Who is Warren Buffett ?

Warren Edward Buffett, the world’s most successful value investor, transformed an ailing textile factory into a financial engine that fueled what would become the world’s most profitable holding company.

According to Forbes, Buffett, known as the Oracle of Omaha for his investment ability, has earned a personal wealth in excess of $100 billion.
He inspires thousands of devoted followers to travel to Omaha, Nebraska, each year to hear him speak at Berkshire’s annual meeting, called the “Woodstock of Capitalism.”

KEY POINT

• Warren Buffett started investing at a young age, buying his first stock at age 11 and his first real estate investment at age 14.
• Buffett studied under the legendary value investor Benjamin Graham while pursuing a business degree at Columbia University. Harvard had rejected him.
• Buffett partnered with Charlie Munger to acquire the failing Berkshire Hathaway textile company, which was subsequently used to acquire and invest in other companies.
• Buffett is a genuine value investor who purchases undervalued but stable businesses and holds them for the long term.
• Buffett has always been a philanthropist, and he has pledged more than $100 billion of his personal fortune to the Bill & Melinda Gates Foundation upon his demise.

Early Life and Education

Buffett was born to Howard and Leila Buffett on Aug. 30, 1930, in Omaha, Nebraska. He was the middle kid and the only male in a family of three. His dad was a stockbroker and a four-term congressman from the United States. Howard Buffett, who held libertarian ideals, was elected to two non-consecutive terms on the Republican ticket.

Warren, his son, had an early fascination with making money and started off selling soft drinks and running a paper route. He used the money he made to buy 40 acres of land when he was 14 and turned a profit by renting it out. He applied to Penn at his father’s insistence and got accepted. Buffett was unsatisfied with his experience there and transferred to the University of Nebraska after only two years.

When he finished high school, his father urged him to continue his studies by getting a master’s degree. Buffett was turned down for admission at Harvard, but he was welcomed at Columbia. Buffett’s stint at Columbia, where he studied under Benjamin Graham, the “father of value investing,” paved the way for a legendary career that got off to a sluggish beginning.

After Buffett graduated, Graham did not hire him and actually advised him against a Wall Street career. As a result of his father’s agreement with Graham, Buffett moved back to Omaha to join the brokerage firm he had grown up in. They began a family after he wed Susan Thompson. Graham first rejected Buffett, but then changed his mind and offered him a job in New York.

Personal Life

Warren Buffett is known for his extreme frugality despite his multibillion dollar fortune. He still enjoys his daily Coca-Cola, visits local eateries for his chosen fare of burgers and steaks, and maintains residence in the five-bedroom home he purchased for $31,000 in 1958. He put off buying a corporate jet for years. When he eventually got his hands on one, he was so vocal in his disapproval of the money being spent on jets that he christened his the Indefensible.

He married Susan Thompson in 1952, and they have been together ever since. Susie, Howard, and Peter were their three children. While Buffett and Susan remained married after their 1977 divorce, she passed away in 2004. Susan had introduced him to a waitress named Astrid Menks before she passed away. In 1978, Buffett and Menks moved in together, and they wed in August of 2006.

 

Investment philosophy

Warren Buffett’s writings include his annual reports and various articles. Buffett is recognized by communicators as a great story-teller, as evidenced by his annual letters to shareholders. He has warned about the pernicious effects of inflation:

The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation.

— Buffett, Fortune (1977)

Index funds vis-à-vis active management

Buffett has long advocated index funds as a viable option for those who lack the time or inclination to actively manage their own portfolios. Investors have been urged by Buffett, who doubts that active management can outperform the market over the long term, to shift their money into low-cost index funds that track wide, diverse stock market indices. When trillions of assets are managed by Wall Street collecting hefty fees, it is frequently the managers, not the clients, who earn outsized profits, as Buffett pointed out in one of his letters to shareholders.[98] A group of managers and Buffett placed a wager in 2007 that an index fund tracking the S&P 500 would outperform high-fee hedge funds. Through the end of 2017, the index fund had beaten the returns of every hedge fund that had wagered against Buffett.

Using investment banks

For a long time now, Buffet has avoided having Berkshire Hathaway work with investment banks.Multiple news outlets, including Barron’s, Insider, and Seeking Alpha, have covered this development.

⇒Important-Buffett’s mystique remained intact until technology stocks became popular. As a resolute technophobe, Buffett sat out the incredible run-up in technology stocks during the late 1990s. Sticking to his guns and refusing to invest in companies that didn’t meet his mandate, Buffett earned the scorn of Wall Street experts and was written off by many as a man whose time had passed.

 

How Did Warren Buffett Amass His Fortune?

By making well-researched, timely investments in undervalued securities and companies, which he would then hold for the long term. For the majority of the companies he acquired, he retained the existing management, as they had evidently performed well enough to make the company attractive to Buffett in the first place. He has invested in stocks for the long term, holding Coke and American Express for decades (both of which he still owns).

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What Are Some of Buffett’s Pearls of Wisdom?

One notable saying goes like this: “If you’re not prepared to hold a stock for 10 years, you shouldn’t hold it for 10 minutes,” a warning to day traders who are looking for quick profits at the expense of long-term investment.

One such well-known saying goes something like, “A simple rule dictates my buying: be fearful when others are greedy, and be greedy when others are fearful.”

Buffett is famous for his pithy sayings about investment, yet he always comes back to the basics of value investing.

What Does Warren Buffett Plan to Do With His Fortune?

He plans to donate vast sums of money, primarily to the Bill & Melinda Gates Foundation, because he has developed a strong friendship with the Gateses and shares and respects their commitment to charitable causes including global health and women’s rights. Warren Buffet is well-known for his prodigious generosity, so it comes as no surprise that he has donated the great majority of his fortune to noble causes.