Biography of Warren buffet. Success story of ‘oracle of omaha’.
It’s not the end result but the journey that matters.
Hello everyone, today’s article is about a man who despite being 89 years is not only young at heart, but his style of doing business and investing is unparalleled ranked at number six in the Forbes list of the richest persons in the world.
Mr. Warren Buffet proves to be one of the best inspirational figures of the investment world, let us know his life story.Warren Buffet was born in 1937 within the city of Omaha us . His father worked as a salesman in the stock broking firm, but sadly during the 1929 Great Depression he lost his job, determined not to give up.
He started his own stock broking firm where other children were enjoying the childhood playing messing around, Warren Buffet love playing around with numbers.Since childhood he had a keen interest in reading books. he found pleasure in all of these things, it would not be wrong to say that since the early days, he had a mind of a business person, he was always up to something, trying his hand on small business, as if it was meant for him all along, when he was around seven to eight years old, he read a book, 1000 ways to make $1,000. one of the 1000 ways that attracted Mr boo fey, was the business of pinball machines, his mind started to imagine numbers, he analysed, how much would a pinball machine cost, what percentage pin table s can he buy by the profit made up of the primary pinball machine.
He liked this idea and in partnership with a friend he bought a pinball machine and placed it in a barber shop. The objective behind it had been that folks who would be within the queue rather than just sitting idly, they might play the pin table. The strategy worked, he began to make a take advantage of his little venture.He reinvested this profit into buying more pinball machines and placing them in barber shops all over the city.
He sold his profitable venture at $1200 After some time, he always had the skills required to be a good businessman. At the tender age of seven to eight, he started doing small business one after the other. For example, distributing newspapers, selling Coca Cola chewing gum magazines toe to toe, he found satisfaction and joy in doing such small businesses, although his family was financially stable, and he wasn’t obliged to do this at a young age of 14 He bought his first land of 40 acres from the money that he had saved from all the businesses that he had done growing up.By the time his college ended, he had a fund of $9,800 in his savings, his father often used to call him fireball because of his nature of starting businesses at such an early age.
His father had tremendous confidence in him. Mr. Buffett gained insight for guidance and wisdom from his father, which is the reason why he gets the credit for his success to his father, he applied for his post graduation and Harvard University which got rejected.
While he was searching about different colleges and reading about the teachers, he got to know that Mr. Benjamin Graham and Mr David dog. Both of them teach at Columbia University. Mr boo Fay had already read a book authored by them. The name of the book was security analysis, and he was highly inspired by this book to learn about investing from Mr. Graham and Mr dog.
He took admission at Columbia University. This turned out to be a life changing decision, which he realised at later stages of his life. Professor Benjamin Graham was the inventor of value investing, And is also known as the father of value investing. After learning the same from progress so Graham, Warren Buffett applied in Graham’s company Graham Newman Corp, which was rejected. After two years, Professor Graham offered a job to Warren Buffet, in this partnership firm for two years, Warren Buffet worked as a security analyst with Graham Newman Corp.
He improved his value investing skill, while working in the company.In 1956, When Benjamin Graham retired, he closed his partnership firm, and as a result, Warren Buffet returned to his hometown, Omaha. After having gained some experience, he opened a partnership firm in his hometown. Partnership firms are known as hedge funds now.
The philosophy he learned while working with the professor and the experience and could both retire profit for him. and with huge profits, he became a millionaire in a short span of time.
For your information value investing means buying stocks that are undervalued. That is buying shares at a price lower than their intrinsic value, intrinsic value is the real value of shares, which is justified by the company’s assets, earnings dividends, earnings power, Professor Benjamin Graham used to study the financial report of the company to derive the intrinsic value of the company.
It happens often, that the share price of the company is trading below their intrinsic value, which we call undervalued stock value investing is the technique of finding such companies and buying them with the same philosophy.
Warren Buffet first bought the shares of Berkshire Hathaway in 1962. The journey of Berkshire Hathaway and Mr. Warren is an interest testing one, during 1962 Berkshire Hathaway was a company that was involved in the textile business. and It was performing badly.
The company was selling its textile mills one after another, and with the money coming in, the company started buying back the shares from shareholders to the logic with which Mr Beauvais bought shares, was that the management was planning to wind up the business by buying back the shares.So when the corporate will sell more of its textile mills and use that cash to shop for back shares. Then Mr buffet will get a good rate for selling his shares by 1964 he had bought a good number of shares of Berkshire Hathaway. When the company sold more of its existing mills and the money started buying back the shares they negotiated with Mr. Warren Buffet, about the price at which he was willing to sell the shares, a deal was struck and the price was decided at $11.50 per share.But when he received the official letter from Berkshire Hathaway, The price mentioned in it was $11.375 instead of $11.50 Well this mismanagement and fraud, conducted by Berkshire Hathaway disappointed Warren Buffet on all levels.He rejected the offer immediately following this incident.
He started to buy more shares of Berkshire Hathaway, and continued until he had complete control over the firm, once he had control.The first thing he did was fire the management that tried to warn him in the first place. On this incident, he has one school to the greatest enemies of the equity investor, expenses, and emotions.And he believes that he took an emotional decision during this investment, and thus regards it as his mistake, but he acted on the error and turned it into a successful business later in 1996, he closed his partnership business, and took over as the chairman of Berkshire Hathaway, after he took over as the head of the firm.
He turned it into a holding firm as its textile business wasn’t up to the mark for those who don’t know, holding company is that firm which invests in other companies.Similarly, Warren Buffet began to invest in various firms like Coca Cola , Washington Post, Geico, etc through Berkshire Hathaway.
Later he also entered the insurance sector, by buying some companies working in the same sector, let us discuss Warren Buffet’s first investment and the lesson he learned from it. He made his first investment at a really young age of 11 years, still he believes that he was wasting his life till he was 11 years old. The first investment made by him was in a form named City service, where he bought shares for himself and his sister, at a price of $38 Initially the stock price of 60 service went down to $29, but in gained momentum, and soon the share price touched the figure of $40 at this price he sold the city service shares he owned.
But after he sold off those shares the price shoot up to $200 from this incident, Warren learn to be patient with his investments, and to give time for the things to work.
Hence his focus mainly lies in investing for the future. For instance, he started to buy the shares of Washington Post in 1973, and went on to incur a return of more than 9,000% on it.Although after years of being invested in it. He sold all the 28% shares of Washington Post in 2014, in his view, buying stocks of any firm is like buying that business.
As a result he invests in the businesses which he understands, so as to carry out a deep analysis of the company. Similarly, he had invested in Coca Cola back within the year 1988. He himself is a big fan of the soft drink, and loves to consume it on a daily basis. If we talk about the investment strategy of this to Warren Buffet, it is the culmination of the strategies propagated by Mr. Benjamin Graham and Philip Fisher.He says he’s 85% Benjamin Graham and 15% Philip Fisher, Benjamin Graham’s strategy says that bias stop when it’s available at less value or is undervalued, whereas Philip Fisher’s philosophy states that one should invest in quality business.In fact, he believes that the code given by Benjamin Graham in his book, intelligent investor, are the most important words in total investment. The court goes like this.
Investing is most intelligent, when it is most business like, if you look at the portfolio of Mr. Buffett, then you will notice that he invested the most during the times of recession, or when a firm was facing one time problems, because during that time he could buy the shares at low value to rules that Warren Buffett sticks to never lose money, and the second one is never forget the rule number one.
Apart from Benjamin Graham, and Philip Fisher, he follows respects and provides huge credit for his success to Mr. Charlie Munger, who also happens to be his business partner, one of the greatest things that one can learn from him is his reading habit.He spends a good amount of time on a daily basis reading.
Yes, dear friends, reading and learning are of utmost importance. If you would like to possess success within the investment world. Despite featuring within the list of the richest persons of the planet and having a fortune.
He’s still a right down to earth person, he still lives within the house he bought back in 1958 and drives his car by himself. Since 2000 He has donated around $46 billion dollars towards charity. You all must be wondering, even at the age of 89 Why does he got to learn.
Well business as well as investing, or his passion, and he does not do it for merely fulfilling his needs, but he enjoys it.You would be surprised to know that about 90% of the wealth he owns is owned by him after he turned 50 years old. That is the best example that goes with the saying that ages just a number. If you all learn something noteworthy from this live story of Mr. Warren Buffet, then you can achieve many things in your life.