Most people know of Michael Burry from the Oscar-winning 2015 film “The Big Short,” in which the former medical doctor turned hedge fund manager (who was one of the first investors to short subprime mortgages via credit-default swaps) is played by Christian Bale.
The film (based on a Michael Lewis book of the same name) is an origin story about the mid-aughts financial crisis that gave the general public a unique glimpse into the inner workings of Wall Street.
But if you were dialed into the investing world back in the late 90s and early 2000s, you were already familiar with Burry, an active blogger and web forum poster who taught himself how to invest by reading books and conducting his own online research.
In one famous 1997 post on a forum called The Silicon Investor, Burry was asked about his reading list. That page is no longer active, but you can still view it on the Wayback Machine.
Here’s what Burry wrote back then, along with a few comments from me on each of the books.
The Original Post
To get started, I’d suggest the following four books:
The Intelligent Investor by Graham
Common Stocks and Uncommon Profits by Fisher
Why Stocks Go Up and Down by Pike
Buffettology by Buffett and Clark
If you read these books thoroughly and in that order and never touch another book, you’ll have all you need to know.
Another book you might want to consider is Value Investing Made Easy by Janet Lowe – a quick read. I have a fairly extensive listing of books on my site, with my reviews of them, and links to purchase them at amazon.
My problem is I’ve read way too much. One book stated, “If you’re not a voracious reader, you’ll probably never be a great investor.” But sometimes I wish I had a more focused knowledge base so that my investment strategy wouldn’t get all cluttered up.
Re: Security Analysis you can get a lot of the same info in a more accessible format elsewhere, but everyone says that Buffett’s favorite version is the 1951 edition. Yes there are differences, and the current version has a lot of non-Graham like stuff in it.
Good Investing, Mike
Michael Burry’s Recommended Reading List
Here are the six books Michael Burry’s recommends in that post.
#1. The Intelligent Investor by Benjamin Graham
A classic book on value investing, The Intelligent Investor is a popular favorite among the greatest investors of all time. Written by Benjamin Graham in 1949, and updated many times since, its lessons remain timeless.
An example of one principle often cited today, and utilized by Burry in 2008, is that of “Mr. Market,” which expands upon the idea that short-term prices are determined by an investor’s mood and not fundamental analysis.
Or, as Graham famously explained, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.“
#2. Common Stocks and Uncommon Profits by Philip A. Fisher
Warren Buffett has said that his own investment approach is 85% Benjamin Graham and 15% Phillip Fisher.
Graham stuck in his lane as a value investor; he knew how to identify companies going for deep discounts to book value.
Phillip Fisher’s approach, which he lays out in this book, was the opposite — he wanted to find companies that were priced well and bound to grow, which could also be held for a very long time.
In other words, he was an advocate for growth investing.
#3. Why Stocks Go Up and Down by William H. Pike
Being able to read a financial statement to learn whether a company is valued correctly is a core skill for value investors. And for decades, William Pike’s Why Stocks Go Up and Down has been a top recommendation for investors to learn this skill.
Last updated in 2013, there’s little technical theory in this book. Instead, it’s heavy on practical application for understanding financial statement analysis, cash flow generation, stock price valuation, and more.
#4. Buffettology by Mary Buffett and David Clark
As with many investors, Burry learned a lot from following Warren Buffett. The book Buffettology takes a deep dive into Warren Buffett’s investment approach.
Updated in 2002 under the name The New Buffettology, the book reviews decades of Buffett trades and dives into the lessons you can learn from them.
#5. Value Investing Made Easy by Janet Lowe
The subtitle of this book is “Benjamin Graham’s Classic Investment Strategy Explained for Everyone.”
So, again, Graham’s influence on Burry is clear.
It’s worth noting the placement of this book at #5 on the list. Personally, I benefit from reading easier books first, working my way up to more advanced books.
Burry lists some of the easier books (like this one) towards the bottom. My guess would be that’s because he sees this book as too basic a guide for making serious trades, but a good review of the fundamentals.
#6. Security Analysis by Benjamin Graham (1951 Edition)
Graham wrote The Intelligent Investor with the aim to teach value investing to the masses. Security Analysis, on the other hand, is the more technical book, aimed at those looking for a deep dive into value investing.
My guess is there’s a reason Burry puts this last on the list — because you’ll need the foundation from the books above to understand the advanced concepts Security Analysis discusses.
Michael Burry’s Recommended Reading List — Part #2
If you read the book version of The Big Short, you might catch that there’s one book recommended by both Burry and Jamie Mai (the president of Cornwall Capital).
That book is You Can Be A Stock Market Genius by Joel Greenblatt.
Burry’s remarks on the book, were:
“I hated the title but liked the book.”
As The Big Short goes on to say:
As he scrambled to find office space, buy furniture, and open a brokerage account, he received a pair of surprising phone calls. The first came from a big investment fund in New York City, Gotham Capital. Gotham was founded by a value investment guru named Joel Greenblatt. Burry had read Greenblatt’s book You Can Be a Stock Market Genius. (“I hated the title but liked the book.”) Greenblatt’s people told him that they had been making money off his ideas for some time and wanted to continue to do so—might Mike Burry consider allowing Gotham to invest in his fund? “Joel Greenblatt himself called and said, ‘I’ve been waiting for you to leave medicine.'”
Joel Greenblatt is a very well respected name in investing today, although his book titles often make it sound like you’re buying into a get rich scheme. He’s currently an adjunct professor at Columbia University Graduate School of Business, in addition to running Gotham Capital.
The book discusses a type of investing Greenblatt has become known for: value and special situations investing. The idea behind the approach is to find events that have little to no impact on the underlying fundamentals of a company, but which devalue the company’s stock price.
While there are many varieties of special situation investing, one example would be investing in companies that recently incurred some bad PR. Perhaps their CEO left, Elon Musk tweeted about them, or they physically assaulted a passenger on their airline (all real examples). Nonetheless, the stock declined based on these events, and was therefore a buying opportunity because the fundamentals had not changed.
While the book doesn’t sell as many copies as The Intelligent Investor, it’s a clear favorite among many of the world’s best investors today.
Investing in yourself is something we talk about a lot on The Ways To Wealth. And for good reason: building valuable skills is one of the straightest paths towards improving your life and increasing your wealth.
Burry spent his time building his skills in investing. And without a typical Ivy League education or Wall Street resume, he spotted an opportunity few others saw. This is what makes his story so inspirational for many investors out there, and serves as a poignant example of how focusing on self-improvement can lead to great outcomes.
While you may not spot the next housing bubble before everyone else, enhancing your knowledge about investing can help you make better overall decisions and speed up your progress towards your financial goals.