Timeline
- 1930
- Born in Omaha, Nebraska.
- 1950
- Received BS from the University of Nebraska.
- 1951
- Received MS in Economics from Columbia Business School.
- 1951
- Co-founded Buffett-Falk & Co.
- 1954
- Appointed as a security analyst at Graham-Newman Corp.
- 1956
- Founds Buffett Partnership Ltd.
- 1962
- Became dollar millionaire.
- 1965
- Acquired Berkshire Hathaway.
- 1967
- Berkshire Hathaway bought National Indemnity Company and National Fire & Marine Insurance Company.
- 1970
- Appointed Chairman and Chief Executive Officer of Berkshire Hathaway.
- 1995
- Acquired major stake in McDonald’s.
- 1996
- Acquired GEICO.
- 1998
- Bought Executive Jet Corporation.
- 2001
- Became the second-richest man in the US.
- 2001
- Announced new investment strategy.
- 2003
- Acquired Burlington Industries.
- 2003
- Named by Forbes as the second-richest man in the world.
- 2004
- Appointed an economic advisor by John Kerry during US presidential elections.
- 2008
- Named by Forbes as the richest man in the world, worth US$62 billion.
Life and Career
Warren Buffett is a multibillionaire investor, businessman and philanthropist, and one of the most influential people in the financial world. As a child, he quickly started making business deals, before studying at Columbia Business School under investment guru, Benjamin Graham, the first proponent of value investing. He formed the investment firm, Buffett-Falk & Co., and worked as an investment salesman, before Graham offered him a job at the Graham-Newman Corporation. Buffett soon realized he preferred to work independently, so he launched his own family investment partnership at the age of 25, with starting capital of US$100,000. He later decided to turn around one of his acquisitions, the unprofitable Berkshire Hathaway textile company. During the market collapse of 1973, he purchased a series of companies at bargain prices. Berkshire Hathaway is today a massive holdings company for a variety of businesses, with assets and sales totaling many billions of dollars. In 2006, it gave away US$30.7 billion in shares to the Gates Foundation, the largest charitable donation in history.
Key Thinking
-
Buffett was named as the richest man in the world, with a fortune of US$62.3 billion, in early 2008, by Forbes magazine.
-
His investing career started with his own personal investment strategy of looking for stocks that offered outstanding value–those that were relatively cheap given their asset value–and then holding those shares for the long term.
-
When he took over Berkshire Hathaway, Buffett focused on restructuring the company’s financial framework, and using it as a holding company for other investments.
-
He grew Berkshire Hathaway into the 12th largest corporation in the US, through the implementation of his investing principles; this strategy proved extremely successful–shareholders who invested US$10,000 in the company in 1965 have made more than US$50 million.
-
He avoids stock bubbles that are generated by media coverage, such as the internet boom of the late 1990s; since 2000, he has ignored the technology sector, and focused on bricks, carpets, insulation, and paint.
-
He is a Democratic supporter, and acted as an economic advisor to John Kerry, the Democratic candidate for the US presidential elections in 2004.
In Perspective
-
Buffett was influenced by investment pioneer Benjamin Graham, in particular his work on value investing. Buffett further developed these theories by researching companies whose shares seemed cheap given their growth prospects.
-
This approach was groundbreaking for its time, as it meant also examining a company’s intangible assets, such as brand value.
-
He invests by sticking rigidly to his own investment principles and avoiding bandwagons–he will not invest in a business he does not understand–but has successfully picked some key stocks at a cheap price, such as Coca-Cola and American Express, when they were at a low point in their business cycle.
Quotation
“Shares are not mere pieces of paper. They represent part-ownership of a business. So, when contemplating an investment, think like a prospective owner.”
www.qfinance.com