Summary: Warren Buffett, the “Oracle of Omaha” and perhaps the most famous investor in the world, has built a legacy with his incredibly successful investing endeavors. This guide will tell the story of Warren Buffett, who is the co-founder, chairman, and CEO of Berkshire Hathaway and the tenth-richest man in the world.
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Who is Warren Buffett – an overview
Warren Edward Buffett is an American businessman, investor, and philanthropist widely recognized as the most successful investor ever. He is currently at the helm of Berkshire Hathaway, one of America’s foremost holding companies and the world’s most prominent corporate conglomerates, as its co-founder, chairman, and CEO.
Buffett is also among the ten richest people in the world, with a net worth of over $122 billion.
Buffett accumulated his wealth mainly through stock market investments, with a particular interest in blue-chip companies. He centered his investment strategy on long-term value investing, focusing on companies perceived to have lasting competitive advantages and durability in the market. Adamantly adhering to Benjamin Graham’s principles of value investing, he spearheaded the approach and inspired many investors to embark on the same path.
Behind his massive wealth, Warren Buffett is a notably frugal person. He communicates straightforwardly and down-to-earthly, which is widely celebrated among his supporters. In 2010, he founded the Giving Pledge with Bill Gates, whereby millionaires are encouraged to give away a majority of their fortunes.
An inspiration for shareholders and non-shareholders alike, Warren Buffett’s brilliant investing career and colorful narrative offers insights into the life of an investor embarking on the stock market journey, upholding their values, and achieving success.
Warren Buffett’s early life and education
Warren Buffett was born on August 30, 1930, in Omaha, Nebraska, to Howard Buffett, a congressman, and Leila Buffett (née Stahl) as the second of their three children. At an early age, he showed interest in business and investing. When he was just seven years old, he was inspired by an investment book he borrowed from the public library titled One Thousand Ways to Make $1000.
In 1945, during his second year in high school, he bought a used $25 pinball machine with a friend and placed it in the neighborhood’s barber shop. They grew the business and sold it for $1200 within months.
Howard, his father, the congressman and his earliest business influence, took him to visit the NYSE when he was 10: a year later, he bought his first stock, the three shares of Cities Service (today Citgo). In a foretelling tone, the Woodrow Wilson High School’s 1947 senior yearbook picture under Buffett’s picture reads: “likes math; a future stockbroker”.
Warren Buffett had decided to skip college altogether and go straight into business, but his father overruled him. He attended the University of Nebraska, then the University of Pennsylvania, only to return to the University of Nebraska, where he graduated with a Bachelor of Science in Business Administration.
At Columbia Business School of Columbia University, he met and studied for a Master of Science in Economics under the mentorship of Benjamin Graham, a prominent financial analyst, and investor commonly referred to as the “father of value investing”. Besides his innate business sense, Warren Buffett’s greatest influence on his investing career was Benjamin Graham’s teachings.
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.
— Warren Buffett
Warren Buffett’s early business career
The first step of Warren Buffett’s business career after his studies was working as a stockbroker at Buffett-Falk, his father’s Omaha company. He initially volunteered to work for his mentor, Graham, for free, but the latter declined the offer.
In 1954, Buffett had a stint at Graham’s partnership, but his mentor retired in 1956 and closed the business. At the time, Buffett’s personal savings were over $174,000 (about $1.87 million adjusted for inflation), and he was just 26. A year later, Buffett operated three investment partnerships. He purchased a five-bedroom stucco house in Omaha for $31,500, where he still lives. By 1960, he operated seven investment partnerships, investing only $100 himself.
Recommended video: Warren Buffet – Just looking at the price is not investing
Berkshire Hathaway
By January 1962, Buffett’s partnerships had an excess of over $7 million, of which more than $1 million belonged to him, breaking the threshold and making him a millionaire. Subsequently, he merged the partnerships into one.
The Oracle of Omaha’s next move was to invest in and eventually acquire a textile manufacturing company, Berkshire Hathaway. In 1965, his partnership went full throttle, and they aggressively bought shares in the company. In 1966, he closed the partnership to new money.
Buffett steered the company away from the textile business and into the insurance sector. The investor later said that entry into the textile manufacturing business had been his worst trade. Ironically, Berkshire Hathaway is one of the most recognized company names in the world today.
Recommended video: Warren Buffet – 12 Mistakes Every Investor Makes
As of September 2023, the Berkshire Hathaway portfolio’s ten largest components are:
- Apple (AAPL): 5.9% stake and 48.3% of its portfolio;
- Bank of America (BAC): 13.1% stake and 9.1% of its portfolio;
- American Express (AXP): 20.8% stake and 7.6% of its portfolio;
- The Coca-Cola Company (KO): 9.3% stake and 6.5% of its portfolio;
- Chevron (CVX): 5.9% stake and 4.3% of its portfolio;
- Occidental Petroleum (OXY): 27.8% stake and 3.8% of its portfolio;
- Kraft Heinz (KHC): 26.5% stake and 3.3% of its portfolio;
- Moody’s (MCO): 13.5% stake and 2.6% of its portfolio;
- Itochu Corporation (8001:TYO): 7.5% stake and 1.4% of its portfolio;
- Mitsui & Co (8031:TYO): 8.1% stake and 1.4% of its portfolio.
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Bailing banks from the global financial crisis and becoming the wealthiest person in the world
A buildup of toxic bank assets and a housing bubble in 2007 and 2008 caused the most brutal financial crisis since the Great Depression. Its effects cascaded worldwide, resulting in a sovereign debt crisis in the European Union. In essence, financial institutions collapsed, climaxing with the bankruptcy of Lehman Brothers on September 15, 2008, and signaling a global banking crisis.
2008 was also the year Forbes estimated Warren Buffett’s net worth to be at $62 billion, dethroning Bill Gates from the number one spot and making Buffett the richest person in the world. However, after Buffett donated billions to charitable causes, the two friends again switched places the following year.
Warren Buffett’s investing strategy
The famous investor has been a lifelong proponent of value investing, a long-term investing approach that favors companies expected to increase in value over an extended period.
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
Warren Buffett follows the school of thought of his mentor, Benjamin Graham. His investing method refers to looking for intrinsic value besides the obvious qualitative ones or the advantages that do not necessarily appear in assessments, such as holding property or other assets. Companies with intrinsic value have their downfall costs reduced and have better chances of making a turnaround and becoming more profitable once the intrinsic assets get utilized more efficiently.
In other words, Buffett and other value investors look for unjustifiably undervalued stocks based on their intrinsic worth. In fact, he is a staunch opponent of the efficient market hypothesis, which claims that the market value always reflects the fair value. Instead of tracking supply-and-demand stock dynamics, investors like Buffett look at companies as a whole and seek a stake in companies that are capable of generating earnings.
In short, Buffett’s investing strategy focuses on how well can the company make money as a business, rather than how the market recognizes the companies worth.
“Price is what you pay. Value is what you get.”
— Warren Buffett
Also, Buffett has reinforced his value investing strategy by reiterating his support for broad and diversified index fund investments, especially for people lacking the time or interest to manage their own money. In fact, he expressed doubt over active investment management outperforming the market in the long run, especially due to high active investment fees.
Warren Buffett on Bitcoin and crypto
In line with his intrinsic value financial philosophy, Buffett has been a staunch critic of Bitcoin, labeling it as a “gambling token”. He maintained his crypto skepticism even during the peak of Bitcoin and altcoins’ value.
“Something like Bitcoin, it is a gambling token and it doesn’t have any intrinsic value, but that doesn’t stop people from wanting to play the roulette wheel.”
— Warren Buffett
Both Warren Buffett and his partner and Berkshire vice chairman Charlie Munger have been fierce Bitcoin opponents.
Recommended video: Warren Buffet – Bitcoin Is An Asset That Creates Nothing
Personal life
Warren Buffett married Susan Thompson in 1952. They had three children: Susie, Howard, and Peter. Although they were married until Susan’s death in July 2004, they had been living separately since 1977. In 2006, on his 76th birthday, Buffett married his longtime companion, Astrid Menks.
The Sage of Omaha is known for his relatively humble lifestyle, especially considering his status as the tenth-richest person in the world: he continues to live in the house he bought more than half a century ago for $31,500.
The famous investor is an avid ukulele player who occasionally plays at events like stockholder meetings. Also, he loves playing bridge, frequently with his friend and fellow fan, Bill Gates. He stated that he spends 12 hours a week playing the game and that “bridge is such a sensational game” that he “wouldn’t mind being in jail” if he had three decent players as cellmates and the game was going 24/7.
He frequently mixes humor and folksy Midswestern-style into business discussions, keeping a casual, down-to-earth attitude all these years. The Qwest Center in Omaha hosts Berkshire Hathaway’s annual shareholder meeting, dubbed “Woodstock of Capitalism”, drawing over 20,000 people from the U.S. and abroad.
Warren Buffett on politics
Warren Buffett is a lifelong supporter of the Democratic Party, notably supporting Barrack Obama before and during his presidency. However, he also cooperated with the Republicans, such as Arnold Schwarzenegger, during the 2003 California election.
He has given a layered opinion on Obama’s health reforms, supporting its aims but criticizing the devotion of 17% of America’s GDP to healthcare as unsustainable. He advocated better use of the funds, comparing the U.S. healthcare value (visits, hospital beds, doctors, and nurses per capita) with European countries.
When it comes to taxation, Buffett supports inheritance taxation and increased taxation of the top earners, such as himself, as he deemed paying less in taxes than his employees to be unfair.
“How can this be fair? How can this be right? There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
— Warren Buffett
Warren Buffett’s legacy
Being one of the wealthiest people in history warrants a mention in financial history books, but Warren Buffett’s legacy goes beyond mere estate accumulation.
In 2007, Time Magazine listed him among the world’s 100 most influential people. Additionally, President Barack Obama awarded him the Presidential Medal of Freedom in 2011.
Besides pledging more than 99.9% of his net worth to foundations like the Bill & Melinda Gates Foundation (the largest charitable donation in history) and the Buffett Foundation, he has frequently raised money for philanthropic causes, including selling his car and tickets to a luncheon with himself.
Recommended video: Warren Buffet shares advice on becoming successful
In conclusion
Finding out who Warren Buffett is in detail makes it evident why the Oracle of Omaha achieved this level of success: he has developed a solid set of investing principles and practices and decided to stick with them throughout many decades of his fruitful business career.
Rather than getting lopsided by the shiny and the glittering, he applied the same value-investing strategy in his 90s, the same as in his teens. Instead of gaming the market, Buffett championed common financial sense, value, and patience. His enormous wealth could have made him the richest guy in the universe if he had wanted that. Still, he decided to live relatively humbly, enjoying few luxuries and giving back to society instead.
In Warren Buffett’s opinion, the rules of the game remain the same. As an investor, you can still follow them and perhaps even achieve similar gains.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about Warren Buffett
Who is Warren Buffett?
Warren Buffett is an American businessman, investor, and philanthropist recognized by many as the most successful investor of all time. He is the chairman and CEO of Berkshire Hathaway and the tenth-richest person in the world, with a net worth of over $122 billion.
What is Warren Buffett's net worth?
As of January 2024, Warren Buffett’s net worth is around $122 billion.
How did Warren Buffett make his first million?
Warren Buffett made his first million by applying the method of value investing and managing several partnerships that he later merged into Berkshire Hathaway.
What is Warren Buffett's investment strategy?
Warren Buffett has been a lifelong proponent of value investing. This strategy focuses on identifying undervalued blue-chip companies with strong intrinsic value and holding them for the long term, rather than gaming the market. Furthermore, he advocates looking at stocks as business, using the market’s fluctuations to your advantage, and securing a margin of safety.
What are Warren Buffett's top holdings?
Berkshire Hathaway, Warren Buffett’s company, owns stocks of prominent companies, including Apple (48.3%), Bank of America (9.1%), American Express (7.6%), The Coca-Cola Company (6.5%), Chevron (4.3%), Occidental Petroleum (3.8%), Kraft Heinz (3.3%), and Moody’s (2.6%).
Why Warren Buffett never split?
Warren Buffett never split Berkshire Hathaway’s stock and it is the most expensive stock in the world. Although he did not explicitly state why, it most likely has to do with his intrinsic value approach to stock and attracting investors with similar investing methodology.
What is Warren Buffett's 90/10 investment strategy about?
Buffett’s 90/10 investment strategy advises investors to put 90% of their principal into S&P 500 stocks and the remaining 10% into short-term government bonds.
What are some Warren Buffett's recommended books on investing?
Some of the books on investing that the Oracle of Omaha has recommended include The Intelligent Investor, Shoe Dog, The Outsiders, Security Analysis, and The Moment of Lift.
Is Warren Buffett still investing?
As of January 2024, Warren Buffett is still the CEO of Berkshire Hathaway, and he is still active in the investing business.
Does Warren Buffett trade options?
Buffett has frequently capitalized on the options-trading technique of selling naked put options as a hedge.
Is Warren Buffett a Democrat?
Buffett declared himself to be “a Democrat, but not a card-carrying Democrat”. He generally supports the Democrats, but he has occasionally voted for the Republican candidates.
What is the Giving Pledge?
The Giving Pledge is a charitable campaign founded by Warren Buffett and Bill Gates to encourage the wealthiest to contribute a majority of their wealth to charitable and philanthropic causes.
Is Warren Buffett really giving away his wealth?
Yes, Warren Buffett has decided to give away more than 99% of his entire wealth to foundations and charities.
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