Chances are you’ve heard of Warren Buffett whether you’re an investor or not. The billionaire is one of the richest people on Earth and has been outspoken throughout his career in the stock market.
Buffett is the picture of what people can accomplish when they start investing early and pay close attention to the fundamental analyses of the companies they back.
But Warren Buffett isn’t your run-of-the-mill Vanderbilt cookie-cutter billionaire. This investing wunderkind-turned-business magnate may be one of the most intriguing examples of the American Dream in recent history.
Who Is Warren Buffett?
Warren Edward Buffett was born in Omaha, Nebraska, on Aug. 30, 1930, to Leila and Howard Buffett. His father was a businessman, investor, and politician.
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Events in his childhood in Nebraska played a major role in his success today.
As a young child, Buffett showed an interest in making money. To do so, he sold soft drinks door to door and ran a paper route.
Buffett made his first stock purchase at just 11 years old when he bought six shares of Cities Services for $38 per share. He gave his sister three shares and retained the other three for himself, but the move wasn’t the biggest of successes.
Shortly after buying the shares, Cities Services shares fell to around $27 before bouncing back to $40, where the Buffett siblings sold their positions. Soon after the sale, Cities Services shares climbed to $200, teaching the “Oracle of Omaha” a lesson on patience.
At 17 years old, Buffett invested $25 in a pinball machine — a machine he believed would grow to become a gaming empire. He walked into a barbershop with a business proposition for the barber, Frank Erico. If the barber let Buffett install a pinball machine, the two would split the profits.
The next day, the machine was installed, and the two collected $4. By the end of the first week, they had enough money to invest in another pinball machine.
Buffett graduated from Woodrow Wilson High School in 1947 and went on to study at the Wharton School of the University of Pennsylvania. He later transferred to the University of Nebraska. When seeking a dedicated business school education, he was famously rejected from Harvard Business School. Nonetheless, Buffett touts his rejection from the school as one of the best things that’s ever happened to him.
The Harvard rejection opened the door to Columbia Business School, a division of Columbia University. He studied under Benjamin Graham, also known as the Father of Value Investing. The lessons from his mentor would shape his style of investing and give him everything he needed to generate his future success. In 1951, Buffett graduated and went on to build his career as an investor.
Warren Buffett’s Investment Career
Buffett’s love for investing started when he purchased his first stock at 11 years old and was nurtured by his mentor Benjamin Graham. His investment career was marked by several milestones since those events, each building on the other to make Buffett the massive success he is today.
Buffett-Falk & Co.
After graduating from Columbia, Buffett attempted to work for his mentor, Graham, but was denied a position. In fact, Graham said Buffett should pursue a career outside Wall Street, an idea that Howard Buffett agreed with.
But Warren Buffett moved back to Omaha to pursue his Wall Street career, ignoring warnings from his father and mentor.
Now back in Omaha, Buffett worked for his father’s investment firm, Buffett-Falk & Co, despite his father not being a big fan of the idea.
Buffett’s Move to New York
Buffett decided to move to New York to dive deeper into the market after working at his father’s firm for about five years. Buffett would build on the lessons he learned from Graham and his father early in his career as he worked on Wall Street.
Buffett Goes Back Home
In 1956, Buffett decided to move back home to Omaha, and when he did, he purchased a house and launched Buffett Associates, Ltd. He became a millionaire while operating his investment firm before he met yet another important figure.
Buffett Meets Charlie Munger
When Warren Buffett was 30 years old, the young millionaire met Charlie Munger, yet another important figure in his life. The two hit it off, forming a partnership that would last to this day. The two focused their investment efforts on Buffett’s investment philosophy of looking at value investing as something more than tapping into potential profits from dying companies.
Berkshire Hathaway Acquisition
In 1965, Buffett and Munger decided to purchase Berkshire Hathaway, which was a struggling company at the time. The two worked to bring the company back to life, and today, it’s one of the largest investment holding companies in the world.
The investment firm now owns massive brands like Geico, Dairy Queen, Fruit of the Loom, and Duracell. The company also invests in a long list of massive companies, such as Apple, Pilot Flying J, and Coca-Cola.
Interestingly enough, Berkshire Hathaway has never paid a dividend and doesn’t plan to. In fact, the company is famous for its unwillingness to pay dividends. Buffett explains this strategy by outlining the fact that the firm has better things to do with its money, specifically growing it through acquisitions and investments.
Warren Buffett’s Investment Strategy
Buffett’s investment philosophy is centered around intrinsic value. His goal as a value investor is to invest in companies that are undervalued when compared to their competition while producing strong earnings, offering compelling valuation metrics, and having a clear path toward growth in the future.
Outside his role as a value investor, Buffett is also an activist investor.
As an activist investor, Buffett and his firm, Berkshire Hathaway, purchase large percentages of struggling companies. The goal is to buy enough shares to force meaningful changes in operations and often management.
Once he and his firm acquire their positions, they propose things the companies can do to improve value for shareholders. If the companies refuse, Buffett and his team often force votes as a result of their large stake in the companies, giving investors the opportunity to help push for meaningful improvements.
Warren Buffett FAQs
Warren Buffett isn’t the average investor, businessman, or even husband. He’s a one-of-a-kind person that commands the attention of the room. These are the answers to some commonly searched or asked questions about the popular investor.
What Is Warren Buffett’s Net Worth?
Warren Buffett’s net worth is $127.3 billion as of April 2022, making him the sixth richest person in the world. His wealth accounts for enough money to buy nearly 34,000 homes or 2.7 million cars or send 3.6 million high school grads on a fully paid ride through college to earn a bachelor’s degree at average prices across the United States.
Why Is Warren Buffett Called the “Oracle of Omaha”?
Buffett is often referred to as the Oracle of Omaha because the investing community tends to follow his moves closely, as believers would follow the word of an oracle. Of course, the Omaha part of the nickname comes from the fact that the billionaire was born in Omaha, Nebraska.
Does Warren Buffett Own Berkshire Hathaway?
Berkshire Hathaway is a publicly-traded company trading under the ticker BRK. As a publicly-traded company, there are thousands of owners because anyone who owns a share of the company’s stock owns a piece of the company.
However, Warren Buffett has retained 30.71% control of Berkshire Hathaway as the company’s largest shareholder.
Who Is Warren Buffett Married To?
Warren Buffett was in an open marriage with Susan Thompson from April 19, 1952, until the day she died in 2004. Buffett later married Astrid Menks, his current wife, a woman his late wife introduced him to.
As was the case with Susan Thompson, Buffett maintains an open marriage with Menks.
Does Warren Buffett Have Children?
Yes. Warren Buffett has two sons and a daughter: Howard, Peter, and Susie Buffett. Like their father and mother, his children also have a passion for charity. Unlike many children of wealth, they do not live luxurious lifestyles.
Who Was Warren Buffett’s Mentor?
Benjamin Graham, also known as the Father of Value Investing, was Warren Buffett’s mentor as he learned the art of value investing. Graham earned his pseudonym because he introduced the idea of fundamental stock analysis to the world.
His theory that you can determine whether a stock is likely to rise or fall by studying valuation metrics is the foundation of the value investing strategy countless investors use today.
Is Warren Buffett Really Giving Away 99% of His Wealth?
Yes, Warren Buffett has pledged to give away 99% of his riches. So far, he’s donated about $41 billion, with most of the money going to the Bill & Melinda Gates Foundation and the foundations developed by Buffett’s three children.
In August of 2010, Warren Buffett and Bill Gates introduced The Giving Pledge to the world. The two urge the world’s wealthiest individuals to give at least 50% of their net worth to charity.
To date, 231 of the world’s richest people across 28 countries have taken the pledge and agreed to donate at least 50% of their net worth.
Final Word
As one of the richest investors to ever walk down Wall Street, it’s no surprise so many people want to learn how to invest like Warren Buffett. Looking back at his career, there are a few steps to doing so. First, start early. Next, focus on value. Finally, pay close attention to fundamentals when making your investments.
