Warren Edward Buffet is the chairman and CEO of Berkshire Hathaway and an American investor, corporate magnate, and philanthropist. He is regarded as one of the world’s most wealthy businessmen, with a net worth of more than $100.6 billion as of April 2021, making him the world’s seventh-richest individual.
Warren Buffet Early Life
Warren Buffett was born in Omaha, Nebraska, on 30 August 1930. His father, Howard, was a stockbroker with his own business, and his mother, Leila, was a stay-at-home mother. Buffett had two wives, one older and the other younger than him. Warren spent time at his father’s brokerage firm as a child, writing numbers on the chalkboard and reading the books. He had a close relationship with his father, whom he describes as affectionate and inspiring. He attributes much of his success to him, claiming that he was the one who first exposed him to investing and his passion for reading.
Warren Buffet Biography - Education
Buffett attended Omaha’s Rose Hill Elementary School. He was always fascinated by numbers as a child, and he also had a keen interest in collecting stamps and bottle caps.
At the age of 16, he enrolled in the Wharton School of the University of Pennsylvania to study “Business.” He soon realized, however, that he understood more than his professors after “two years of trying.” He moved ahead to the University of Nebraska in Lincoln, where he graduated with a bachelor’s degree in business administration. Mr Buffett also received a Master of Science in economics. Later on, in 1951, Mr Buffett graduated from Columbia University with a master of science in economics.
Warren Buffet Career
From 1951 to 1954, Buffett worked as an investment salesman at Buffett-Falk & Co., then as a stock analyst at Graham-Newman Corp., then as a general partner at Buffett Partnership, Ltd. from 1956 to 1969, and finally as Chairman and CEO of Berkshire Hathaway Inc. from 1970. Buffett found Graham on the board of GEICO insurance in 1951.
Travelling to Washington, D.C. by train, He pounded on the door of GEICO’s headquarters on a Saturday before a janitor let him in. He met Lorimer Davidson, Vice President of GEICO, and the two spoke about insurance for hours. Davidson would go on to become a lifelong friend and a significant influence on Buffett. After just fifteen minutes, he considered Buffett to be an “extraordinary individual,” he would later remember. Buffett wanted to work on Wall Street but was discouraged by his father and Ben Graham. Graham declined his offer to work for him for free.
Top Reasons of Buffet’s Success
- Buffett’s research emphasis has remained relatively narrow The Oracle of Omaha has based his research on the markets and industries in which he has the most expertise. There are financial stocks and consumer staples for Buffett. He becomes adept at choosing winners in these two sectors by concentrating on the businesses, subjects, and developments that interest him.
- He values proven brand-name businesses over potentially high-reward dart throws Warren Buffett’s popularity is also because he invests in well-established companies with distinct competitive advantages. While Wall Street is currently obsessed with growth stocks, the Oracle of Omaha has never been one of them. He’d instead invest in well-established, time-tested companies and hold on to them for a long time.
Coca-Cola (NYSE: KO), the world’s largest beverage company and Berkshire Hathaway’s longest-held stock (since 1988), is a prime example. Coca-Cola is present in every country but two (North Korea and Cuba). It is one of the most well-known brands globally, with a whopping 20% share of the cold beverage market in developing countries.
- For investment purposes, dependable management teams are essential Buffett also places a premium on management teams that are dependable and capable. Buffett seeks out motivated executives who actively strive to increase shareholder value and retain or expand current market share.
- Dividend stocks are always top of mind His dividend stock investments have also aided Buffett’s long-term performance. Because Buffett prefers mature businesses with substantial competitive advantages, many of these businesses are profitable and more likely to pay a dividend. Berkshire Hathaway was on track to produce $4.7 billion in dividend income in 2020 before the pandemic hit. It has changed dramatically, with all airline stocks being delisted and a handful of other income stocks having their payouts reduced or suspended. Despite this, Berkshire Hathaway’s annual revenue remains well over $3 billion.
- The Oracle of Omaha surrounds itself with strong and competent financiers. Buffett’s reputation has been built on his ability to surround himself with a capable investment team. Buffett’s right-hand man Charlie Munger, as well as Berkshire Hathaway’s investing lieutenants Todd Combs and Ted Weschler, will help fill in the study gaps.
Warren Buffett’s Biography & Philosophy - Value Investing
Buffett invests in the Benjamin Graham value investing academy. Value investors seek securities with unjustifiably low prices compared to their intrinsic value. Although there is no widely accepted method for calculating intrinsic value, it is often calculated by examining its fundamentals. The value investor, like bargain hunters, looks for stocks that are undervalued by the market or stocks that are expensive but aren’t recognized by the majority of buyers.
Buffett brings the concept of value investing to a new stage. The efficient market hypothesis is contested by many value investors (EMH). According to this theory, stocks often trade at their fair value, making it more difficult for investors to purchase undervalued stocks or sell them at inflated rates. They believe that the market will finally begin to favour certain high-quality stocks that have been undervalued for some time.
He considers each company as a whole, so he selects stocks solely based on their overall potential. Buffett doesn’t expect capital gain when he buys these stocks as a long-term investment, but rather an equity of high-quality businesses that can generate earnings. Buffett isn’t concerned with whether the market will ultimately accept a company’s value when he invests in it. He is worried about the company’s ability to generate profits.Summing Up
Warren Buffett is a quirky, down-to-earth businessman who has achieved success in ways that most people can only dream of. Ironically, the guy has a humble disposition and explains investing in a grandfatherly manner. Here are ten lessons learned from the Oracle of Omaha, based on quotes, business decisions, and a general value strategy that has outperformed almost all.