Warren Buffett – Life Story of the Investment Guru

Introduction

Warren Edward Buffett, a well known and highly acclaimed businessman, investor, philanthropist and the great CEO and Chairman of Berkshire Hathaway was born on August 30, 1930, in Omaha in Nebraska.

He was born to his mother named Leila and his father Howard. He had two sisters and was the second oldest among them.

His is father was a stockbroker, who later turned became a Congressman in America. From his childhood days, Warren displayed potential and an amazing aptitude for money and business.

Early Childhood

In his early childhood, unlike others, he displayed immense ability for finance and business. His friends often said that he was a mathematics genius, who could count large columns of numbers in his head. Buffett went to Rose Hill Elementary School in Omaha. As a young boy, he always was a lover of numbers and also had a particular interest in collecting things like stamps and bottle caps. At a very small age of 6 years, he demonstrated his business skills, by making a profit of 5 cents on the purchase of six coca-cola packs from his grandfather’s grocery store. He was very close to his father and took inspiration from him and also credits his success to him. He also said that he was introduced to investing and books by his dad and from there his love for investing and reading evolved. His passion for business increased after reading a book called “One Thousand Ways to Make $1000”. As a child, Buffett told a friend that if he wasn’t a millionaire by 30 he would jump off the tallest building in Omaha.

He also involved himself in many small ventures such as finding and selling used golf balls and selling popcorn at football games at the University of Omaha. At the age of 11, he wanted to see the New York Stock Exchange, The Scott Stamp and Coin Company and The Lionel Train Company. When he first saw the NYSE for the first time, he understood that this is the place and stock investing is the place where money is.

He made his entry into an investment at the age of 11 years, where he made his first investment in the Cities Service Preferred by buying its three shares at $38 per share. The rate of the stock dropped to $27 per share, but he didn’t lose his patience and adhered to hold it, till it reached $40 per share. He booked a small profit in this investment, which he later regretted when the stock price rose to $200 per share. This experience is often cited by him as his early days learning of having patience in investing. 

In 1942, Buffett’s father was elected to serve his first term as a US Congressman. Hence the family had to move to Washington D.C. He then attended Alice Deal Junior High and then went on to Woodrow High School. While he was in High School, he started Stable Boy Selections with his friend, which was a horse racing tip sheet. They both would use mathematical odds to work out tips and type them out on a typewriter. This could not continue for long as they did not have the licence for that.

Warren spent days watching his father and other investors and would often listen to what they talk. As a teenager, he got himself involved in car washing, delivering newspapers etc, to save money. He was earning and saving good money from his small ventures of distributing papers for The Washington Post, and also distributed the papers for the competitors on the same route. It could be said that business was in his blood. He spent hours reading books in his early days and continued doing this for the rest of his life. Reading is something which he says is one of the key reasons for him to be successful. It is said that he read over 600 to 1000 pages a day in his early career and still was devoted to reading books in his later career. He almost spent 80% of his time reading in his late-career.

At the age of 14, he and a friend stepped into the pinball business in which they used to buy used pinball machines to be put in barbershops for customers to pay to use. The company was called The Wilson Coin Company and they would split profits between themselves and the barber. This is how he kept himself involved in business and made money. He bought his first property at the age of 15 and spent $1200 to purchase a 40-acre farm in Nebraska.

Further Education – A beginning to the world of Investing

His entrepreneurial business journey was going well, hence it did not compel him to attend college for further studies. However, his father urged and enrolled him at the University of Pennsylvania at the age of 16 to study business. He stayed two years, moved to the University of Nebraska to finish up his degree, and emerged from college at age 20 with nearly $10,000 from his childhood businesses. He was rejected at the Harvard Business School and so he enrolled himself at the Columbia Business School and received his master’s degree in 1957. He studied under economist Benjamin Graham and furthered his education at the New York Institute of Finance. He studied under Benjamin Graham, who became his lifelong friend and David Dodd, both well-known securities analysts. He learned the fundamentals of value investing, under Benjamin’s class of securities analysis. He learned from these investors, and this changed his life and set him on the path of professional analysis to the investment markets. This changed his life completely and he entered into an altogether different world of investing. He considered Graham, as the second most influential person in his life after his father. After reading his book “The Intelligent Investor”, he fell in love with the book and later said that it was the best book about investing ever written in history.

Buffett, himself considered that his investment patterns were 85% Benjamin Graham’s and 15% Phil Fisher’s. He was able to find assets that were valued at a lower cost than they could be worth. After his studies, he was keen to start working on Wall Street, but his father and Benjamin were not in his favour. He even wanted to work with Graham, but he refused to do so. So Buffett had to move back to Omaha and work with his father in the brokerage firm. 

After his studies, he enrolled himself on the Dale Carnegie public speaking course, and this is again said to be one of the most important investments he made in his life. He was a shy introverted person and he said that he couldn’t be what he is today if he didn’t do these classes. In Omaha in 1952, he got married to Susie and had their first child.

Berkshire Hathaway’s Entry into his Life

It was in 1956, Buffet formed the firm Buffett Partnership Ltd. in Omaha, utilizing the techniques and strategies learned from Graham. Since he could judge and identify undervalued companies, he utilized this to become a millionaire. One such enterprise, he valued was a textile company named Berkshire Hathaway which was owned by Seabury Stanton. He first started to buy the stocks of that company in the early 1960s and by 1965 took control of the company. Buffett tried to stick with the textiles part of the business at first but soon he realised that there was not so much profit in it. He then started investing in insurance companies, and in 1967 bought the National Indemnity Company and National Fire and Marine Insurance Company. In the year 1970, he made himself the Chairman of the Board at Berkshire Hathaway and wrote his first letter to the shareholders. These letters however were often studied by other investors around the world.

Buffett’s Trademark Moves

In 1971, Buffett made one of his biggest investments until then and bought a company, ‘See’s Candy’ for $25 million in cash. This became a trademark move for his business, in investing in companies that had a competitive advantage over others in the industry. In a few years, Berkshire’s value increased from $20 to $95 per share. In 1976, Buffett began buying shares in GEICO, a company that was running in losses. It was run by Mr Lorimer Davidson, and after a conversation with him, Buffett realized that the company’s fundamentals were good, but it was just that it was not very well managed. So he kept buying in it and eventually bought the company in 1996. Later he made a lot of investment in insurance companies, and this again proved to be one of his trademark moves of that time. 

In the late ’80s, Berkshire began to buy shares of Coca Cola and soon held a 7% stake in the company. It was in the ’90s that Buffett became a billionaire. In the ’90s when dot.com companies were luring most of the investors, he kept his calm and stuck to his long term investing policy. He did not have a big interest in technology companies, it was then when Berkshire share price came down to $40,000 from the high of $81,000 per share.

During the international financial crisis of 2007 and 2008, he was criticized for allocating the capital too early and not getting the best deal out of it. He then invested in General Electric and Goldman Sachs and gained a big profit of $10 billion from his deals in 5 years. 

His investment in Bank of America is again considered to be a genius move. He has also served as director of Citigroup Global Markets Holdings, Graham Holdings Company and The Gillette Company. Highly successful and accomplished, the “Oracle of Omaha” had an extraordinary capacity to convert poor investments into gold, through his immense knowledge and passion for investing.

In the year 2012, Buffett disclosed that he had been diagnosed with prostate cancer. He began the treatment and completed it. The health challenges never stopped and slowed him, and he continued to be ranked amongst the top world’s billionaires list. In February 2013 Buffett purchased H. J. Heinz with private equity group 3G Capital for $28 billion. Berkshire Hathaway future investments were with Duracell and Kraft Foods Group. In 2016 Buffett launched Drive2Vote, a website aimed at encouraging people in his Nebraska community to exercise their right to vote, as well as to assist in registering and driving voters to a polling location if they needed a ride. 

Philanthropist – Warren Buffett

Warren Buffett is considered one of the great philanthropists in the world’s history. The billionaire investor has donated $37 billion worth of Berkshire Hathaway stocks to date, as a part of his pledge to give away most of his substantial fortune. Warren disclosed that he denoted $2.9 billion worth of stock to nonprofit groups, as the 90-year-old billionaire investor continues to follow his pledge to give away nearly all his fortune to philanthropic causes by the time he dies. 

In February 2011, Buffett received a Presidential Medal of Freedom, which is America’s highest civilian honour at the White House. It was awarded by President Obama, who said the people being awarded were “some of the most extraordinary people in America and around the world”.

Warren Buffett also said that he has given the share in Berkshire Hathaway to five organizations, namely the Bill and Melinda Gates Foundation; the Susan Thompson Buffett Foundation, the nonprofit named for his late wife; and three groups founded by his children, Howard, Peter and Susie. Mr Buffett and Mr Gates founded the Giving Pledge, a nonprofit that encourages fellow tycoons to promise to give away at least half of their wealth over their lifetimes. Among the Gates Foundation’s recent philanthropic focuses is the coronavirus; it has been utilized in the development of Covid-19 vaccines and paid to help distribute them to poorer countries. 

Looking at the life of Warren Buffett, it’s very much clear that he is a man who lived by principles and integrity. This includes his investment decisions, which always followed fundamental rules that he stuck to, as well as his private life. Although earning huge wealth, he always lived a humble life and always appreciated the people who were associated with him.

Warren Buffett – Life Story of the Investment Guru

Introduction

Warren Edward Buffett, a well known and highly acclaimed businessman, investor, philanthropist and the great CEO and Chairman of Berkshire Hathaway was born on August 30, 1930, in Omaha in Nebraska.

He was born to his mother named Leila and his father Howard. He had two sisters and was the second oldest among them.

His is father was a stockbroker, who later turned became a Congressman in America. From his childhood days, Warren displayed potential and an amazing aptitude for money and business.

Early Childhood

In his early childhood, unlike others, he displayed immense ability for finance and business. His friends often said that he was a mathematics genius, who could count large columns of numbers in his head. Buffett went to Rose Hill Elementary School in Omaha. As a young boy, he always was a lover of numbers and also had a particular interest in collecting things like stamps and bottle caps. At a very small age of 6 years, he demonstrated his business skills, by making a profit of 5 cents on the purchase of six coca-cola packs from his grandfather’s grocery store. He was very close to his father and took inspiration from him and also credits his success to him. He also said that he was introduced to investing and books by his dad and from there his love for investing and reading evolved. His passion for business increased after reading a book called “One Thousand Ways to Make $1000”. As a child, Buffett told a friend that if he wasn’t a millionaire by 30 he would jump off the tallest building in Omaha.

He also involved himself in many small ventures such as finding and selling used golf balls and selling popcorn at football games at the University of Omaha. At the age of 11, he wanted to see the New York Stock Exchange, The Scott Stamp and Coin Company and The Lionel Train Company. When he first saw the NYSE for the first time, he understood that this is the place and stock investing is the place where money is.

He made his entry into an investment at the age of 11 years, where he made his first investment in the Cities Service Preferred by buying its three shares at $38 per share. The rate of the stock dropped to $27 per share, but he didn’t lose his patience and adhered to hold it, till it reached $40 per share. He booked a small profit in this investment, which he later regretted when the stock price rose to $200 per share. This experience is often cited by him as his early days learning of having patience in investing. 

In 1942, Buffett’s father was elected to serve his first term as a US Congressman. Hence the family had to move to Washington D.C. He then attended Alice Deal Junior High and then went on to Woodrow High School. While he was in High School, he started Stable Boy Selections with his friend, which was a horse racing tip sheet. They both would use mathematical odds to work out tips and type them out on a typewriter. This could not continue for long as they did not have the licence for that.

Warren spent days watching his father and other investors and would often listen to what they talk. As a teenager, he got himself involved in car washing, delivering newspapers etc, to save money. He was earning and saving good money from his small ventures of distributing papers for The Washington Post, and also distributed the papers for the competitors on the same route. It could be said that business was in his blood. He spent hours reading books in his early days and continued doing this for the rest of his life. Reading is something which he says is one of the key reasons for him to be successful. It is said that he read over 600 to 1000 pages a day in his early career and still was devoted to reading books in his later career. He almost spent 80% of his time reading in his late-career.

At the age of 14, he and a friend stepped into the pinball business in which they used to buy used pinball machines to be put in barbershops for customers to pay to use. The company was called The Wilson Coin Company and they would split profits between themselves and the barber. This is how he kept himself involved in business and made money. He bought his first property at the age of 15 and spent $1200 to purchase a 40-acre farm in Nebraska.

Further Education – A beginning to the world of Investing

His entrepreneurial business journey was going well, hence it did not compel him to attend college for further studies. However, his father urged and enrolled him at the University of Pennsylvania at the age of 16 to study business. He stayed two years, moved to the University of Nebraska to finish up his degree, and emerged from college at age 20 with nearly $10,000 from his childhood businesses. He was rejected at the Harvard Business School and so he enrolled himself at the Columbia Business School and received his master’s degree in 1957. He studied under economist Benjamin Graham and furthered his education at the New York Institute of Finance. He studied under Benjamin Graham, who became his lifelong friend and David Dodd, both well-known securities analysts. He learned the fundamentals of value investing, under Benjamin’s class of securities analysis. He learned from these investors, and this changed his life and set him on the path of professional analysis to the investment markets. This changed his life completely and he entered into an altogether different world of investing. He considered Graham, as the second most influential person in his life after his father. After reading his book “The Intelligent Investor”, he fell in love with the book and later said that it was the best book about investing ever written in history.

Buffett, himself considered that his investment patterns were 85% Benjamin Graham’s and 15% Phil Fisher’s. He was able to find assets that were valued at a lower cost than they could be worth. After his studies, he was keen to start working on Wall Street, but his father and Benjamin were not in his favour. He even wanted to work with Graham, but he refused to do so. So Buffett had to move back to Omaha and work with his father in the brokerage firm. 

After his studies, he enrolled himself on the Dale Carnegie public speaking course, and this is again said to be one of the most important investments he made in his life. He was a shy introverted person and he said that he couldn’t be what he is today if he didn’t do these classes. In Omaha in 1952, he got married to Susie and had their first child.

Berkshire Hathaway’s Entry into his Life

It was in 1956, Buffet formed the firm Buffett Partnership Ltd. in Omaha, utilizing the techniques and strategies learned from Graham. Since he could judge and identify undervalued companies, he utilized this to become a millionaire. One such enterprise, he valued was a textile company named Berkshire Hathaway which was owned by Seabury Stanton. He first started to buy the stocks of that company in the early 1960s and by 1965 took control of the company. Buffett tried to stick with the textiles part of the business at first but soon he realised that there was not so much profit in it. He then started investing in insurance companies, and in 1967 bought the National Indemnity Company and National Fire and Marine Insurance Company. In the year 1970, he made himself the Chairman of the Board at Berkshire Hathaway and wrote his first letter to the shareholders. These letters however were often studied by other investors around the world.

Buffett’s Trademark Moves

In 1971, Buffett made one of his biggest investments until then and bought a company, ‘See’s Candy’ for $25 million in cash. This became a trademark move for his business, in investing in companies that had a competitive advantage over others in the industry. In a few years, Berkshire’s value increased from $20 to $95 per share. In 1976, Buffett began buying shares in GEICO, a company that was running in losses. It was run by Mr Lorimer Davidson, and after a conversation with him, Buffett realized that the company’s fundamentals were good, but it was just that it was not very well managed. So he kept buying in it and eventually bought the company in 1996. Later he made a lot of investment in insurance companies, and this again proved to be one of his trademark moves of that time. 

In the late ’80s, Berkshire began to buy shares of Coca Cola and soon held a 7% stake in the company. It was in the ’90s that Buffett became a billionaire. In the ’90s when dot.com companies were luring most of the investors, he kept his calm and stuck to his long term investing policy. He did not have a big interest in technology companies, it was then when Berkshire share price came down to $40,000 from the high of $81,000 per share.

During the international financial crisis of 2007 and 2008, he was criticized for allocating the capital too early and not getting the best deal out of it. He then invested in General Electric and Goldman Sachs and gained a big profit of $10 billion from his deals in 5 years. 

His investment in Bank of America is again considered to be a genius move. He has also served as director of Citigroup Global Markets Holdings, Graham Holdings Company and The Gillette Company. Highly successful and accomplished, the “Oracle of Omaha” had an extraordinary capacity to convert poor investments into gold, through his immense knowledge and passion for investing.

In the year 2012, Buffett disclosed that he had been diagnosed with prostate cancer. He began the treatment and completed it. The health challenges never stopped and slowed him, and he continued to be ranked amongst the top world’s billionaires list. In February 2013 Buffett purchased H. J. Heinz with private equity group 3G Capital for $28 billion. Berkshire Hathaway future investments were with Duracell and Kraft Foods Group. In 2016 Buffett launched Drive2Vote, a website aimed at encouraging people in his Nebraska community to exercise their right to vote, as well as to assist in registering and driving voters to a polling location if they needed a ride. 

Philanthropist – Warren Buffett

Warren Buffett is considered one of the great philanthropists in the world’s history. The billionaire investor has donated $37 billion worth of Berkshire Hathaway stocks to date, as a part of his pledge to give away most of his substantial fortune. Warren disclosed that he denoted $2.9 billion worth of stock to nonprofit groups, as the 90-year-old billionaire investor continues to follow his pledge to give away nearly all his fortune to philanthropic causes by the time he dies. 

In February 2011, Buffett received a Presidential Medal of Freedom, which is America’s highest civilian honour at the White House. It was awarded by President Obama, who said the people being awarded were “some of the most extraordinary people in America and around the world”.

Warren Buffett also said that he has given the share in Berkshire Hathaway to five organizations, namely the Bill and Melinda Gates Foundation; the Susan Thompson Buffett Foundation, the nonprofit named for his late wife; and three groups founded by his children, Howard, Peter and Susie. Mr Buffett and Mr Gates founded the Giving Pledge, a nonprofit that encourages fellow tycoons to promise to give away at least half of their wealth over their lifetimes. Among the Gates Foundation’s recent philanthropic focuses is the coronavirus; it has been utilized in the development of Covid-19 vaccines and paid to help distribute them to poorer countries. 

Looking at the life of Warren Buffett, it’s very much clear that he is a man who lived by principles and integrity. This includes his investment decisions, which always followed fundamental rules that he stuck to, as well as his private life. Although earning huge wealth, he always lived a humble life and always appreciated the people who were associated with him.