YW Blogcast 19 - Who did Warren Buffett learn from?

Chances are that even the most clueless among us have at least heard the name of uber-investor, Warren Buffett. If you’ve had a few too many margaritas, you might be thinking about Jimmy, who makes a pretty good living himself singing songs about warm places and palm trees. Back to Warren though, who is generally credited as perhaps the most successful investor today.

When Warren Buffett took control of the company Berkshire Hathaway in 1964, its market capitalization was $22 million. 35 years later that has grown to $115 billion. Obviously, Mr. Buffett knows a little about creating wealth through the stock market but where did he learn his tricks?

Turns out that Buffett’s mentor was a man by the name of Benjamin Graham, who was working as a partner in a brokerage when the stock market crash and subsequent Great Depression hit in the 1920′s and 1930′s. He lost all his personal fortune but went on to gain it back and learned a little about investing and human nature in the process. Graham’s skills at financial analysis were superlative. At the age of 25 he was already earning $600,000 yearly – keep in mind this was in early 20th century dollars.

The important thing to remember about Benjamin Graham is that he and David Dodd wrote a book called Security Analysis, in which the pair proposed their belief that investing takes research, training, and experience to be successful, and that speculating was nothing more than irrational gambling.

Though written in 1934, the fundamental wisdom holds rock solid today. You would be well served to begin your investing career by finding a copy of this financial masterpiece.