The legendary value investor Warren Edward Buffett turned a troubled textile factory into a financial engine that later became the world’s most successful holding company.
According to Forbes, Buffett is known as the “Oracle of Omaha” because of his investment ability, and his personal wealth has exceeded US$100 billion.He inspires a large number of loyal fans to go to Omaha every year to have the opportunity to listen to his speech at Berkshire Hathaway’s annual meeting, which is ironically called the “Woodstock of Capitalism.”
Warren Buffett: The Road to Riches
Buffett was born on August 30, 1930 in Howard and Layla Buffett in Omaha, Nebraska. He is the second of three children and the only boy. His father was a stockbroker and a four-term U.S. Congressman. Howard served on the Republican votes for non-consecutive terms, but supported liberal views.
Making money is Buffett’s early interest. He sells soft drinks and has a paper path. When he was 14 years old, he invested the proceeds of these efforts in 40 acres of land, which he then rented out for profit. At the urging of his father, he applied to the University of Pennsylvania and was admitted. Two years later, Buffett left unmoved and transferred to the University of Nebraska. After graduation, his father once again convinced him of the value of education and encouraged him to study for a graduate degree. Harvard rejected Buffett, but Columbia accepted him. Buffett studied under Benjamin Graham, the father of value investing, and his time at Columbia University laid the foundation for his legendary career, despite a slow start.
After graduation, Graham refused to hire Buffett and even hinted that he avoided working on Wall Street. Buffett’s father agreed with Graham, and Buffett returned to Omaha to work in his father’s agency. He married Susan Thompson and they started a family. Soon after, Graham changed his mind and offered Buffett a job in New York.
Warren Buffett: Investing Trivia Part 3
Once in New York, Buffett had the opportunity to build on the investment theory he learned from Graham at Columbia University. According to Graham, value investing involves finding stocks that are sold at a special discount below the value of the underlying asset, which he calls “intrinsic value.” Buffett internalized this concept, but was interested in taking it a step further. Unlike Graham, he wants to go beyond numbers and focus on the company’s management team and the competitive advantage of its products in the market.
In 1956, he returned to Omaha, founded Buffett Associates, and bought a house. In 1962, he was 30 years old and was already a millionaire when he joined forces with Charlie Munger. Their cooperation eventually led to the development of an investment philosophy based on Buffett’s philosophy that value investing is not just an attempt to extract the last few dollars from a dying company.
Along the way, they bought Berkshire Hathaway (NYSE: BRK.A), a dying textile factory. When the business showed some signs of life, what was originally a classic Graham value game turned into a long-term investment. The cash flow from the textile business is used to fund other investments. In the end, the original business was eclipsed by other holdings. In 1985, Buffett closed the textile business, but continued to use this name.
Buffett’s investment philosophy is based on the principle of buying stocks in companies that he believes are well-managed and undervalued. When he makes a purchase, his intention is to hold the securities indefinitely. Coca-Cola, American Express, and Gillette all meet his criteria and have been Berkshire Hathaway’s portfolio for many years. In many cases, he directly acquired these companies and continued to let their management teams handle day-to-day business. Some well-known companies that fall into this category include See’s Candies, Fruit of the Loom, Dairy Queen, The Pampered Chef, and GEICO Auto Insurance.
Before the tech stocks became popular, Buffett’s sense of mystery remained the same. As a resolute technology phobia, Buffett did not see an incredible rise in technology stocks in the late 1990s. Buffett insisted on his position and refused to invest in companies that did not meet his responsibilities, so he won the contempt of Wall Street experts and was regarded by many as a person whose age has passed. The technological collapse that occurred when the Internet bubble burst bankrupted many experts. Buffett’s profits have doubled.
Although net worth is in the billions, Warren Buffett is legendary frugal. He still lives in a five-bedroom house bought for $31,000 in 1958. He drinks Coca-Cola and dines at a local restaurant. Burgers or steaks are his preferred table fee. For many years, he has avoided the idea of buying a business jet. When he finally got an airplane, he named it “irrefutable”-publicly acknowledging his criticism of the money spent on the airplane.
After getting married in 1952, his marriage to Susan Thompson lasted for more than 50 years. They have three children, Susie, Howard and Peter. Buffett and Susan separated in 1977 and did not get married until her death in 2004. Before she died, Susan introduced him to the waitress Astrid Menkes. Buffett and Menkes started living together in 1978 and got married in August 2006.
What do you do with your money when you are the most successful investor in the world? If you are Warren Buffett, you give up. In June 2006, Buffett announced that he would donate most of his wealth to the Bill and Melinda Gates Foundation, which focuses on world health issues, American libraries, and global schools, shocking the world. It is one of the largest transparent charities in the world.
Buffett’s donation will appear in the form of Berkshire Hathaway’s Class B shares. His total donation to the Gates Foundation is 10 million shares. It will be issued in 5% increments until Buffett’s death or the foundation fails to meet spending regulations or Bill or Melinda Gates still actively participates in foundation activities. Buffett’s donation in 2006 was 500,000 shares, valued at approximately US$1.5 billion.
Based on the value of stocks in June 2008, all donations to the Gates Foundation are worth about 37 billion U.S. dollars. Buffett expects the stock price to increase over time. Another stock donation of more than 1 million shares will be evenly distributed to three charities run by Buffett’s children. The other 1 million shares will be used for a foundation set up to commemorate his first wife.
Although the donation to the Gates Foundation is undoubtedly a huge surprise, Buffett’s philanthropy is nothing new. He donated for 40 years through the Buffett Foundation, which was renamed the Susan Thompson Buffett Foundation. The foundation supports selected family planning causes and is committed to preventing nuclear proliferation.
Buffett has always planned to donate most of his wealth to charity, but insists that this will be done after death. Changing his mind is typical of Buffett-rational, decisive, maverick, and opened up a path of his own. “I know what I want to do, and it makes sense to start acting,” he famously said.
In the future, Buffett will continue to provide more funds. In his own words: “I am not a fan of dynasty wealth, especially when 6 billion people live poorer than our hands and have the opportunity to benefit from this money.”