindle Edition

I found both the 2nd Edition and the 3rd Edition to be very, very useful and can't recommend them highly enough.

From the inside cover:

"Financial Shenanigans, 2nd Edition, helps you fight fire with fire, giving you the state-of-the-art weapons you need to identify warnings of a company's problems before earnings come out and the damage becomes irreversible. Detailing the seven fundamental tricks that companies have used to fool auditors and investors for decades, yet providing updated information and techniques on how these shenanigans are being used in today's technologically advanced, financially savvy investment world, this fast-paced book provides updated explanations of how anyone can uncover and sidestep:"


Memos From The Chairman
(Alan C. Greenberg)
156 pages, 1996 Workman

Kindle Edition

Mr. Greenberg's wisdom is revealed in this humorous look at how to manage a business to which Mr. Buffett wrote the foreword to this book. In the foreword he says, "Haimchinkel (His designated Oracle on earth is Ace) is my kind of guy-cheap, smart, opinionated.... I now slavishly follow and preach his principles". I must confess that I want to be defined as a PSD (Poor, Smart with a Deep Desire to Become Rich).

You Can Be A Stock Market Genius (Even if you're not to smart!)
(Joel Greenblatt)
298 pages
1997 Simon & Schuster

This excellent book has it all, it's humorous and packed full of useful information for the potential investor to digest. The author goes into some detail on the different types of arbitrage activities an investor could potentially profit from while also providing real life examples of the situations he is referencing. This book is required reading for anyone interested in exploring arbitrage activities. I heartily recommend his book to all investors.


Fooled by Randomness
(Nassim Nicholas Taleb )
220 pages
2001 Texere

Kindle Edition

What is the difference between investing and luck? How does randomness come into play in investing and in life? The author provides answers to these questions and more in this book. He attempts to persuade the reader to examine issues more closely while trying to resist "being fooled by randomness". He states that the book "is about luck disguised and perceived as non-randomness."

The author advocates not chasing the latest investment fad or fashion, not looking at your investments very often, and being open to both sides of any idea because the idea could go wrong as well as right. He further urges that the reader should also examine what the consequences of either outcome could be.

Another interesting theme the author touches on occurs when he stresses that it is very difficult to determine a lucky or successful investor by looking at the result achieved during that short time span as they could possibly have been achieved through luck.

I found the book refreshing, humorous at times, and capable of making me examine familiar topics in a new manner.


The Black Swan (2nd Edition)
(Nassim Nicholas Taleb )
480 pages, 2010

Kindle Edition

What is the difference between investing and luck? How does randomness come into play in investing and in life? The author provides answers to these questions and more in this book. He attempts to persuade the reader to examine issues more closely while trying to resist "being fooled by randomness". He states that the book "is about luck disguised and perceived as non-randomness."

The author advocates not chasing the latest investment fad or fashion, not looking at your investments very often, and being open to both sides of any idea because the idea could go wrong as well as right. He further urges that the reader should also examine what the consequences of either outcome could be.

Another interesting theme the author touches on occurs when he stresses that it is very difficult to determine a lucky or successful investor by looking at the result achieved during that short time span as they could possibly have been achieved through luck.

I found the book refreshing, humorous at times, and capable of making me examine familiar topics in a new manner.


Against the Gods
(Peter L. Bernstein)
400 pages, 1998 John Wiley & Sons

Kindle Edition

The publisher, John Wiley & Sons states:


"To what degree should we rely on our past to determine our future? This riveting book describes how the rational process of risk taking propelled the progress of science and enterprise into the modern world of speed, power, instant communication, and sophisticated finance. Risk management is now an indispensable skill whose applications range from allocating wealth through planning a family to wearing a seatbelt. Drawing upon history and biography to trace the development of its concepts, the author explains the origin of risk management--the basics of probability, sampling, regression to the mean, game theory, and rational versus irrational decision making. Bernstein introduces complex concepts via an accessible, entertaining narrative between the great minds behind the ideas. Against the Gods features the epic quests and questions of great thinkers such as Pascal, Fermat and von Neumann who have embarked on a reworkable adventure of intellectual discovery, proving that the future is more than just the whim of the gods, that men and women are not passive before nature."


Value Investing: From Graham to Buffett and Beyond
Bruce C. N. Greenwald
Judd Kahn
Paul D. Sonkin
Michael van Biema
312 pages
2001 John Wiley & Sons

Kindle Edition


Inside Cover Flap:

"Described by the New York Times as the "guru to Wall Street s gurus," Bruce Greenwald is a leading authority on value investing. His courses and seminars on the subject have drawn some of the savviest people in the investment world. Now, along with some colleagues, Greenwald reveals the fundamental principles that have made value investing one of the most consistently profitable investment techniques."


"In an investment world frequently blinded by excessive optimism, short-term speculation, and other practices ranging from unsound to downright shady, value investing remains a reliable discipline even as it moves into a new century. Built on the works of Benjamin Graham, the father of security analysis, value investing is based on the premise that the underlying value of a financial security is measurable and stable, even though the market price fluctuates widely. The core of value investing is to buy securities when their market prices are significantly below their intrinsic values. Graham called the gap between price and value the "margin of safety." A large margin of safety both increases the potential return and reduces the risk of loss."


"In Value Investing, the authors enrich the discipline by exploring its history, explaining its underlying principles, and setting guidelines for its successful application. The book covers such indispensable issues as:

1. Where to look for under priced securities

2. How to determine the intrinsic value of a stock


3. Alternative methods for constructing a portfolio that control risk without restricting investment returns


"After discussing the basis of value investing, the book describes the proven techniques of some of the greatest value investors in history, including Warren Buffett, Walter Schloss, Mario Gabelli, and Michael Price."


"By adapting Graham s strategies to accommodate new investment climates, each has contributed a distinctive thread to make the discipline of value investing stronger and more flexible. "