Michael Burry is an academic trained doctor turned investor and one of the first investors to recognize a flaw in the housing market which occurred in 2010 and 2011. He is widely recognised for his success as a hedge fund manager and some lessons from him can be learned from his favourite books on investing.
Below are some of the books that he recommends for those looking for ways to learn about investing. The list consists of various classic texts, plus modern alternatives that cover topics such as stock trading, value investing and risk management.
- The Intelligent Investor by Benjamin Graham: This classic text offers advice on how to identify good investments, properly assess risk and select stocks with better returns than the market average.
- Stocks For The Long Run by Jeremy Seigal: This book examines stock investing as an ideal approach to long-term wealth accumulation in times of both bull markets and bear markets. It covers topics such as basic stock analysis, portfolio diversification techniques, sector analysis, inflation protection techniques and global portfolio analysis.
- All About Asset Allocation by Richard Ferri: An ideal reference guide for traders who are new to asset allocation and want to gain a more comprehensive understanding of the concept – its uses, mechanics, variations and efficiency considerations involving traditional asset classes such as stocks, bonds, cash equivalents, real estate and alternative investments.
- Risk Management & Financial Institutions by John Hull: This textbook provides an understanding of how risk management takes place within financial institutions and all its associated implications concerning regulation regulations and types of products that a particular institution or sector can buy or sell.
- Security Analysis by Benjamin Graham & David Dodd: This book offers readers insight into the various methods used in security analysis – from analyzing financial statements and estimating future earnings growth rates – to discussing legal aspects such as investment restrictions imposed by certain countriesâ€™ laws or international deals gone awry.
Investing books are widely read by serious investors, from beginners to financial professionals. There are many books that offer valuable insights into the stock market and investing strategies.
Michael Burry, who was portrayed in the movie The Big Short, has put together an excellent list of recommended books for investors. In this article, we will review some of the books that Michael Burry recommends:
The Intelligent Investor by Benjamin Graham
Widely considered to be the greatest investment book of all time, “The Intelligent Investor” by Benjamin Graham is mandatory reading for any investor seeking to build long-term wealth. The book, first published in 1949 and revised several times since, presents a timeless set of fundamentals for successful investing by launching readers onto a path that leads somewhere.
Throughout the book, Graham argues that having patience in the markets is key to generating profits and avoiding losses over long periods of time. He emphasizes the need for a conscious shift away from speculation and towards maintaining balance with risk tolerance when making investing decisions. He defines emotion as an adversary that must be overcome if long-term investment success is to be achieved.
The goal of his classical value style investment strategy is simple: buy stocks at a discount relative to their real intrinsic value and hold them until such time as they reach their true worth or are sold at an appropriate gain. Graham concisely outlines both quantitative (value) and qualitative (safety) considerations when choosing investments. He also defines certain principles that guide investors toward their ultimate investment goals such as margin of safety, diversification, and cost minimization among others.
In addition, Graham offers countless examples of investments throughout the ages – some wise decisions and some which turned out disastrously – which act as illustrations on how the investor can put his investment theories into practice in order to protect his capital from losses while maximizing returns over time.
Security Analysis by Graham and Dodd
Benjamin Graham and David Dodd’s Security Analysis is one of the most well-known investment books of all time. First published in 1934, it is considered a classic work on fundamental analysis and value investing. The book features detailed methods for analyzing specific securities and equities, understanding market movements and displaying practical tools for smart investments. Graham and Dodd introduced concepts such as intrinsic value, margin of safety, present value calculations and the consideration of growth stocks to investors at a time when such concepts were relatively new. Security Analysis is still revered by investors today, including Michael Burry who insists that every investor should read this book if they want to be successful in the stock market.
Security Analysis explains the idea that stocks are not just pieces of paper representing an ownership stake but actual “claims on actual businesses” which should be valued accordingly. It recommends making reliable assessments based on earnings and tangible assets rather than relying on speculative rhetoric or market sentiment. By examining corporate balance sheets and income statements in great detail, investors can better assess whether they are buying undervalued assets with long-term prospects or companies using debt to cheat their shareholders out of quality profits, saturating their own markets with bad products or wooing customers with costly advertising campaigns while generating little return.
Common Stocks and Uncommon Profits by Philip Fisher
Common Stocks and Uncommon Profits by Philip Fisher is considered a classic of investing literature and was a bedrock of Michael Burry’s investing philosophy. Published in 1958, the book drills down into two main areas: Growth stocks, or stocks of companies expected to grow their profits or earnings; and how investors can use diversification to mitigate risk.
Fisher’s approach focused on finding great businesses with long-term potential, rather than short-term value opportunities. He believed in focusing on a company’s “scuttlebutt” – such as talking to employees and suppliers to get an idea about the company – when it came to selecting investments. And he was well ahead of his time in advocating for portfolio diversification away from traditional stock investments as part of an overall investment strategy.
In Common Stocks and Uncommon Profits, Fisher provides a comprehensive overview of different types of stocks and explains why investors should always focus on finding quality companies that can outpace the competition over long periods of time. In particular, he emphasizes identifying businesses with sustainable competitive advantages that can be monitized over time through fundamental research and analysis. He also warns against riskier investments such as penny stocks or those based on hunches, preferring instead to concentrate research time on well-known high quality companies run by competent management teams.
The Most Important Thing by Howard Marks
â€œThe Most Important Thingâ€ by Howard Marks is an essential read for any investor. In this book, renowned investor Howard Marks shares his knowledge and insight on market cycles, bubbles and corrections, investor sentiment and possible surprises in the stock market. Marks examines specific examples from the past to explain his techniques and offers a lesson for today’s environment. He dives into the importance of second-level thinking – which he defines as â€œattempting to anticipate how others will react to events,â€ – and he stresses being aware of one’s own biases when making investment decisions.
Marks goes beyond the mechanics of investing; he also provides sound advice on knowing yourself and developing your own style as an investor. He speaks at length about attaining humility in investing, which could’ve saved investors untold grief during the financial crisis.
As far as investment books go, we’d be remiss if we didn’t mention â€œThe Most Important Thingâ€ by Howard Marks – It’s a must-have addition to any investor’s library!
Margin of Safety by Seth Klarman
Margin of Safety by Seth Klarman is considered a classic in the world of investing. Originally published in 1991, this book is favored among many investors for its lucid explanation of conservative value investing principles and its focus on finding investments with a margin of safety to minimize risk and maximize upside potential.
Klarman’s strategies have served as the foundation for many successful investors, including Michael Burry, who spoke highly of it in his bestseller The Big Short. In Margin of Safety, Klarman emphasizes the importance of limiting downside exposure and drawing from many disciplines such as corporate finance, accounting, game theory and more. He explores topics such as:
- accrual accounting
- market inefficiency
- intrinsic value calculation
- tax considerations
- diversification principles
- stress testing investment decisions
- performance measurement methods
and much more to help you construct a portfolio that has maximum downside protection while capturing as much upside potential as possible. Whether you are new to investing or already familiar with value investment practices, Margin of Safety provides indispensable advice that any investor can benefit from.
Other Recommended Reading
While we highlighted Michael Burry’s top picks for investing books, there are plenty of other great books to read for investors looking to get a deeper understanding on the stock market or investing practices. Whether you are a beginner or an experienced investor, there are plenty of books out there that can provide valuable information and insights.
Let’s take a look at some of the other recommended reading options:
The Big Short by Michael Lewis
The Big Short, written by Michael Lewis, is a book about the build-up to the financial crisis of 2008. It provides a thorough account of how the odds were stacked against investors, and how so few saw what was coming until it was too late. The book focuses mainly on the activities of hedge fund manager Michael Burry, played by Christian Bale in The Big Short movie.
In addition to Burryâ€™s story and insight into the excesses of Wall Street during the boom times before 2008, it also offers perspective from other players in the subprime mortgage market such as money managers, traders and bankers. The Big Short reveals an industry recklessly playing with fire and convinced that luck would always be on its side.
Itâ€™s an essential primer for any investor who wants to understand how our financial system works – or doesnâ€™t work – and how so few saw what was coming ahead of time. It’s an entertaining read that has also informed our current approach to understanding risk management as we move forward with investments in these volatile times.
The Essays of Warren Buffett by Lawrence Cunningham
The Essays of Warren Buffett: Lessons for Corporate America is a compilation of Warren Buffettâ€™s letters to Berkshire Hathaway shareholders, compiled and edited by Lawrence Cunningham. Buffett uses the letters to provide insightful and uncommonly thoughtful advice on investing and business.
Through his essays, investors gain insight into the ways he assesses potential investments. He explains his investment philosophy in an entertaining and consumable way that makes it accessible for both experienced and novice investors. The concepts taught in these essays are proven methods for successful investing, many of which apply to all types of investments such as stocks, bonds, commodities, real estate, and any other investment vehicle.
Aside from the valuable lessons about investing that can be learned from The Essays of Warren Buffett, Cunningham includes topics such as
- financial disclosure regulations,
- corporate governance principles,
- corporate ethics guidelines,
- alternative compensation strategies for executives
and other important issues related to running a business or making investments. These essays are invaluable resources in helping you understand how good decisions should be made when investing your hard-earned money. Itâ€™s no surprise that this book has been highly recommended by Michael Burry as one of the best books on investing out there!
The Little Book of Common Sense Investing by John Bogle
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns is a book written by John Bogle, the founder of The Vanguard Group. This feature explains why index funds are the preferred investment and provides tips for creating a diversified portfolio, understanding fees and expenses, and adjusting asset allocations.
In this guide, readers learn why chasing short-term gains and investing with emotion often leads to losses over the long-term. Bogle recommends buying stocks and bonds directly instead of using expensive and complicated mutual funds that can underperform or fail in the market. He goes on to explain how an all-weather portfolio can withstand any adversity while limiting fees.
This book provides advice that appeals to investors at all stages of their investing lives. In addition to teaching readers how to construct a portfolio, it discusses common questions such as:
- Avoiding market timing mistakes
- Selling winners too quickly
- Missing out on great investment opportunities
Throughout these chapters there are small elements of wisdom illustrating why firm commitment coupled with low cost is essential for achieving financial goals.
The Essays of Warren Buffett by Lawrence Cunningham
The Essays of Warren Buffett: Lessons for Corporate America is a collection of writings from Berkshire Hathaway Chairman and CEO Warren E. Buffett. Written by Lawrence A. Cunningham, the book was released in 2001 exclusively in softcover editions by Cunninghamâ€™s imprint, Warren Buffettâ€™s longtime publisher, Cunningham Group Publications LLC based in St. Petersburg, Florida.
This compilation of Berkshire Hathaway letters to shareholders outlines how the firm’s unique investment strategies has allowed it to achieve remarkable results over the past several decades. The book chronicles Buffett’s views on investments and businesses and explains how one can make long-term investments with commitment and dedication. For example, readers develop an understanding of why certain stocks are worthy investments when they are bought at a price below their intrinsic values whenever possible.
Other topics highlighted include his advice on the importance of industry research before investing as well as evaluating financial statements carefully. Additionally, readers learn about managing money with a long-term view and can gain insight into why an individual should remain patient with their investments even during times of market volatility or distress. Furthermore, The Essays also provide sound financial advice about stocks, bonds and other different types of investments that readers may consider for their own portfolios going forward.
In conclusion, the two books that Dr. Michael Burry recommends are Margin of Safety by Seth Klarman and The Essays of Warren Buffet: Lessons for Corporate America by Warren Buffett and Lawrence Cunningham. These two books provide an in-depth review of investment strategies, principles, and tactics that investors can apply to their practice. Overall together they discuss fundamentals, long-term value investing, as well as risk management skills.
Furthermore, Dr. Michael Burry also recommends other books such as The Intelligent Investor by Benjamin Graham or When Genius Failed by Roger Lowenstein for further reading that share similar themes with the aforementioned books.