“People Just Like You” Series – Warren Buffet

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful” Warren Buffet

It’s easy to be a fan of Warren’s, and countless investors have honed their skills from every turn of his career. Warren Buffer is considered one of the most successful investors in the world and with a net worth of over $101.1 billion as of October 2021, is the world’s tenth-wealthiest person.

Buffet is 91years old and is known by global media as the “Oracle of Omaha,”. Although he has 3 kids of his own, he has promised to donate over 99% of his wealth. So far he has given more than $45 billion, mostly to the Gates Foundation and his kids’ foundations.

He is one of the most frugal billionaires in the United states who still lives in the same Omaha, Nebraska, home he purchased in 1958 for $31,500.

Who is Warren Buffet?

Warren Buffett is an American business magnate, investor, and philanthropist. He formed Buffett Partnership Ltd. in 1956, and by 1965 he had assumed control of Berkshire Hathaway, overseeing the growth of a conglomerate with holdings in the media, insurance, energy and food and beverage industries. Berkshire Hathaway owns more than 60 companies, including insurer Geico, battery maker Duracell and restaurant chain Dairy Queen.

Buffett has been the chairman and largest shareholder of Berkshire Hathaway since 1970. He has been referred to as the “Oracle” or “Sage” of Omaha by global media.

He is noted for his adherence to value investing, and his personal frugality despite his immense wealth.

So, what made Warren so special? – His early years

Warren Edward Buffett was born on August 30, 1930, in Omaha, Nebraska. Buffett’s father, Howard, worked as a stockbroker and served as a U.S. congressman. His mother, Leila Stahl Buffett, was a homemaker. Buffett was the second of three children and the only boy.

He demonstrated a knack for financial and business matters early in his childhood: Friends and acquaintances have said the young boy was a mathematical prodigy who could add large columns of numbers in his head, a talent he occasionally demonstrated in his later years.

Buffett often visited his father’s stock brokerage shop as a child and chalked in the stock prices on the blackboard in the office. At 11 years old he made his first investment, buying three shares of Cities Service Preferred at $38 per share.

The stock quickly dropped to only $27, but Buffett held on tenaciously until it reached $40. He sold his shares at a small profit but regretted the decision when Cities Service shot up to nearly $200 a share. He later cited this experience as an early lesson in patience in investing.

Buffett displayed an interest in business and investing at a young age. He was inspired by a book he borrowed from the Omaha public library at age seven, One Thousand Ways to Make $1000. Much of Buffett’s early childhood years were enlivened with entrepreneurial ventures.

In one of his first business ventures, Buffett sold chewing gum, Coca-Cola bottles, and weekly magazines door to door. He worked in his grandfather’s grocery store. While still in high school, he made money delivering newspapers, selling golf balls and stamps, and detailing cars, among other means. On his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route.

At 11, he bought three shares of Cities Service Preferred for himself, and three for his sister
– By the age of 13, Buffett was running his own businesses as a paperboy and selling his own horseracing tip sheet
– He bought the land when he was 14 years old with $1,200 of his savings
At 15, Warren made more than $175 monthly delivering Washington Post newspapers
-During his high school tenure, he and a friend purchased a used pinball machine for $25. They installed it in a barbershop, and within a few months, the profits enabled them to buy other machines. Buffett owned machines in three different locations before he sold the business for $1,200
-By the time he finished college, Buffett had accumulated $9,800 in savings (about $107,000 today).

Amazing!!

Did he need to get an Education?

Of course, he still had to get some quality education. It was not just enough that he had started making money at a young age. Buffett enrolled at the University of Pennsylvania at the age of 16 to study business. He stayed two years, moved to the University of Nebraska to finish up his degree, and emerged from college at age 20 with nearly $10,000 from his childhood businesses.

In 1951 he received his master’s degree in economics at Columbia University, where he studied under economist Benjamin Graham and furthered his education at the New York Institute of Finance.

Influenced by Graham’s 1949 book, The Intelligent Investor, Buffett sold securities for Buffett-Falk & Company for three years, before working for his mentor for two years as an analyst at Graham-Newman Corp. He sure went through the process!

His break!

In 1956 Buffet formed the firm Buffett Partnership Ltd. in his hometown of Omaha. Utilizing the techniques learned from Graham, he was successful in identifying undervalued companies and became a millionaire. One such enterprise Buffett valued was a textile company named Berkshire Hathaway. He began accumulating stock in the early 1960s, and by 1965 he had assumed control of the company.

In later years, following Berkshire Hathaway’s significant investment in Coca-Cola, Buffett became director of the company from 1989 until 2006. He has also served as director of Citigroup Global Markets Holdings, Graham Holdings Company and The Gillette Company.

In June 2006 Buffett made an announcement that he would be giving his entire fortune away to charity, committing 85 percent of it to the Bill and Melinda Gates Foundation. This donation became the largest act of charitable giving in United States history.

In 2010, he and Bill Gates launched the Giving Pledge, asking billionaires to commit to donating at least half of their wealth to charitable causes.

Lessons learned!
Invest in yourself – Perhaps the greatest thing that could be gained from Warren Buffett’s life is to invest in yourself. He speaks about it often, but he knew when he was younger that he needed good speaking skills in order to convince investors to invest in his partnerships. To do that, he took classes on public speaking. Whether it be developing a new skill, getting exercise, or simply sleeping enough, taking care of yourself and self-improvement will always pay off.

Teach your kids the value of savings and investing early – Learning the ropes much early in life helps to manage the risk of losing and appreciating the power of savings. Its never too late to teach the kids this important value.

Learn from his frugality– Buffett is notorious for living conservatively despite his massive wealth. He lives in the same house he bought back in the 50s. He eats breakfast on the cheap as well, going to McDonald’s every morning with change his wife gives him. While that might sound extreme, the lesson is invaluable. If you live below your means, and put money away, you’ll be ready for that rainy day.

Reputation is important – Buffett’s quote “It takes 20 years to build a reputation, and five minutes to ruin it” is something that is not often observed these days. In business or life in general, your integrity and reputation with others will determine how far you go, and what circles of influence you get into.

Only work with people you trust – Berkshire Hathaway takes a largely hands-off approach to managing its companies. But it does vet its business associates carefully, looking for good honest people with talent.

Don’t borrow money to buy stocks – On CNBC, Buffett pointed out, “It’s insane to risk what you have and need for something you don’t really need. … You will not be way happier if you double your net worth.” To borrow money and put it into assets that have so much risk is never a good move. Yes, a lot of investors do it. That doesn’t make it a good idea

– “Be fearful when others are greedy, and greedy when others are fearful.” – It’s probably one of the most quoted ideas ever, but these are biblical words for investing. Buffett does not overpay.

Make sure you’re happy – Buffett has said many times that he loves what he does. It’s what allows him to still wake up every day and go to work when he’s pushing 90 years old. He was quoted last year as saying: “I can’t buy time, I can’t buy love, but I can do anything else with money, pretty much. And why do I get up every day and jump out of bed and I’m excited at 88? It’s because I love what I do and love the people I do it with.”

Quirky, down to earth, and altogether unique, Warren Buffett has succeeded in ways that most only dream of and yet he carries a humble demeanor with a grandfatherly.

Share lessons in the comment section if you will.

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5 thoughts on ““People Just Like You” Series – Warren Buffet”

  1. Faith Olajumoke

    Well done! Reputation! this really resonate with me. “It takes 20 years to build a reputation and 5 minutes to ruin it”. Consistency in whatever one is doing right, integrity and character for 20 years will build a reputation and a one time mis-behaviour can cut short the journey to greatness.

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