Arguably America’s most inspiring investor, Warren Buffett is a name that sparks admiration from millions. People from all over the globe know of his name and hordes of investors look to Buffett for advice and to follow along with his homespun investment strategy: invest in what you know, invest in value. Buffett is the CEO and largest stakeholder of Berkshire Hathaway and is one of the world’s most generous philanthropists. He has a personal wealth of $79 billion and he even has his own show on HBO! (I don’t know about you but I know what I’m doing tonight…)
Warren Buffett has always believed in the value of careful analysis of companies in the stock market and thousands upon thousands of books and articles have been published about the successes and strategies of this legendary figure. Buffett’s value investing approach is well known and his investing style and principles are studied in detail from the likes of wall street analysts to students in the classroom. New to investing and don’t know where to start? Why not begin with Buffett’s annual letters to Berkshire Hathaway shareholders – an absolute must-read for any serious investor.
But where did Buffett’s knowledge come from? Can you really learn to be like him? How did he start?
One of the reasons that Buffett is so inspirational is the fact that his rise to become one of the world’s wealthiest billionaires was all self-made. It gives us, the everyday investor, a chance to dream a life that may be more achievable than we think!
Buffett was born in 1930 in Omaha, Nebraska, the middle child and son of a stockbroker. Famously, as a young boy, Buffett did not sit still and was known to sell soft drinks and deliver newspapers to make extra cash around his neighborhood. His early ventures developed his taste for the world of business.
After graduating from the University of Nebraska (after dropping out of UPenn after 2 years, by the way) it was at graduate school that Buffett met someone who would become one of the biggest influences upon his life: Benjamin Graham, the father of value investing. Buffett learned much from Graham and the two got on well together, yet upon graduating, Graham refused to hire Buffett! So Buffett went on to work at his father’s brokerage firm where he worked for several years, met and married his wife, and started a family.
Yet a few years later, along came Graham who finally offered Buffett a job. This was a huge turning point for the young Oracle of Omaha – after accepting the offer in NY, Buffett would build on his investing theories he’d learned from Graham and would take his theories one step further, by breaking the traditional value investing strategy to focus on factor’s such as a company’s management team and a product’s competitive advantage. It was a key time for Buffett to develop his investing principles.
In 1962, at 30 years old, Buffett joined forces with Charlie Munger. Buffett had started his own investment company, Buffett Associates, a few years earlier, and the dynamic duo of Buffett and Munger used their powerful investing philosophies to rain success. Notably, a company that they purchased along the way was a dying textiles mill called Berkshire Hathaway. After the mill showed some promise, extra cash flow from the business was used to purchase other investments. Slowly these additional investments grew to be so large they eclipsed the original textile mill and Berkshire grew into the holding company it’s known as today.
“Rule #1: Never lose money. Rule #2: Never forget rule #1.”
Recently, Buffett sat down with CNBC’s Squawk Box for the 10th annual Ask Warren Show, where viewers and listeners get an incredible glimpse into the wealth of knowledge of this iconic man, who many see as a role model. Just listening to this 86-year-old investing god makes you start to appreciate the prominence of this powerful business man and the magnitude of knowledge he has gained through his life.
Quick video highlights:
If you want to take a look at some of the top stocks that Buffett is buying and selling, take a look at Buffett’s recent portfolio rebalances in an article here!