Warren Buffett is an American billionaire businessman and investor who through his multinational holding company, Berkshire Hathaway, owns companies such as GEICO, Duracell, Fruit of the Loom, and Helzberg Diamonds, among many others.
His success in the investor market has earned him the nickname Oracle of Omaha, as well as a consistent presence on the list of the world’s richest people, reaching the number one spot on a few occasions.
Warren Buffett Net Worth
According to Forbes, Warren Buffett, as of 2018, had a net worth of $84.4 billion, which placed him third on the list of the world’s richest people. With such huge earnings, it’s no surprise that in the last decade he’s given away close to $30 billion of his wealth to charity.
Also, despite his enormous wealth, Buffett has made sure he doesn’t live an extravagant lifestyle, never spending more than $3.17 on his McDonald’s breakfast and today still living in the five-bedroom stucco house he bought in Omaha in 1958 for $31,500. He also owns an oceanfront vacation home in Laguna Beach, California, which he purchased in 1971 for $150,000. The investor has since put the house up for sale for a price of about $11 million. Buffett drives a Cadillac XTS that has a retail value of around $45,000.
Warren Buffett Biography
Warren Edward Buffett was born the second of three children to Leila (born Stahl) and Howard Buffett on August 30, 1930, in Omaha, Nebraska. His father was a businessman and investor who later entered politics and served as a four-term Republican United States Representative for the state of Nebraska.
Buffett attended Rose Hill Elementary School before enrolling at Alice Deal Junior High School. However, he graduated from Woodrow Wilson High School in 1947. At that time, Buffet, who considered himself very good at math, was said to have already cultivated a keen interest in business.
He ran a couple of businesses that included delivering newspapers and selling golf balls, gum and stamps. He had also bought stock in Cities Service at age 11, which helped him save to buy a 40-acre farm run by a tenant farmer. With all these achievements, at the time of his graduation, Buffett tried to put aside college plans to fully launch his business career, however, his father overruled him.
Warren Buffett spent two years at Wharton before transferring to the University of Nebraska where he graduated with a Bachelor of Business Administration at the age of 19. He subsequently applied to Harvard Business School but was rejected, leaving to enroll at Columbia Business School where he earned a Master of Science in Economics in 1951. He then attended the New York Institute of Finance before beginning a career in stock brokerage.
Warren Buffett Career
Buffett worked from 1951 to 1954 at Buffett-Falk & Co. as an investment salesman; from 1954 to 1956 at Graham-Newman Corp. as a securities analyst; from 1956 to 1969 at Buffett Partnership, Ltd. as general partner, and since 1970 as Chairman and CEO of Berkshire Hathaway Inc.
In 1951, Buffett discovered that Graham was on the insurance board of GEICO. Taking a train to Washington, DC on a Saturday, he knocked on the door of GEICO headquarters until a janitor ushered him in.
There he met Lorimer Davidson, vice president of GEICO, and the two discussed the insurance business for hours. Davidson would eventually become Buffett’s lifelong friend and lasting influence, and would later recall that he discovered Buffett to be an “extraordinary man” after only fifteen minutes. Buffett wanted to work on Wall Street, but both his father and Ben Graham advised him against it. He offered to work for Graham for free, but Graham refused.
Buffett returned to Omaha and worked as a stockbroker while taking a public speaking course at Dale Carnegie. Using what he learned, he felt confident enough to teach an evening class on “Investing Principles” at the University of Nebraska-Omaha. The average age of his students was more than twice his own. During this time, he also purchased a Sinclair gas station as an additional investment, but was unsuccessful.
In 1952, Buffett married Susan Thompson at the Dundee Presbyterian Church. The following year they had their first child, Susan Alice. In 1954, Buffett accepted a job with Benjamin Graham’s society. His starting salary was $12,000 a year (about $114,000 today).
There he worked closely with Walter Schloss. Graham was a tough boss. He was adamant that stocks offer a wide margin of safety after weighing the trade-off between their price and their intrinsic value. That same year the Buffetts had their second child, Howard Graham. In 1956, Benjamin Graham retired and closed his partnership. At the time, Buffett’s personal savings exceeded $174,000 (approximately $1.64 million today) and founded Buffett Partnership Ltd.
In 1957, Buffett operated three partnerships. He bought a five-bedroom stucco house in Omaha, where he still lives, for $31,500. In 1958, the Buffetts’ third child, Peter Andrew, was born. Buffett operated five companies that year.
In 1959, the company grew to six partnerships, and Buffett met future partner Charlie Munger. In 1960, Buffett operated seven companies. He asked one of his partners, a doctor, to find ten other doctors willing to invest $10,000 each in his partnership. Ultimately, eleven agreed, and Buffett raised his money with an original investment of his own of just $100.
In 1961, Buffett revealed that 35% of the partnership’s assets were invested in the Sanborn Map Company. He explained that Sanborn stock sold for only $45 a share in 1958, but the company’s investment portfolio was worth $65 a share. This meant that Sanborn’s map business was valued at “minus $20.
” Buffett eventually purchased 23% of the company’s outstanding shares as an activist investor, obtaining a seat for himself on the Board of Directors, and allied himself with other dissatisfied shareholders to control 44% of the shares. To avoid a power struggle, the Board offered to buy back shares at fair value, paying with a portion of his investment portfolio. 77% of the outstanding shares were delivered. Buffett had made a 50% return on investment in just two years.
Taking On Berkshire
In 1962, Buffett became a millionaire due to his partnerships, which in January 1962 were in excess of $7,178,500, of which more than $1,025,000 belonged to Buffett. He merged these associations into one. Buffett invested in and eventually took control of a textile manufacturing company, Berkshire Hathaway. He began buying shares in Berkshire from Seabury Stanton, the owner, whom he later fired.
Buffett’s partnerships began buying shares at $7.60 a share. In 1965, when Buffett’s partnerships began aggressively buying Berkshire, they paid $14.86 per share, while the company had working capital of $19 per share. This did not include the value of fixed assets (factory and equipment).
Buffett took control of Berkshire Hathaway at a board meeting and named a new chairman, Ken Chace, to run the company. In 1966, Buffett closed the partnership with new money. He later claimed that the textile business had been his worst trade.He then moved the business into insurance, and in 1985 the last of the factories that had been Berkshire Hathaway’s core business was sold.
In a second letter, Buffett announced his first investment in a private company: Hochschild, Kohn and Co, a privately owned department store in Baltimore. In 1967, Berkshire paid its first and only 10-cent dividend.
In 1969, Buffett liquidated the partnership and transferred his assets to his partners, including shares in Berkshire Hathaway. In 1970, Buffett began writing his now famous annual letters to shareholders. He lived solely on his salary of $50,000 a year and his income from outside investments.
In 1973, Berkshire began acquiring shares in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled her company and flagship newspaper, and joined her board. In 1974, the SEC opened a formal investigation into Buffett and Berkshire’s acquisition of Wesco Financial, due to a potential conflict of interest. No charges were filed. In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million. Antitrust charges were brought, instigated by its rival, the Buffalo Courier-Express . Both newspapers lost money until the Courier-Express folded in 1982.
In 1979, Berkshire began acquiring shares in ABC. Capital Cities announced its purchase of ABC for $3.5 billion on March 18, 1985, which shocked the media industry as ABC was four times the size of Capital Cities at the time. Buffett helped finance the deal in exchange for a 25% stake in the combined company.
The newly merged company, known as Capital Cities/ABC (or CapCities/ABC), was forced to sell some stations due to US Federal Communications Commission ownership rules. The two companies also owned several radio stations in the same markets.
In 1987, Berkshire Hathaway bought a 12% stake in Salomon Inc., making it the largest shareholder and Buffett the director. In 1990, a scandal broke out involving John Gutfreund (former CEO of Salomon Brothers). A rogue trader, Paul Mozer, was bidding in excess of what was allowed by Treasury rules. When Gutfreund was informed of this, he did not immediately suspend the rogue trader. Gutfreund left the company in August 1991. Buffett became chairman of Salomon until the crisis passed.
In 1988, Buffett began buying stock in The Coca-Cola Company, eventually acquiring up to 7% of the company for $1.02 billion. It would prove to be one of Berkshire’s most lucrative investments, and one that still stands.
Buffett ran into criticism during the 2007 and 2008 subprime mortgage crisis, part of the Great Recession that began in 2007, for allocating capital too early, resulting in suboptimal deals. “Buy American. I am.” he wrote for an opinion piece published in the New York Times in 2008.
Buffett called the downturn in the financial sector that began in 2007 “poetic justice”. Buffett’s Berkshire Hathaway suffered a 77% drop in earnings during the third quarter of 2008 and several of his subsequent deals suffered large market price losses.
Berkshire Hathaway acquired 10% of Goldman Sachs Perpetual Preferred Stock.Some of Buffett’s put options (European exercise at expiration only) that he wrote (sold) were executing at about $6.73 billion of losses marked to market at the end of 2008. The scale of the potential loss prompted the SEC to require Berkshire to produce “more robust disclosure” of the factors used to value the contracts.
Buffett also helped Dow Chemical pay for its $18.8 billion acquisition of Rohm & Haas. In doing so, he became the largest shareholder in the enlarged group with his Berkshire Hathaway, which provided $3 billion, underscoring his pivotal role during the crisis in the debt and equity markets.
In 2008, Buffett became the world’s richest person, with a total net worth estimated at $62 billion by Forbes and $58 billion by Yahoo, surpassing Bill Gates, who had been the number one on the Forbes list for 13 consecutive years. In 2009, Gates regained the top position on the Forbes list, with Buffett moving to second place. The values of both men fell, to $40 billion and $37 billion respectively; According to Forbes, Buffett lost $25 billion in a 12-month period during 2008/2009.
In October 2008, the media reported that Buffett had agreed to buy preferred stock in General Electric (GE).The deal included special incentives: he received an option to buy three billion shares of GE, at $22.25, over five years after the deal, and Buffett also received a 10% dividend (payable in three years). ). In February 2009, Buffett sold some shares of Procter & Gamble Co. and Johnson & Johnson from his personal portfolio.
In addition to suggestions of a lack of time, the wisdom of keeping some of Berkshire’s biggest holdings, including The Coca-Cola Company, which peaked at $86 in 1998, raised questions. Buffett discussed the difficulties of knowing when to sell in the company’s 2004 annual report:
That may seem easy to do when you look through an always clean rearview mirror. Unfortunately, however, it is the windshield through which investors must look, and that glass is invariably fogged.
In March 2009, Buffett said in a cable television interview that the economy had “fallen off a cliff…Not only has the economy slowed down a lot, but people have really changed their habits like I haven’t seen.” . Furthermore, Buffett feared that the levels of inflation that occurred in the 1970s, which led to years of painful stagflation, could resurface.
A Berkshire In Capital Letters
On August 14, 2014, Berkshire Hathaway’s stock price reached $200,000 per share for the first time, capitalizing the company at $328 billion. While Buffett had given away much of his stock to charity at the time, he still owned 321,000 shares worth $64.2 billion. On August 20, 2014, Berkshire Hathaway was fined $896,000 for failing to report on December 9, 2013, the purchase of stock in USG Corporation as required.
In 2009, Buffett invested $2.6 billion as part of Swiss Re’s campaign to raise equity capital. Berkshire Hathaway already owned a 3% stake, with rights to own more than 20%. Also in 2009, Buffett acquired Burlington Northern Santa Fe Corp. for $34 billion in cash and stock. Alice Schroeder, author of Snowball , said a key reason for the purchase was to diversify Berkshire Hathaway from the financial industry. Measured by market capitalization in the Financial Times Global 500, Berkshire Hathaway was the 18th largest corporation in the world as of June 2009.
In 2009, Buffett divested himself of his failed investment in ConocoPhillips, telling his Berkshire investors:
I bought a lot of ConocoPhillips stock when oil and gas prices were near their peak. In no way did I anticipate the dramatic drop in energy prices that occurred in the last half of the year. I still believe that there is a good chance that oil will sell much higher in the future than the current price of $40 to $50. But so far I have been dead wrong. Even if prices go up, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.
The merger with Burlington Northern Santa Fe Railway (BNSF) closed with the approval of BNSF shareholders during the first quarter of 2010. This deal was valued at approximately $44 billion (with $10 billion of outstanding BNSF debt) and represented an increase from the previously existing share of 22%. In June 2010, Buffett defended credit rating agencies for his role in the US financial crisis, claiming:
Very, very few people were able to appreciate the bubble. That is the nature of bubbles: they are mass delusions.
On March 18, 2011, Goldman Sachs received approval from the Federal Reserve to repurchase Berkshire’s preferred stock in Goldman. Buffett had been reluctant to give up the stock, which was averaging $1.4 million in dividends per day, saying:
I’m going to be the Osama bin Laden of capitalism. I am on my way to an unknown destination in Asia where I will search for a cave. If the US military can’t find Osama bin Laden in 10 years, let Goldman Sachs try to find me.
In November 2011, it was announced that over the course of the previous eight months, Buffett had bought 64 million shares of International Business Machine Corp (IBM), worth around $11 billion. This unexpected investment raised his stake in the company to about 5.5 percent, the largest stake in IBM alongside State Street Global Advisors.
Buffett had said on numerous previous occasions that he would not invest in technology because he did not fully understand it, so the move came as a surprise to many investors and observers. During the interview, in which he disclosed the investment to the public, Buffett stated that he was impressed by the company’s ability to retain corporate clients, saying: “
In May 2012, Buffett’s acquisition of Media General, consisting of 63 newspapers in the southeastern United States, was announced. The venture was Buffett’s second print news purchase in a year.
Acting publisher James W. Hopson announced on July 18, 2013, that the Atlantic City press would be sold to Buffett’s BH Media Group by ABARTA, a private holding company based in Pittsburgh, USA at the shareholders’ meeting of Berkshire in May 2013, Buffett explained that he did not expect to “move the needle” on Berkshire with newspaper acquisitions, but anticipates a 10 percent annual return. The Press of Atlantic City became Berkshire’s 30th daily, following other purchases including Virginia, Roanoke Times US, and The Tulsa World in Oklahoma, US.
During a presentation to students at Georgetown University in Washington, DC in late September 2013, Buffett compared the US Federal Reserve to a hedge fund and claimed that the bank is generating “$80 billion or $90 billion a year probably” in revenue for the US government. Buffett also advocated more for the issue of equality of wealth in society:
We have learned how to produce many goods and services, but we have not learned so well how to get everyone to share in the reward. The obligation of a society as prosperous as ours is to discover how no one is left behind.
After the difficulties of the economic crisis, Buffett managed to return his company to pre-recession standards: In the second quarter of 2014, Berkshire Hathaway made $6.4 billion in net profit, the most it had achieved in a period of three month.
Warren Buffett Investment Philosophy
Warren Buffett’s writings include his annual reports and various articles. Buffett is recognized by journalists as a great storyteller, as evidenced by his annual letters to shareholders. He has warned about the pernicious effects of inflation:
The math makes it clear that inflation is a far more devastating tax than anything that has ever been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. For a widow who has her savings in a 5 percent passbook account, it doesn’t matter whether she pays 100 percent income tax on her interest income during a period of zero inflation or pays no income taxes for years. 5 percent inflation.
In his article, “The Graham-and-Doddsville Superinvestors”, Buffett refuted the academic efficient market hypothesis that beating the S&P 500 was “pure fluke”, highlighting the results achieved by several Graham and Dodd students. value investing school of thought.
In addition to himself, Buffett named Walter J. Schloss, Tom Knapp, Ed Anderson (Tweedy, Browne LLC), William J. Ruane (Sequoia Fund), Charlie Munger (Buffett’s partner in Berkshire), Rick Guerin (Pacific Partners Ltd .) and Stan Perlmeter (investments in Perlmeter).  In his November 1999 Fortune article , he warned against unrealistic investor expectations:
Let me summarize what I’ve been saying about the stock market: I think it’s very difficult to make a convincing case that stocks over the next 17 years will behave like, anything like, the performance of the last 17. If I had to pick the The most likely return, from appreciation and dividends combined, that investors collectively (again, aggregated) would earn in a world of constant interest rates, 2% inflation, and those ever-damaging friction costs, would be 6%.
Buffett has endorsed index funds for people who aren’t interested in managing their own money or don’t have the time. Buffett is skeptical that active management can outperform the market in the long run and has advised individual and institutional investors to move their money into low-cost index funds that track broad, diversified stock indices.
Buffett said in one of his letters to shareholders that “when Wall Streeters manage trillions of dollars that charge hefty fees, it will usually be the managers who make outsized profits, not the customers.” In 2007, Buffett made a bet with numerous managers that a simple S&P 500 index fund would outperform hedge funds that charge exorbitant fees. By 2017, the index fund was outperforming every hedge fund that bet against Buffett.
Warren Buffett Personal Life
Warren Buffett is on his second marriage. His first marriage was to Susan Buffett (nee Thompson), whom he first met through her sister, Roberta, at Northwestern University, even though the two families had known each other for some time, and Susan’s father was Howard’s campaign manager.
Warren and Susan exchanged vows at the Dundee Presbyterian Church in Omaha in 1952 and went on to have three children; first, a daughter named Susan who works as a philanthropist and chairs the Sherwood Foundation, formerly known as the Susan A. Buffett Foundation. She was born in July 1953. Her second child was a son named Howard, who was born in December 1954. Howard is a former politician, businessman, philanthropist, and farmer. The couple’s last child is a son named Peter, who was born in May 1958, is an Emmy Award-winning musician, songwriter, author, and philanthropist.
In 1977, Susan and Warren parted ways. She left her husband to move to San Francisco in hopes of pursuing a singing career, which her husband supported, though he was reportedly heartbroken about it. The two never remarried and remained close until her death in 2004. Two years after her death, Buffett married his longtime partner, Astrid Menks, whom Susan had introduced him to before she left and who also she had been living with him in his house. Omaha at home for many years.