Warren Buffett is considered one of the best investors of all time. He’s built an enormous fortune and has one of the biggest net wealths of anyone in the world today, thanks to his skill as an investor.
Here we look at how Warren Buffett built his fortune and the factors contributing to his net wealth today.
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Warren Buffett’s net wealth
Warren Buffett is one of the most successful investors of all time. Born in 1930 in Omaha, Nebraska, Buffett showed an early interest in business. As a child, he would buy six packs of Coca-Cola for 25 cents and sell each bottle for a nickel, making a tidy profit. He also started a pinball business and sold a newspaper.
Buffett's father was a stockbroker and served as a role model for the young investor. In high school, Buffett started his own business selling golf balls and stamps, and he also worked odd jobs, such as delivering newspapers and washing cars.
After high school, Buffett attended the University of Nebraska but transferred to the University of Pennsylvania's Wharton School of Business. He studied under Benjamin Graham, a renowned value investor who would later become Buffett's mentor.
Benjamin Graham is considered to be the father of value investing. He began his career in finance in the early 1920s, although he quickly realized that most investors were focused on short-term gains and speculation rather than investing in companies with strong fundamentals, such as robust balance sheets.
With this knowledge, he went on to develop his own investment philosophy, focusing on buying undervalued stocks. He believed buying equities cheaply, holding them for the long term and selling them when the market had realised the value was a great way to make money. Put simply, Graham believed that by carefully analyzing a company's financial statements and other fundamental data, he could identify stocks trading at a discount to their true value.
This mentality shaped Warren Buffett's view of the world from a young age.
In 1951, Buffett received his master's degree in economics from Columbia University. He then worked at his father's brokerage firm before starting his investment partnership in 1956.
Warren Buffett's early partnerships significantly influenced his success as an investor and businessman. In the 1950s and 1960s, Buffett formed several partnerships that allowed him to pool his resources with other like-minded investors. These partnerships enabled him to invest in larger and more complex deals than he would have been able to do on his own.
Warren Buffett buys Berkshire Hathaway
One of these deals was Berkshire Hathaway. When Buffett first started buying the stock in the late 1959s, the business was a struggling textile manufacturer. The young investor decided to try and buy enough shares in the business to force management to buy him out at a higher price - earning a handsome profit in the first place.
Management refused, and Buffett lashed out, buying control and kicking the former management out.
Over the next few years, Warren Buffett wrestled with the business. He kept a tight leash on costs and used any excess cash to expand and diversify.
He started building his empire with the acquisition of two small insurance groups. These companies gave Warren Buffett an edge. Insurers have large portfolios of investments, giving Buffett a lot of flexibility around where and when he could invest. Over the years, the company has continued to acquire other insurance companies, including GEICO and General Re.
Despite these additional investments and diversification, Berkshire’s insurance businesses remain at the core of the group today. Berkshire Hathaway also owns a load of other well-known companies, including the battery brand Duracell and Dairy Queen ice cream parlours.
Warren Buffett’s investing method
Buffett is known for his successful investing style. Historically, he has searched for undervalued companies that have a strong foundation and a competitive edge within a specific market. He then invests in these companies for the long term.
As a result, he has made impressive returns. Some of Berkshire Hathaway’s famous investments include Apple Inc, Coca-Cola and American Express.
Warren Buffett’s charitable nature
While Berkshire Hathaway's success can largely be attributed to Buffett's investment strategies, the company also has a reputation for ethical business practices. Buffett has long emphasized the importance of integrity in business, and the company's annual shareholder meetings are known for their transparency and open communication.
Warren Buffett is known for his philanthropic efforts, including his commitment to giving away the majority of his wealth through the Giving Pledge - a commitment by some of the world's wealthiest individuals and families to give away the majority of their wealth to address society's most pressing problems.
Buffett was one of the first signatories of the pledge, and he has encouraged other billionaires to follow his lead. Through his generous donations and advocacy for charitable giving, Buffett has become a role model for others who want to use their wealth to positively impact the world.
Jacob is the founder and CEO of ValueWalk. What started as a hobby 10 years ago turned into a well-known financial media empire focusing in particular on simplifying the opaque world of the hedge fund world. Before doing ValueWalk full time, Jacob worked as an equity analyst specializing in mid and small-cap stocks. Jacob also worked in business development for hedge funds. He lives with his wife and five children in New Jersey. Full Disclosure: Jacob only invests in broad-based ETFs and mutual funds to avoid any conflict of interest.
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