December 18, 2013

Buffett’s 7 Best Books for Investors: 2013

What do investing gurus read when they need some guidance?

Warren Buffett gives plenty of advice on where to invest money, and here, on what to read about it. (Photo: AP) Warren Buffett gives plenty of advice on where to invest money, and here, on what to read about it. (Photo: AP)

Every investor seeks a way to get a little bit of an edge.

So many pundits and self-proclaimed investment gurus have tried to fill the void. So much TV time is devoted to offering that advice. Just think of CNBC with Jim Cramer’s “Mad Money” and other shows that parse the markets.

But exactly whom do the big boys turn to when they need some guidance? We decided to take a look at what books investment gurus like to read. We started with Warren Buffett. In the next Best Books slideshow, we’ll look at the reading list put together by Vanguard founder John Bogle.

The books on the list are a mix of offerings Buffett mentioned in a letter he wrote that accompanied Berkshire Hathaway’s annual report--it even includes a look at the “Oracle of Omaha” himself--and the rest were part of list called “Warren Buffett’s Three Favorite Books.”

We’ve included Amazon.com’s reader ratings and a reader comment for each book. Check out Buffett’s 7 Best Books for Investors: 2013:

The Outsiders by William Thorndike, Jr.

1. “The Outsiders”

The Tale: William Thorndike Jr.’s look at CEOs who got high marks for capital allocation.

Amazon Rating: 80 of 95 give it 5 stars, zero give it 1

Cogent Customer Quote: “Thorndike explores one of the ‘mysteries’ as to why some businesses, with good, but not necessarily outstanding operational performance have been able to create outsized shareholder returns over time.” – Eric E. Chen

Tap Dancing to Work by Warren Buffett

2. “Tap Dancing to Work: Warren Buffett on Practically Everything”

The Tale: Buffett helps a friend (Carol J. Loomis, the author) who published this collection of her Fortune magazine articles written throughout the career of the “Oracle of Omaha.”

Amazon Rating: 49 of 101 give it 5 stars, 5 give it 1

Cogent Customer Quote: “The book provides an interesting timeline of articles chronicling Buffett's deals. In the earlier days you could see his notoriety wasn't present yet. Even though most Buffett followers will recognize most of the article topics, it is still interesting to read the in-depth reporting and general public thoughts of each deal at that time in history.” – Randy.

The Clash of Cultures by John Bogle

3. “The Clash of Cultures: Investment vs. Speculation”

The Tale: John Bogle on shifts in long-term investing and what caused them.

Amazon Rating: 38 of 51 give it 5 stars, zero give it 1

Cogent Customer Quote: “Great expose on the world of finance, where less than 1% of investment funds are actually invested in companies, while 99% is spent gambling on whether the securities/markets go up or down. He shows that long-term investing in index funds will provide greater investor returns than speculation.” – Robert Olson.

Investing Between the Lines by Laura Rittenhouse

4. “Investing Between the Lines: How to Make Smarter Decisions By Decoding CEO Communications”

The Tale: Laura Rittenhouse helps investors make sense of all the management speak coming from corporations.

Amazon Rating: 16 of 23 give it 5 stars; 2 give it 1

Cogent Customer Quote: “One of the toughest jobs an investor has is deciphering what a company says in the many venues it presents itself. This book does an excellent job of helping you understand what to look for and what it may or may not mean.” – R. Buhrmann

Intelligent Investor by Benjamin Graham

5. “Intelligent Investor”

The Tale: Benjamin Graham’s 1949 book focused on his strategy of loss minimization over profit maximization. Buffett wrote a preface and appendix to the 2006 edition

Amazon Rating: 271 of 418 give it 5 stars; 10 give it 1

Cogent Customer Quote: “Graham's writing is clear, concise and levelheaded. He warns against unreasonable financial expectations and proceeds to explain his theories in sufficient detail to be worthwhile, without being over the comprehension of the layman interested in investing.” – Mingus 500.

Security Analysis by Benjamin Graham

6. “Security Analysis”

The Tale: Benjamin Graham makes the list again with his 1934 book on how to make investing safe. Readers were eager for such wisdom in the years following the 1929 market crash. Buffett penned the foreword to the 2008 edition.

Amazon Rating: 48 of 70 give it 5 stars; 2 give it 1

Cogent Customer Quote: “Security Analysis is a definitive and clear guide to understanding value investing, and conducting thorough fundamental analysis on a stock of your choice, allowing for an informed investment decision.” – Alex Vayner.

The Wealth of Nations by Adam Smith

7. “The Wealth of Nations”

The Tale: Adam Smith’s 1776 tome is considered the fundamental look at classical economics. Perhaps the full title of the book says it all: “An Inquiry Into the Nature and Causes of the Wealth of Nations.” Many Amazon readers noted that it was important to be careful when choosing an edition of this book because some are condensed.

Amazon Rating: 150 of 271 give it 5 stars; 22 give it 1

Cogent Customer Quote: “If you have any interest at all in Economics, you'll want to go to the source. This is the source. Adam Smith lays the groundwork for the study of Economics in this very readable treatise.” – Lauren in Tokyo.

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