His childhood and education
Warren Buffett, known as the “Oracle of Omaha”, is one of the most well known and respected businessmen in the business world
Warren Buffet was born in Omaha, Nebraska on August 30, 1930. He came from a wealthy family, his father Howard, was an equity broker and was also a member of the American Congress. His mother, Leila Stahl Buffet, was a housewife. Warren Buffet is the youngest of a family of 3 children and is the only boy.
He has demonstrated from an early age a strong gift for finance and investment subjects. His relatives indicated that he was a mathematical prodigy, who could easily solve sophisticated and complex problems. As a child, Warren Buffet often visited his father at his workplace and grew up following the stock market price.
He made his first investment at the age of 11, buying 3 shares of Cities Service Preferred at $38 per share. Following his investment, the stock dropped to $27, but Buffet held the stock until it rose to $40. He then sold them, making a small profit, but quickly regretted his decision when the price of the company’s stock soared to $200. During his career, he will often come back to this experience by explaining that patience is a necessary quality in the business world.
At the age of 13, Buffet was already running his own newspaper delivery business. In 1942, his father was elected to the House of Representatives, and his family moved to Fredericksburg, Virginia to pursue his political career. Buffet went to Woodrow Wilson High School in Washington D.C., where he continued to develop new ways to make money. For example, during his high school years, he and a friend bought a used pinball machine for a modest $25 and installed it in a hair salon. Within a few months, the profit raised allowed them to buy more and place them in different locations and then resell their business for $1,200, a return on investment of $48.
After high school, Buffet was accepted into the University of Pennsylvania at the age of 16 to study business life. He stayed there for two years before moving to the University of Nebraska where he graduated at the age of 20 with almost $10,000 in his pocket, money he saved from his profits made during his youth.
Largely influenced by Benjamin Graham’s book (1949), “The Smart Investor”, Buffet was accepted to Columbia Business School and had the opportunity to study with Benjamin Graham, one of the pioneers of value investing, he graduated in 1951 but upon graduation, Graham refused to hire him and even suggested that he avoid a career on Wall Street. Buffet’s father agreed and Buffet returned to Omaha where he worked with his father to sell financial products within Buffet-Falk & Company. He married Susan Thompson and started a family. Three years later, his mentor Graham changed his mind and offered him a job in New York with Graham-Newman Corp. for 2 years.
In 1956, he started his own company called Buffter Partnership Ltd. in his hometown of Omaha. He drew heavily on the techniques Graham had learned, and brilliantly identified undervalued companies, which made his fortune. In particular Berkshire Hathaway, a textile company for which he gradually bought shares and acquired control in 1965.
Despite the success of the Buffet Partnership, Buffet dissolved it to focus on the development of Berkshire Hathaway. It eliminated the textile division and instead purchased goods in more promising areas such as the media (The Washington Post), insurance (GEICO) or oil (Exxon). He has succeeded in transforming a struggling textile factory into one of the most profitable financial groups in the world. Buffet’s investment philosophy is to identify an undervalued but well-managed company and invest in it indefinitely.
Following a significant investment by Berkshire Hathaway in Coca-Cola, Buffet became its director from 1989 to 2006. He has also held management positions with prestigious groups such as Citigroup, Graham Holdings Company and Gillette Company.
In June 2006, Buffet made a significant announcement that it would donate all of its assets to charities, 85% of which would go to Bill and Melinda Gates’ association. The donation will be in the form of shares of its Berkshire Hathaway company, it is estimated at 10 million shares (i.e. 37 billion dollars). In 2010, Buffet and Gates announced the creation of a “The Giving Pledge” campaign to recruit more wealthy people for philanthropic causes.
Buffet also expects the share price to continue to rise for the next few years, he has also made another donation of 1 million shares to 3 associations held by his children.
More recently, in 2012, Buffet disclosed that he had prostate cancer, started chemotherapy in July 2012 and beat the disease by successfully completing his treatment in November 2012.
Warren Buffet is now one of the richest men in the world, each year he is in the top ranking of the world’s billionaires with an estimated fortune of more than $62 billion.
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