Warren Buffett

Warren Buffett - toolshero

Warren Edward Buffett, born on 30 August 1930, is an American investor and businessman. Buffett is the CEO, chairman, and largest shareholder of Berkshire Hathaway, a multinational conglomerate holding. Buffett is considered to be one of the richest people and most influential philanthropists of today.

Warren Buffett Biography

Warren Edward Buffett is one of the three children of Howard and Leila Buffet. Later dubbed the ‘Oracle of Omaha’, Buffett started trading at the age of 6. While other children were playing outside, Buffett bought six cola cans from the local supermarket and started making money. He sold the cans with a five-cent profit per can and saved up a modest amount.

Five years later, at the age of 11, Buffett bought his first shares for himself and his sister Doris. He paid $38 for the shares in Cities Service Preferred. Right after his purchase, the stock price of the share dropped with $11 to $27 per share. The disappointed but resilient Buffett kept the shares until they rose to a value of $40. Although he made a profit with his first transaction, Buffett learned that patience is a virtue in the financial world; the value of the shares rose quickly to $200.

The state where Buffett grew up took a significant hit from the Great Depression. This taught Buffett, and many others with him, to respect the value of money. In fact, he valued this to such an extent that he started living in a YMCA youth hostel to spend less money on his living expenses. At the age of 13, Buffet got his first job as a paper boy. His first goal, to make $1,000, was achieved the following year, in 1944.

Warren Edward Buffet started his studies at the Wharton School of the University of Pennsylvania in 1947. Two years later, he transferred to the University of Nebraska-Lincoln. Eventually, he graduated from Colombia University in 1951 with a master of science. Here, he learned to develop his investment philosophy and was taught by Benjamin Graham and David Dodd. He would meet Benjamin Graham again later.

Warren’s father and Benjamin Graham impressed upon Buffett not to work on Wall Street after graduating. Therefore, he started working at his father’s company, Buffett-Falk & Co., after graduating. He started as investment salesman at this company. During this period, Buffett had saved up nearly $10,000. It demonstrates his exceptional insight into the financial world.

In 1954, he started working for Benjamin Graham in a new partnership. Benjamin Graham was a difficult man. He expected Buffett to do everything he’d been taught and to comply with the conventional rules of investing. Buffett, however, had a very different view and questioned these rules. Benjamin Graham quit the partnership in 1956, after which he retired. By then, Buffett had built a significant network and completed seven limited partnerships in 1956. In doing so, he started Buffett Associates Ltd., an investment firm in Omaha.

He invested $100 in the company himself and before the end of the year, Buffett managed approximately $300,000 of capital. Although he was pleased with his first results, he remained particularly ambitious to further expand his empire. He bought his first house ‘Buffett’s Folly’, and managed all the partnerships from one of the bedrooms. This house was the place where Buffet’s life began to take shape. He had a beautiful wife, had three children, and was the founder of a very successful company. In the years after, Buffet proved himself by achieving a profit of 250%, where the Dow only increased with 74%. In 1962, Buffett made his first million. By 1965, he had over 90 partners in the United States. In a new strategy, he merged these partnerships into a single company: Buffett Partnerships Ltd. He raised the minimal investment to 100,000 dollars and started his office on Farnam Street, Omaha.

Around 1962, one Charlie Munger moved back to Omaha from California. People describe him as a snob, but this man was brilliant. He attended Harvard Law School without a bachelor’s degree. Buffett and Munger were introduced to each other by mutual friends and felt an instant attraction. This was the basis for a close friendship and a successful business collaboration that would change lives the coming 40 years.

A few years after the Buffett Partnership Ltd was founded, the company’s assets increased by over 1,000%, equalling total assets of $44 million. The most successful year, however, was 1968 when the profit increase amounted to 59% and total assets of $104 million. In the meantime, the company had started to invest in Berkshire Hathaway, a textile factory. He started buying the shares in the early ’60s and eventually took over control. In the late ’60s, Berkshire Hathaway bought a 12% interest in Salomon Inc, making them the biggest shareholder. Buffett became the director and, after a scandal in 1990, took over the position of CEO John Gutfreund in 1991.

Buffett started buying Berkshire shares from the Coca-Cola Company around 1988. They did this for several years and eventually bought 7% of the company worth $1.02 billion. It turned out to be one of the company’s best investments ever. He signed over $11 billion worth of contracts to deliver dollars to other currencies in 2002. In 2006, he had made over $2 billion. In that year, he also announced he wished to donate the bulk of his immense fortune to charity, of which the majority was to go to the Bill and Melinda Gates Foundation. This foundation received over $28 billion in Berkshire Hathaway shares from 2014.

In 2008, Warren Buffett became the richest person in the world with a total net worth of $62 billion, as reported by Forbes. This meant he passed Bill Gates, who had been the number one the previous thirteen years. The following year, in 2009, Gates reclaimed his first place.

Warren Buffett remained a successful man. In 2011, he invested in International Business Machine Corp (IBM). In 2012, he bought Media General, a collective that included over 60 newspapers in the southern United States. Despite the fact that many of Buffett’s successful contemporaries retired, Buffett continued to exert significant influence on the activities of Berkshire.

Warren also had an eventful personal life. His first wife, Susan, passed away in 2004. Although they never got divorced, Buffett had a relationship with Astrid Menks for 20 years, which was approved by Susan. They married in 2006. It is also known that Buffett has financed various political, democrat campaigns, including campaigns of Hillary Clinton and Barack Obama.

Warren Buffett quotes

  1. “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
  2. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
  3. “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
  4. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
  5. “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
  6. “I just sit in my office and read all day”
  7. “Be fearful when others are greedy and greedy when others are fearful.”
  8. “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
  9. ‘’Risk comes from not knowing what you’re doing.’’

Publications and Books by Warren Buffett et al.

  • 2001. Warren Buffett on the stock market. Fortune Investor’s Guide, 80-94.
  • 2001. The essays of Warren Buffett: lessons for corporate America. L. Cunningham.
  • 2012. Warren Buffett: Why stocks beat gold and bonds. Fortune, February, 27.
  • 2010. Warren Buffett on business: Principles from the sage of Omaha. John Wiley & Sons.
  • 2002. Berkshire Hathaway Inc. Shareholder Letter.
  • 2002. Berkshire Hathaway Annual Report. Berkshire Hathaway Chairman’s Letter (21 Feb. 2003).
  • 2002. Who really cooks the books?. New York Times, 24, A19.
  • 2010. My philanthropic pledge. Retrieved June, 3, 2011.

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