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Learn All About The Legendary Warren Buffett: From His Early Days In Omaha To Becoming The Richest Man In The World
Warren Buffett is widely considered to be one of the most successful investors of our generation.
In this section, you’ll have the opportunity to go back to his roots and trace the path he took to becoming a legendary investor.
From growing up in Omaha to trading stocks as a child, from developing his investment philosophy that has influenced all of his investments to building Berkshire Hathaway into an iconic company associated with him, you’ll discover how Warren Buffett made it big in the world of investing.
You’ll find out about how he developed his approach to investing and how it’s served him so well throughout the years.
This is your chance to follow the making of a true legend – Warren Buffett!
How The Great Depression Shaped Warren Buffett’S Grasp Of Money And Entrepreneurship
Growing up in Omaha, Nebraska during a time of economic uncertainty and instability taught Warren Buffett the value of money.
His father’s job as a securities salesman at a local bank was lost when the Great Depression hit their hometown and his father soon started his own business in order to make ends meet.
The family had very little money, and Leila Buffett would often give her share of food to Howard in order for him to have something more substantial for dinner.
These difficult times made an impression on Warren which inspired him to seek financial security and stability through money.
Warren’s interest in investments began showing at an early age.
He often visited his father’s office, went on a business trip with him to New York’s Stock Exchange at 10 years old, and was making investment profits along with his sister by 11 years old.
They funded such investments through Warren’s entrepreneurial activities like collecting lost golf balls from a local golf course or running five separate paper routes simultaneously at 14 years old which allowed him to buy 40 acres of land already at 15 years old.
All throughout Warren prioritized savings, showing resourcefulness even before entering Wharton School of Finance and Commerce where he graduated with top honors–demonstrating that even from childhood, money was always firmly on the mind of Warren Buffett.
How Rejection From Harvard Changed Warren Buffett’S Life And Investment Strategy
It was at Columbia Business School where the legendary investor Warren Buffett met his mentor, economist Benjamin Graham.
Buffett was highly respected in the program and became a close friend to Graham.
Without this relationship, it’s difficult to say what would have become of Buffett’s investment career.
Graham formulated an approach to analyzing stocks that Buffett adopted as his own philosophy.
He believed in finding a company’s intrinsic value and comparing it to the market value (i.e., current price of stocks).
The idea was that if the intrinsic value is greater than the market value, then you have a safe bet and will eventually profit from it.
This strategy appealed greatly to Buffett and inspired him in his own practice.
Because of his impressive work ethic, Buffet shortly began work for Graham’s Wall Street investment firm, before which some of his proposals were deemed too risky.
But in 1954 he pulled through with a high return on one of his deals involving cocoa futures.
Thanks to this experience and by using Graham’s advice, Buffet quickly gained recognition as an expert among the staff at this firm.
It is clear why beginning this relationship with Graham has kickstarted an extraordinary career for Warren Buffett!
The Investing Genuis Of Warren Buffett: How A Small-Town Boy Made It Big With Smart Decisions And Unconventional Wisdom
At the age of 26, Warren Buffett returned to his hometown of Omaha and started his own business.
He launched a venture called “Buffett Associates, Ltd.”, with a goal of applying the principles of legendary investor Benjamin Graham to put his capital and network to work in order to create generational wealth for himself and his family.
Initially, Buffett was able to raise $500,000 from friends and family members, which he then began investing into undervalued companies with great potential.
Within one year of starting the venture, he was able to increase the value of that initial investment by 10%.
After three years, he had doubled it!
During this time, despite competing against big investors in New York City, Buffett was miraculously outperforming the Dow-Jones Industrial Average.
In 1961, he took things up to a whole new level by making an enormous million-dollar investment into a troubled windmill company called Dempster Mill Manufacturing – an investment that no other investors would dare take on.
Through smart accounting practices implemented by Buffett himself as chairman of the board at Dempster Mill Manufacturing, by 1963 stock prices had tripled from their initial value when Buffett first made the purchase.
He sold what had become a profitable company for a massive $2.3 million profit in 1963.
By 1965, at just 35 years old and after five years in Nebraska following college, Buffett’s portfolio was worth over $22 million with his personal net worth reaching nearly $4 million – an incredible feat that served as proof of how profoundly successful his model really was.
The Incredible Investment Success Of Warren Buffett And The Creation Of Berkshire Hathaway
In 1962, Buffett noticed a great bargain in Berkshire Hathaway and began buying the stock.
The company had started as a textile manufacturer in 1839, however by the early 1960s, it was losing much of its strength to cheaper markets overseas.
Despite this, when Buffett studied the stock more closely and calculated its intrinsic value, he realized that it should be trading at $16.50 per share instead of its current $7.60 – which meant he had found an amazing deal.
He decided to buy every bit of stock he could get his hands on and eventually became the largest shareholder in the company.
During the 1960s and 70s, Buffett continued to add companies to Berkshire’s holdings while paying himself an annual salary of $50,000 – a careful decision made since the textile portion of his business only earned around $45,000 a year!
By 1976, one share of Berkshire Hathaway had gone up from $7.60 to $95 – a huge success for Buffett and proof of what can come from identifying quality investments.
In addition to all this success with Berkshire Hathaway from 1962 onward, Buffett was also able to accomplish another dream – owning a newspaper.
In 1973 Berkshire acquired 15% of The Washington Post Company’s stock making him the largest outside shareholder!
How Warren Buffett Transformed His Investment Philosophy And Became A Billionaire In The 1980S
In the 1980s, Warren Buffett’s wealth skyrocketed.
By the end of the decade, his net worth had increased from $140 million to a staggering $620 million.
This increase in wealth was largely due to the ever-growing markets and low interest rates during this period which created an environment that made stocks more attractive to buyers.
When Reagan was inaugurated in 1981, he promised to turn the economy around with favorable policies like cutting interest rates – something that economists predicted could only continue decreasing even further.
As a result, these low interests caused the Dow Jones Industrial Average to jump 38 points and set a new record high.
This economic boom acted as the ideal backdrop for Buffet’s own patient and methodical investment philosophy.
Berkshire Hathaway’s stock price rose right along with it, hitting a peak of $1,310 at the end of 1983 and their holdings becoming worth $1.3 billion.
Thanks to this remarkable economic environment coupled with Buffett’s savvy investments, by 1985 he had made it onto Forbes Magazine’s annual list of billionaires.
Warren Buffett: Defying Billionaire Stereotype Through Modest Life Style And Generosity
Despite being one of the world’s wealthiest people, Warren Buffett doesn’t fit into the traditional “Wall Street billionaire” mold.
For starters, he still lives in the same $31,500 home that he bought when he was 27 – and has no plans to upgrade any time soon.
What’s more, Buffett isn’t a fan of America’s elite class and has advocated for increased taxation on those individuals who are able to afford it during his lifetime.
In addition, despite hailing from a family history of Republicans, Buffett became and remains a Democrat due to their values around equality and social justice.
Finally, believing that wealth should not determine one’s future success in life, Buffett declined to give his children an excessive financial leg-up after his wife passed away and instead opted to donate most of his riches toward philanthropic causes such as the Bill and Melinda Gates Foundation which helps fight disease in developing nations.
Ultimately, such actions indicate that despite his immense wealth, Warren Buffett isn’t a stereotypical Wall Street billionaire.
Wrap Up
The main takeaway from Warren Buffett’s book is that understanding the true worth of a company, and then applying that knowledge to which stocks you should invest in, will ultimately lead to a greater fortune.
This is because Benjamin Graham taught Buffett the difference between what the company is selling for, and what it’s actually worth.
Accompanying this stellar knowledge, Buffett also had an unwavering refusal to be swayed by short-term trends and an impressive insight into numbers which enabled him to amass an incredible fortune amounting to more than $66 billion.
