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Warren Buffett

Warren Buffett

Net Worth

$97,000,000,000

Born in (City)

Omaha, Nebraska

Born in (Country)

United States

Date of Birth

30th December, 1930

Date of Death

-

Mother

Leila Stahl Buffett

Father

Howard Buffett

Children

  • Susan Alice Buffett
  • Peter Buffett
  • Howard Graham Buffett

About

Warren Buffet is one of the most idolized, respected and imitated investors in the world. He has been a source of inspiration for entrepreneurs and venture capitalist everywhere. The buffet is known as the Oracle of Omaha, Maestro of Wall Street and Chairman Berkshire Hathaway. His name is considered to be synonymous with wealth and investing, a true modern icon of success. Warren Edward Buffet was born on August 30, 1930, in Omaha, Nebraska to his mother Leila and father Howard, a stockbroker, with his brokerage firm. The buffet was the second oldest, he had two sisters. Buffett has been the chairman and largest shareholder of Berkshire Hathaway since 1970. He has been referred to as the "Oracle" or "Sage" of Omaha by global media. He is noted for his adherence to value investing, and his personal frugality despite his immense wealth. Research published at the University of Oxford characterizes Buffett's investment methodology as falling within "founder centrism", defined by a deference to managers with a founder's mindset, an ethical disposition towards the shareholder collective, and an intense focus on exponential value creation. Essentially, Buffett's concentrated investments shelter managers from the short-term pressures of the market. Buffett is a notable philanthropist, having pledged to give away 99 per cent of his fortune to philanthropic causes, primarily via the Bill & Melinda Gates Foundation. He founded The Giving Pledge in 2009 with Bill Gates, whereby billionaires pledge to give away at least half of their fortunes.

Early Life

As a child Buffet would spend time at his father's firm, reading books that were there and writing numbers on chalkboards. He displayed an amazing aptitude for both money and business at a very early age. He also loved numbers and could calculate columns of numbers off the top of his head. Buffet credits his success and his love for reading to his father, who also introduced him to investing. At only six years old, he sold chewing gum and bottles of cola door to door. His grandfather owned a grocery store, where he would buy a 6 pack cola for 25 cents and sell them individually for a nickel each, earning a five-cent profit. He had many other such ventures including delivering newspaper for the Washington Post, finding and selling used golf balls and selling popcorn at football games at the University of Omaha. Five years later. Buffet took his first step into the world of high finance. When Buffet was eleven, his father took him on a trip to New York. He wanted to see the New York Stock Exchange, it was here that he realized that stock investing was where the money was when he saw a young boy rolling cigars for traders to keep them happy. Buffet made his first investment using the money he had saved up until then. He used $120 to buy his first stocks. He decided to buy shares for his sister and himself, in an oil and gas company called Cities Services. They each bought shares priced at $38.25 per share. But after investing in these, the price quickly dropped to around $27 per share, leaving Buffet scared and anxious. He held on and waited until the price increased to $40 when they sold it and made a small profit. But soon after he sold them, they increased up to $202 and Buffet realized that if he had waited he could have made a lot more. This ordeal taught him to be patient and not rush into a decision without reason. When he was a teenager he was very inspired by a book called,” The Intelligent Investor” by Benjamin Graham. Another of Buffet’s early ventures was in pinball machines. At 14, he and a friend bought a used pinball machine to put up in barbershops for customers to pay and use. The company was called Wilson Coin Company and they would split profits between themselves and the barber that owned the shop. The business was later sold to a war veteran for $1200. Buffet used the money that he saved up until now to buy his first property at the age of 15. He used around $1000 to purchase a 40-acre farm in Nebraska and hired a farmer who worked the land for him and they shared the profits. Buffet graduated from high school in 1947. His father persuaded him to go to college, though it was never his intention. Buffet attended the Wharton Business School at the University of Pennsylvania. He studied business for two years but was not happy as he felt that he knew more than the professors, so he moved to the University of Nebraska where he graduated at 19, earning his degree in Business Administration. While studying, Buffet also continued with his business ventures, this time instead of a paperboy, he was a Circulation Manager for the Lincoln Post and would oversee 50 other paperboys.

Road to Success

The buffet was very introverted and shy. He decided to take classes at Dale Carnegie public speaking course. He credits this to being one of the most important investments of his life. He began teaching night classes in investing at the University of Omaha. In 1954, he was contacted by Graham who offered him a job at his partnership. He moved back to New York to work there as a securities analyst. He spent most of his time at the partnership searching for opportunities and analyzing reports. There were aspects of finance that he was obsessed with, compound interest the most important. It was due to this that was able to amass wealth in the years to come. In 1956, Graham retired and closed his partnership. That same year, Buffet started his firm, Buffet Partnership Ltd. Seven family members and friends invested $105000, in total, with Buffet investing $100 himself. By the end of the year, he was managing $3000,000. In 1960, Buffet spoke to one of his partners who was a doctor and asked him if he could get 10 doctors to invest $10,000 each. By, 1962, the partnership was worth $7.2 million and Buffet merged all the partnerships. The minimum investment amount was $100,000. The Partnership continued to successful, in 1966 assets were rising over $44 million. Buffet used the techniques learnt from Graham to successfully identify undervalued companies, one such company was Berkshire Hathaway. He began collecting stocks in the early 1960s and by 1965 had assumed complete control of it. In 1968, the Buffet Partnership Ltd made a profit of $104 million. Buffet dissolved the partnership in 1969 as he was unable to find any bargains in the current market. He liquidated all the assets apart from Berkshire Hathaway. He distributed all the partners shared of Hathaway but kept his holding which stood at 29%. In 1965, after taking over Berkshire, he fired Stanton and announced Ken Chace as the new president of the company. He went on to invest in insurance companies and 1967, he bought the National Indemnity Company and National Fire & Marine Insurance Company. In 1970, Buffet assumed the position of Chairman of the Board at Berkshire Hathaway. In 1971, he made the biggest investment of his career. Through Berkshire Hathaway, he bought a company called, See’s Candy for $25 million. Berkshire Hathaway’s value rose from $20 per share to $95, between 1965 and 1975. A year later, he started buying shares in GEICO. The company became fully owned by Berkshire in 1996. The involvement of the insurance business in Berkshire Hathaway became a trademark park of Buffet’s success. Thanks to the insurance business, Berkshire Hathaway had a float of $ 39 million in 1970 and has risen to $100 billion. In the late 70s, Berkshire’s stock prices went up to over $290 per share and Buffet was worth around $140 million. In the 80s Buffet bought Nebraska Furniture Mart and also bought into Scott and Fetzer, paying $60 per share. In 1998, Berkshire began to buy shares in Coca-Cola and managed to own a share of 7% after two years, the share was worth over $1 billion. Buffet became a billionaire in 1990.

Challenges

In the late 90s, the lure of new dot.com companies was too appealing for most investors and it soon became a bubble. Buffet on steered clear of it. This impacted the Berkshire stock, which had gone from $81,000 to around $40,000 per share in 2008. The share prices recovered to their previous high once the bubble burst. Warren Buffet is not only admired for his business achievements, but also his philanthropy. Since 2000, he has donated more than $46 billion, making him the most charitable billionaire. As of 2020, his net worth is $73.3 billion. Although Buffet had no interest in technology companies, in 2013, he bought a 13% stake in VeriSign, which holds exclusive rights to the dot.com domain. Throughout 2008, he acquired large stakes in companies such as Goldman Sachs and General Electric. Buffet made over $10 billion in profit from the deals he made between 2008 and 2011. This is despite the drop in profits by 62% in 2008. Buffet’s most genius investment in Bank of America. An investment of $5 billion in warrants, made him a profit of $12 billion by 2017.

Failures

After graduation, Buffet wanted to go to Harvard Business School, as he thought it would be more mentally stimulating, but he was rejected. Instead, he went the Columbia Business School to study for his masters, as this was where his inspiration, Benjamin Graham was at the time. Graham went on to become one of the most influential people in his life, second to his father. After the completion of his studies, Buffet was keen to work on Wall Street, both Graham and his father pleaded with him not to. Buffet even offered to work for Graham for free, when he discovered that he was on the Board of GEICO Insurance, but was rejected, so he returned to Omaha and started working at his father’s firm.

Achievements

He was presented with the Presidential Medal of Freedom by President Barack Obama in 2011.|He is the chairman and CEO of Berkshire Hathaway and ranks among the world’s wealthiest people. Considered to be the most successful investor of the 20th century, he is also the biggest philanthropists of our times and had pledged to donate most of his fortunes to social causes.

Quotes

  • We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
  • Price is what you pay. Value is what you get.
  • The most important investment you can make is in yourself