Best known as the “Oracle of Omaha,” Warren Buffett is an investment pundit, business magnate, and philanthropist. He is the CEO of an American conglomerate, Berkshire Hathaway, headquartered in his hometown, Omaha, Nebraska in the USA.
Acing the third position in Forbes annual list of billionaires in 2018, Buffett had a flair for wealth accumulation from a tender age. ”I always knew was going to be rich.
I don’t think I ever doubted it for a minute.” Conducting what seemed like simple business at the age of 6 after his aunt gifted him with a nickel coated money changer, Buffet bought his first shares at 11 and never looked back.
His success in investing, whether in stock or acquiring whole businesses, is based on one principle; patience. He identifies his prey, waits patiently for the stock price to decline to the desired level, buys when the price is well below the value of the company and holds on to it forever. Buffett is a keeper.
Buffett’s ability to amass enormous wealth is hitched on how he controls his expenses. He doesn’t let his possessions possess him.
Besides investing his money, he gives it away to some charities around the world. “I’m not interested in cars, and my goal is not to make people envious. Don’t confuse the cost of living with the standard of living.” He has been named as a top philanthropist over the last years.
Buffett’s investing career started way before he knew much about life and was in a significant way influenced by his family making him develop the great love for it. That explains his thoughts, “In the world of business, the people who are most successful are those who are doing what they love.”
As an enticement to eat his asparagus, his aunt Alice promised to give him a stopwatch, which upon receiving, Buffett was fascinated by the counting machine.
But when he turned 6, she gave him a nickel coated money changer changing his fascination from just numbers to money. He started selling Chiclets to those who passed outside his house and went door-to-door selling soda pop and chewing gum.
His entrepreneurial skill grew as he sold magazines in his neighborhood and during local football games, popcorn, and peanuts.
Having been introduced to the stock market by his father and visited the New York Stock Exchange at the age of 10, Buffet bought his first shares at 11. He chose one of the companies his father loved, Cities Service, and with his savings paid $114.75 for the three shares.
The following weeks would see Buffett fretful as the stock value declined by 30% making him wonder if he would profit. A while later, the share rose to $40 each and Buffett sold for a $5 profit.
To his surprise, the company’s share value continued to rise to $202 a share indicating that Buffett had rushed into selling.
He learned two tough lessons; one, never to be distracted by the price paid for a share and two, not to be satisfied by small profits. With that, he coined his principle of patience in investing. These lessons added to spending time in brokerage firms in Omaha were among the pillars of his future endeavor.
Upon moving to Washington with his family, Buffett’s affair with the stock market slowed down. He instead turned his interest to delivering newspapers; Washington Post and Times-Herald at 13.
With a friend while in high school, Buffett bought refurbished pinball machines at $25 each and placed them at local barber shops. On the first day, he found a total of $4 in nickels in the first machine and later earned him $50 every week.
Joining Columbia Business School gave Buffett a refined taste in trading stock causing him to re-enter the market. He learned the importance of understanding the core values of companies he desired to buy stock from. By the end of his time there, he asked his tutor to hire him in his brokerage venture, but his plea was declined.
He returned to Omaha and began working at his father’s brokerage firm; Buffett-Falk Company as a stockbroker.
Seeing that he had difficulties holding conversations with possible clients, Buffett enrolled for a public speaking course with Dale Carnegie, the author of ‘How to Win Friends and Influence People’. With new confidence, Buffett became a witty storyteller, winning people’s hearts over and over.
In 1954 Buffett was offered a job as a security analyst for Graham-Newman, a company that belonged to his tutor. Buffett’s desire to work for him and continuous communication bore fruit; he left Omaha and returned to New York to take up the job.
1956 would see his tutor retire, moving Buffett with an offer to buy his shares but he declined. The partnership disbanded, and he returned to Omaha again ready to start his alliance.
From 1957 onward, Buffett focused on his partnerships. He grew from the first, Buffett Partnership where he was a general partner and kept adding to it others until 1960 when he ran 7 of them. He invested 35% of the partnerships’ assets in buying Sanborn Map Company’s shares @$45 while the company’s portfolio showed they were worth $65.
Buffett merged all his partnerships into one and invested in Berkshire Hathaway, a textile manufacturing firm by then. He kept buying the shares from Seabury Stanton, the owner.
He got the shares at $14.86 while they were worth $19 and after that took control of the company, changing its core business to the insurance sector.
Beginning of 1979, Berkshire Hathaway’s shares sold at $775, giving Buffett more muscles to acquire stocks from other firms. They included the Washington Post Company, Wesco Financial Corporation, Buffalo Evening News, Capital Cities and Salomon Inc.
where he became the largest shareholder and director. His best investment was the Coca-Cola Company where he paid $1.02 billion for up to 7% of the company.
Buffett hit the billionaire mark when Berkshire Hathaway’s Class A shares sold at $7, 175 a share in mid-1990. With his growth in the industry making large strides upwards despite a few shakes while acquiring other companies, in 2006 Buffett pledged to donate 85% of his company’s stocks to 5 charities.
The recession crisis between 2007 and 2008 saw Berkshire Hathaway making losses that brought down its 3rd Quarter 2008 earnings by 77%. Though a considerable shake-up, Buffett went on to acquire 10% perpetual preferred stock of a multinational investment bank, Goldman Sachs.
By the end of 2008, Forbes reported Buffett as the Richest person in the world putting him ahead of Microsoft’s CEO, Bill Gates.
Though 2009 saw him drop to the second place, Buffett acquired stocks from General Electric Company and sold some from Johnson & Johnson and Procter & Gamble Co.
Berkshire Hathaway was named as the 18th largest corporation in the World.
Buffett’s ability to grow Berkshire Hathaway went through times of trials that included mistiming on when to sell stock time and again.
He didn’t claim to be a genius though many people saw him as one. Instead, he took what seemed like baby steps to grow. “I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”
In the 3rd Quarter of 2014, Buffett’s Berkshire Hathaway capitalized at $328 billion.
Owning over 60 companies including battery maker Duracell and Geico, an insurer the corporation had $108 billion in cash and cash equivalents as of September 2017. It is through it that Buffett provided over 377,000 employees with full-time jobs as of 2017.
Being a keeper, Buffett is keen to surround himself with people with high values both at work and at play. He says, “Tell me who your heroes are, and I’ll tell you how you’ll turn out to be.”
Named on several occasions as a top philanthropist in the world, Buffett and his close friend Bill Gates started The Giving Pledge in 2010.
Through the foundation, they encouraged wealthy people around the world to give at least half of their wealth to charity in the course of their lives.
Since 2006, Buffett has donated over $30.9 billion to various charities, with a considerable portion of the total going to Bill and Melinda Gates Foundation. He and his late wife planned to give their wealth after they had taken care of their family; a commitment he has lived to make right.
He observes annual donation where he gives shares of his corporation, Berkshire Hathaway to charities which in turn sell the shares to finance their work. It’s clear; Buffett’s wish is for the money to be spent.
Though his initial target to hit the millionaire mark was at 35, Buffett became a millionaire after he merged his partnerships and invested his money in Berkshire Hathaway at around the age of 32.
Since then, the Oracle of Omaha continued to acquire smaller companies with great potential and in 2008; he was named the wealthiest man in the world. His net worth stood at $62 billion.
Even after giving a considerable share of his wealth to charities and sometimes making losses in his investments, Buffett’s net worth continued to rise and was recorded at $83.7 billion on August 4, 2018.
Warren Edward Buffett was born on August 30, 1930, in Omaha, Nebraska. Of the three children, he is second and the only son to Leila Stalh and Congressman Howard Buffett.
Growing up in Omaha, Buffett witnessed a time when his father lost his job at the bank to the great depression. But with his grandfather’s support, his father pulled through and co-founded a company. From that experience, he developed an entire drive to acquire lots of wealth.
Studying at Rosehill Elementary School, Buffett loved numbers and in particular Math. He was able to remember columns of numbers in the way they appeared giving him a winning edge against other children.
Having moved to Washington DC from Omaha after his father was elected in US Congress in 1942, he proceeded to join Alice Deal Junior high and later graduated from Woodrow Wilson High in 1947. All along, he ran one or the other business, saving his money to invest on a better deal.
His initial desire was to go straight into business instead of college but his father, who he was very fond of, advised him to proceed to college.
At 17 years of age, Buffett joined University of Pennsylvania, Wharton School and studied for two years while still pursuing his business ventures.
At 19 he transferred to the University of Nebraska where he graduated with Bachelor of Science in Business Administration.
Being an avid reader, Buffett read a book, ‘Intelligent Investor’ by Benjamin Graham. Upon learning that Graham was teaching at Columbia Business School, he opted to join the school.
He graduated with a Master of Science in Economics in 1951. Meeting Graham had a high impact on Buffett that even after proceeding to New York Institute of Finance, he kept his advice at heart.
Part of Buffet’s future success in business was attributed to Graham’s words. On several occasions, Buffett would say, “The basic ideas of investing are to look at stocks as business, use the market’s fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.”
After taking a public speaking course, Buffett found the courage to propose to his then-girlfriend, Susan Thompson at the Dundee Presbyterian Church in Omaha in 1952. They got three children; Susan Alice, Howard Graham, and Peter.
Buffett lived with his wife until 1977 when she moved to San Francisco desiring to pursue her career in singing. Though they remained married and in functional terms, this decision left Buffett distraught.
Two years after Susan’s death, he married Astrid Menks, his longtime companion on his 76th birthday.
Buffett met Menks through Susan, and she encourages her to take care of him. She approved of the relationship to the point of signing Christmas cards to friends as “Warren, Susie, and Astrid.”
Buffett announced that he had been diagnosed with prostate cancer in early 2012 and had to undergo two months of daily radiation treatment. Later that year he said he was glad to have completed the cycle.
Besides running Berkshire Hathaway, Buffett enjoys playing bridge and reading books for his personal growth. “The most important investment you can make is in yourself.”
Mini Biography: https://www.nasdaq.com/article/who-is-warren-buffett-cm207761
Mini Biography – Warren Buffett Way: https://www.wiley.com/WileyCDA/Section/id-817934.html
Net Worth: https://www.forbes.com/profile/warren-buffett/#44d41db94639
Interview with CBS News: https://www.cbsnews.com/news/person-to-person-warren-buffett/