Biography of Warren Buffet
Warren Edward Buffet, is an American investor, business tycoon, philanthropist, and the Chairman of Berkshire Hathaway- a multinational group of companies. He is currently the 7th richest person in the world. He is considered one of the most successful investors in the world and history and currently has a net worth of about $89 billion as of January 2021.
Warren
Buffet was born in 1930 in the city of Omaha, Nebraska, USA, to his father
Howard Buffet, who was a congressman, and mother Leila. Buffet starts to think of
making money at a very early age. At the age of 6, he bought six-packs of
Coca-cola from his grandfather's shop for 25 cents and resold them at the
profit of 5 cents while the same aged children were busy playing. Five years
later, Buffet took his first step into the world of business.
Early Life and Education
At eleven years old, Buffet purchased his first stock of 3 shares for him and 3 for his sister Doris Buffet of Cities Service at $38 per. He sold them at $40 each and also regret while shares went up to $200 after selling them. Then he learned the basic lesson, Patience is a virtue.
He took many jobs in his early life from washing cars to delivering newspapers. In 1947, Warren Buffet graduated from Woodrow Wilson high school. After finishing his school graduation, he wanted to skip his college admission and directly go to business having success in his side entrepreneurial and investment.
He was selling chewing gum and Coca-cola bottles while graduating from school. In 1945, while Buffet was still in high school purchased a used pinball machine along with a friend of his, and placed it in a local barbershop.
Within a few months, they owned three different barber-shop across Omaha. Later, they sold the business for $1,200 to a war veteran. At age 15, Buffet made $175 monthly delivering the Washington Post newspaper. He invested in his father’s business and bought 40 acres of farmland from a farmer at the age of just 14 with $1,200 of his savings.
Later in the year 1947, he was sent to Wharton Business School at the University of Pennsylvania. He studied there for only two years and joined the Alpha Sigma Phi fraternity. He then transferred to the University of Nebraska-Lincoln. Despite having worked full-time, he completed his Bachelor of Science in Business Administration within only three years.
After being
rejected by Harvard Business School, Buffett enrolled at Columbia Business
School of Columbia University upon learning that Benjamin Graham taught there.
He earned a Master of Science in Economics from Columbia in 1951. After
graduating, Buffett attended the New York Institute of Finance.
Business Career
Buffet worked at Buffet-Falk as a salesman from 1951 to
1954. From 1954 to 1956 worked at Graham-Newman Corp. as a security analyst, and as
a general partner at Buffet Partnership from 1956 to 1969. And the CEO of
Berkshire Hathaway Inc. from 1970 to now.
In 1951, Buffet came to know that Benjamin Graham is on the board of GEICO insurance. Benjamin Graham was a British-born economist, professor, influencer, and investor. He was widely known as the ‘Father of value investing. He wrote two books on neoclassical investment. One is Security Analysis (1934) co-written by David Dodd and another is The Intelligent Investor (1949).
Later on, Warren buffet described the Intelligent Investor as the best book about investment ever. Benjamin Graham was the key influencer in Buffet’s life. On a Saturday, taking a train, Buffet knocked at the door of GEICO until a janitor noticed him. He met Lorimer Davidson and discussed the insurance business for hours. Davidson found an ‘extra-ordinary’ man inside Buffet. Later Davidson became the lifetime friend of Buffet.
Buffet offered to work for Graham for free. But his father and Graham refused it. Buffet returned to Omaha and worked as a stockbroker while taking a public speaking course at Dale Carnegie. By this time, he felt confident enough to teach an Investment Principles night class at the University of Nebraska-Omaha. The average age of his students was twice or more than twice of him.
In 1952, Buffet married Susan Thompson. The next year they had their first child Susan Alice. Buffet joined a job with Benjamin Graham’s partnership in 1954.
His starting salary was $12,000 a year (about $114,000). In the same year, Buffet had his second child Howard Graham. In 1956, Benjamin Graham retired and closed his partnership.
By this time Buffet’s savings were about $174,000 (almost $1.64 million today) and Buffet started his own business Buffet Partnership Ltd. In 1957, Buffet purchased a five-bedroom house name Buffet’s folly for $31,500 and he still lives there.
In 1958, Buffet’s third child Peter Andrew was born. By 1960, Buffet operated seven partnerships from his bedroom. In 1961, Buffet obtain a seat on the Board of Directors of Sanborn Map Company and owned 77% of the shares of the company. In just two years, Buffet obtained a 50% of its return on investment.
Owning Berkshire Hathaway
Warren Buffet became a millionaire in 1962 by the raise of his partnership business, which in January 1962, was worth equal to $71,78,500, and of them, Buffet owned $10,25,000. Buffet started to invest in a textile manufacturing firm, Berkshire Hathaway, and gradually took control of the company.
He began buying shares from Seabury Stanton who was the owner of the Berkshire and later on, Buffet fired him from the company. Buffet’s partnership purchased per share $7.60 from the very beginning and while purchasing at $14.86 per share it was worth $19 per. Buffet took the control of Berkshire Hathaway and declared a new president, Ken Chace to run the company. After a time, he moved to the insurance business and sold the last mill of textile in 1985, which was the core business of Berkshire.
Other Businesses
In 1969, Buffet liquidated the partnerships and transferred their shares to Berkshire. In 1970, he started to write annual letters to shareholders. He lived on his salary of $50,000 per year and his other businesses. In 1973, Berkshire began to purchase shares of Washington Post Company.
Buffet befriend Katharine Graham, who controlled the newspaper company and managed to be a board member. In 1977, Berkshire bought the Buffalo Evening News for $32.5 million. Antitrust charges started by several media instigated by its rival Buffalo Courier-Express. Both papers went down to the business till Courier-Express shut down in 1982.
In 1979, Berkshire started to purchase stock in ABC. On the other hand, Capital Cities announced a $3.5bilion purchase of ABC on March 18, 1985. Since ABC was four times bigger company than Capital Cities, Berkshire helped finance in return for a 25% stake in the combined company.
In 1987, Berkshire bought
12% of the stake of Salomon Inc and Buffet became the director of it. Because
of a scandal, the old CEO of the company John Gutfreund left the company and
Buffet became the chairman of the company until the crisis passed. In 1988,
Buffet began purchasing the share of the Coca-cola
Company and later on purchased up to %7 of the company’s shares which is
worth $1.02 billion. It was one of its key investments of Buffet and still
holds it.
Becoming a Billionaire
Buffet became a billionaire first on May 29, 1990, when Berkshire started to sell class A shares for $7,175 per. Later on, Buffet acquired General Re which had a significant loss. General Re, later provided reinsurance after Buffet became involved with Maurice R. Greenberg at AIG in 2002.
In 2006, AIG had to be agreed to pay a $1.6billion fine because of an accounting fraud case in 2005. In 2010, the US government agreed to settle the case with General Re for $92 million to avoid prosecution in the AIG case.
Gen Re also committed to implementing a ‘corporate governance concession’,
which required Berkshire Hathaway's Chief
Financial Officer to attend General Re's audit committee meetings and mandated
the appointment of an independent director. In 2002, Buffet entered $11 billion
worth of ‘forward contracts’ and in two years his total gain was $2 billion
through these contracts. As of January 2021, Buffet owns a net worth of $89
billion.
Personal Life
Buffet married Susan Buffet in 1952. They had three children, Susan Alice, Howard Graham, and Peter Andrew. The couple began to live separately in 1977, though they remained married until Susan Buffet died in 2004.
Buffet married Astrid Menks in 2006, who lived with Buffet since his wife departed from him in 1977. Buffet’s daughter Susie lives in Omaha, is a national board member of Girls Inc., and is a philanthropist. Buffet disowned his son Peter’s adopted daughter, Nicole, in 2006 though his first wife addressed her as their adorable grandchild.
He wrote her a letter, ‘I have not emotionally or legally adopted you as a grandchild, nor have the rest of my family adopted you as a niece or a cousin’.
His annual salary was $1,00,000 in 2006. He continued to live in the same house Omaha bought for $31,500 in 1958. He also owns a $4 million house in Laguna Beach, California. Buffet bought a private jet in 1989 for $6.7 million and named it ‘The Indefensible’.
In 2006, it was reported that Buffet
did not carry a mobile phone, did not have a computer on his desk, and drove his automobile, a Cadillac DTS. In 2013, he had a Nokia flip
phone and first sent an email ever. He is a follower of Nebraska Football and a bridge
player. He declared in 2006 that he would give away 85% of his Berkshire
holdings to five foundations in the annual gift of stocks, starting in July
2006, the largest contribution to the Bill
and Melinda Gates Foundation.
Ending
Warren Buffet is a full-time businessman, and investor. In most
of his businesses, he got success. In the world of investment, he is an all-time
legend. He never thinks of failing and giving up his selfness in business.
------- Quick, Becky (March 20, 2011)
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