What investment gurus read
Prestigious universities, experience and a lot of reading. The most successful investors, fund managers and economic gurus of our time spend hours reading, and not only about the economy. These are some of the books the likes of Buffet, Soros, Lynch, Gross and Mobius have fully digested.
A major part of the education of the world’s most successful investors can be put down to having studied at the most renowned educational institutions, but also to what they have picked up from books and time-honoured experience. Indeed, leading financial advisors quite often allude in public to those texts that have marked them most, not to mention the fact that they themselves end up writing their own books. The BBVA New Gen catalogue contains some of the investment geniuses and gives an insight into the positions they have taken in their portfolios.
For instance, Warren Buffett, nicknamed the Oracle of Omaha, is one of the wealthiest people in the world thanks to his skill in investing in companies that have been undervalued by the market. At his annual meetings with shareholders he usually mentions a book or two. One that he has repeatedly referred to over the years is The Intelligent Investor by Benjamin Graham (economist, lecturer and investor), in which the author advocates the importance of opting for companies that really make a profit. He has also recommended another of Graham’s books, Security Analysis, which Buffett read while studying economy at Columbia University (USA). This work looks at what can be learnt from the great 19th century investors. Another recurrently mentioned work is the stock investor Philip Fisher’s, Common Stocks and Uncommon Profits, in which the author emphasises the importance of taking how a company is managed into account and not solely its financial situation.
Buffett has likewise recommended, The Little Book of Common Sense Investing written by The Vanguard Group founder, John C. Bogle. A benchmark for passive investing, he spent his entire life defending what he believed to be the best approach to investment, namely restricting oneself to mimicking what a particular stock market index, or fixed return, is doing and waiting. Moreover, through his book, The Battle for the Soul of Capitalism, Bogle has inspired other investors by warning about the verbiage that quite often surrounds financial advice and about market unpredictability.
For his part, Peter Lynch, the well-known manager of the Magellan Fund at Fidelity Investments, who managed to post annual returns of around 30% in the course of two decades, thereby doubling the S&P 500 record rate of profit, has shared his core investment principles in several works. For instance, his highly readable One up on Wall Street, in which he sums up his investment philosophy and the criteria he uses to select a company, or his Beating the Street, in which he looks back at some of his most successful ideas.
Bill Gross, co-founder of the Pacific Investment Management Company LLC (PIMCO) and another of the most famous financial gurus owing to his mastery of the fixed income market, found his inspiration on how to make a return from investing from a book about gambling. Legend has it that after losing all his money at black-jack, he came across Edward O. Thorpe’s book entitled Beat the Dealer, in which Thorpe explained how to count the cards to do just that. Gross would go on to write his own book, Everything You’ve Heard About Investing is Wrong, in which he heralded the dawn of a new financial era; one in which the rules for investors would radically change, which has indeed been the case.
For one of the biggest experts in emerging markets, the American Mark Mobius, John Templeton’s 16 Rules for Investment Success is a key work. Templeton was the founder of the flagship fund where he spent his career, ultimately acquired by Franklin, which is today known as Franklin Templeton. Mobius has also referred on occasion to how useful a read is The Battle for Investment Survival by the veteran investor Bernard Baruch. Mobius himself has written The Little Book of Emerging Markets: How to Make Money in the World’s Fastest Growing Markets.
Georges Soros, as famous for his speculative investing (given his expertise in hedge funds) as he is for his philanthropic work, claims to have gained inspiration from the philosopher, Karl Popper’s The Open Society and Its Enemies, to develop his own economic and political thinking, to defend liberal institutions and to want to dedicate part of his fortune to the Open Society Foundations, one of the most influential philanthropic organisations in the world.
Warren Buffet's biography: What is his investment style?
In the early 40's, a young boy, son of a stockbroker in Omaha, Nebraska, barely 11 years old, after studying the daily stock quotes, bought his first shares at a price of $38 dollars per share.