Sunday, January 30, 2011

Warren Bufffet:Legendary Investor


Born on August 30,1930 in Omaha, Nebraska, Warren Edward Buffet is the only son among the three children of Howard Buffet, a former US Congressman and Leila Stahl. He is often called the most brilliant investor in American history because of his smart investing strategies. 

His legendary rise to fame as world's most intelligent investor is the product of dedication, effort and balance attitude of handling investment and money. He once named by Carson Group as World's Top Money Manager.

His company’s flagship is Berkshire Hathaway headquartered at his hometown, Omaha, Nebraska in the United States and recently named by Fortune magazine as World's third most admired company. Buffet remains the company's Chairman of the Board and CEO and still actively working on its investment portfolio. He also allowed himself to be paid only by $100,000 annually lower than the usual standard of salaries among world's top CEO who are receiving more than $1 million a year. In 2007, he edged out his best friend, Bill Gates, as world's richest person in Forbes Magazine's listing but on the following year, after he donated enormous amount of his wealth to the Bill and Melinda Gates Foundation, he ranked number two after the Microsoft founder.  In 2010 and this year 2011, he is the third richest man in the world, not because his investments are not doing well, but because the large portion of his wealth went to several charity institutions.

But what made him different from other world’s billionaires? It's his devotion to philanthropic activities, and just like Bill Gates, Buffet donated 80% of his fortune to charitable causes. Buffet is known for his frugality despite his enormous wealth, his simple lifestyle became the favorite topic in the business circuit.

While still a child, the third richest man in the world already showed a kin interest in investing and saving money, despite his family’s prominence, he loved to earn money out of his own, he would do door to door selling of chewing gum, Coca-Cola or magazine. He started joining a business when he was still in high school, first working in the grocery store of his grandfather then venturing into a pinball machine and placed it in the local barbershop. He showed interest on stock market early on, he would spend time at the customers’ lounge of a stock brokerage near his father’s brokerage company. When he was 11 years old, he bought three shares of Cities Service Preferred Stock. By the time he finished college, he accumulated more than $90,000 in savings.

Buffet earned a degree in Economics at the University of Nebraska-Lincoln and after learning that Benjamin Graham (author of the book The Intelligent Investor) teaches at Columbia University, he traveled to New York to enroll at Columbia where he obtained his Master of Science in Economics degree in 1952. He also attended at the New York Institute of Finance.
Buffet’s own words of investing: “The basic ideas of investing are to look at stocks as business, use the market’s fluctuations to your advantage and seek a margin safety”.

He first worked as an Investment Salesman then as a Security Analyst in New York. Early on, his interest and passion in brokerage intensified his ambition to become a self-made investor. In his high school yearbook he wrote on his dream “future stockbroker” not long after, he made a full blast with this passion. He is self-motivated, drivingly ambitious and determined, religiously followed by heart the investment teaching and style of Benjamin Graham. He returned to his home town in Nebraska and worked as a stockbroker. He also taught classes at the University of Nebraska-Omaha about Investment principles.

He married Susan Thompson in 1952 where he has three children: Susan Alice, Howard Graham and Peter Andrew. Two years later, his favorite author Benjamin Graham offered him a job at his insurance company until 1956, he then founded the Buffet Partnership Limited, an investment company. Four years later, the company grew to seven partnerships, this shrewd tactics in investing, made him a self-made millionaire in 1962, he then merged all the partnerships into one and acquired the dying textile manufacturing firm, Berkshire Hathaway and slowly converted it into the world's largest investment company which eventually became the flagship of his business empire. His philosophy in partnerships is “unless new partners can bring some asset other than simply capital, I intend to admit no additional partners”.

He had his first investment at Hochschild Kohn and Company, a privately owned Baltimore department store. In 1970 he became Chairman of Berkshire Hathaway, by 1979 he was worth $620 million. He began investing in newspaper companies, Washington Post, Buffao Evening News and ABC news. He bought stocks at Coca-Cola which became his most lucrative investment. By 2006, Buffet announced that he would give 85% of his company’s holdings to different foundations most notably to Bill and Melinda Gates Foundation. He has shares at some of the biggest companies in the world, General Electric, P& G and Johnson and Johnson.

He separated from his wife in 1977 and remarried only in 2004 to his long time friend, Astrid Menks. Though highly regarded as compassionate and kind, the dangerous streak of Buffet was erupted when his son’s adopted daughter, Nicole, participated in the documentary called The One Percent, detailing the personal story of billionaires. Buffet is known to be a very private man and never partied to anyone. In his letter to Nicole, he slammed a hard-hitting line” 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." Nevertheless, Nicole admired his step-grandfather as kind, generous and loving recalling several Christmas events where the billionaire played santa claus to his grandchildren.

Buffet's simple house at Omaha, Nebraska

Warren Buffet continues to live in the same modest house he acquired in 1958 which valued only at $700,000 today. Though he has a private jet, he often traveled on public transportation facilities. He is an avid football fan and love to play bridge with close friend Bill Gates. It was also reported that Buffet does not carry a cell phone and does not have a computer at his desk and no driver, he drives his own car, a Cadillac DTS and wore tailor-made suits from the Chinese label, Trands. He also established "The Giving Pledge" with Bill Gates, an organization that encourages America's richest people to donate considerable portion of their wealth to charitable activities. He is the recipient of Presidential Medal of Freedom, a highest honor a US President can give to a civilian for exceptional civil and humanitarian services. He is also listed as one of The 100 Most Influential People in the 20th Century and named along with Gates as The Most influential Global Thinker.

Amidst the global crisis which forced many countries into recession and more companies  declared bankruptcy, Berkshire Hathaway performed very well in the stock market, climbing its investment income into $3 billion last year and one of the few businesses in America unaffected by the major economic meltdown in 2009, consequently rescuing US economy from going down to the bottom of recession, this event made experts to call him "The White Knight from Omaha". These are just few reasons why Warren Buffet is dubbed as the most brilliant investor in American history.

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