Warren Buffett is the best investor in the world. Biography, books, sayings, the path of the "oracle from Omaha"

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Many people believe that Warren Buffett is the best investor in the world, and with good reason. A man known not only in the United States, but throughout the world, lives in Omaha, Nebraska. He is 73 years old. He has the fifth largest fortune in the United States - at the end of 2012, amounting to 46.5 billion dollars. But with all this, a large fortune did not turn his head, he tries to live modestly. Warren reminds others that money did not create a person, but a person created money, and encourages others to live easier. The billionaire also urges his compatriots to follow his example: do not chase brands, but use those things that are convenient.

Why is Warren Buffett loved in the United States?

An important fact that characterizes him as a person is the voluntary abandonment of 50% of his property (which is about 37 billion dollars). He transferred these funds with one stroke of the pen, without hesitation, to American charitable foundations. This is how he responded to Bill Gates' call in 2010 for we althy Americans to give halftheir we alth to the country that made them rich. It was the largest and truly impressive act of charity in the world, an example for all we althy people. The funds were transferred mainly to a fund managed by the Gates spouses: Bill and Mellinda. Without exaggeration, the whole country was deeply surprised by this act of a man who was previously famous for his frugality. It was a truly patriotic act, a lively response from Buffett's soul to the attack on the US Twin Towers by terrorists.

He is really loved in his native Omaha, he, a billionaire with a worldwide reputation, does not hide from people, he freely visits shops and other public places.

Once upon a time when an Omaha school was facing significant financial sanctions and the threat of closure, an elderly couple of teachers from the same school came to the rescue. They transferred several million dollars to the required account. Where did they get them from? The teachers turned out to be one of the first shareholders of Buffett's company, entrusting him with all their savings - $25,000.

To the correspondent's question about how he understands what life success is, he replied that the most important thing is loving people around, and how much you have in a bank cell is already secondary. Warren Buffett does indeed have such beliefs. News, current events have little effect on his life values. Indeed, this smart, but wayward and charismatic man is loved by family and others.

Warren Buffett is a famous business name

Operations in the securities marketsecurities are most often speculative. It is supposed, of course, to buy shares at low prices and sell them at a higher rate. Many people try to carry out two operations at once at lightning speed, moreover, as profitably as possible. But the hero of our article did not go in his enrichment through speculation, he, as experts say, is a “pure investor”. His style is different: measure seven times, cut once. The hobby of a businessman is the purchase of shares in promising companies that the market subjectively underestimates. This defect has the prospect of being corrected. Only the fact that Warren Buffett himself invested in this company enhances its reputation. He respects the companies he invests in. He owns a phrase that should be heard by all investors. It says that it is better to buy a great company at a fair price than to buy an honest company at a great price. Warren Buffett is fundamental in the morality of business. His statements testify to this.

He buys securities only from companies, only making sure that their real value is higher than the proposed one. Moreover, such shares have been in his portfolio for at least ten years. Enterprises are working steadily, and the value of their shares at this time is growing. He is not interested in short-term speculation, unlike George Soros. Such a position is, of course, constructive: production gets an impetus to development. Compatriots are sure that Warren Buffett is stimulating the US economy with his activities. Photos of this worthy person are often published in newspapers and magazines. He willingly gives interviews. This businessman and philanthropist is lovedin the country and there is - for what … After all, he fundamentally defends investments and criticizes speculation. He urges other businessmen not to cross the line between these concepts, to be “for the whole country”, and not just “for themselves.”

His principle is to invest in businesses with impeccable management. Therefore, he studies not only their balance sheet, but also the production structure, as well as the biographies of managers. This investor is like an agronomist looking for the right soil to plant in. His favorite investment option is when companies, thanks to investment, continue to consistently develop. Therefore, he chooses undervalued assets. In describing how to choose a company to invest in, Buffett speaks in the words of his mentor Ben Graham that it makes sense when comparing price (what we pay) and value (what we get).

If we consider Warren Buffett as a stock investor, then his average annual income is only 24%. And this is in an area where it happens that the lucky ones "snatch" the jackpot in 500%! How many of these swashbucklers with brilliant one-time deals has Warren seen? But luck for them is a fickle lady, and she has been arm in arm with the hero of our article for more than 50 years, not leaving him alone.

Buffett is sure that everything present is tested by time, but he talks about it, as always, unbanal and figuratively, applying the following comparison: at low tide, it becomes noticeable who swam naked.

Why is he called the "Oracle of Omaha"?

Everything he did in life, literally everything, was successful. (The biography of Buffett reviewed in this article below will convince you of this.) His predictions come true amazingly. Everything he says publicly is carefully analyzed. On Wall Street, what Warren Buffett says has no less weight than the word of the President of the country. Quotes from his speech can even bring down the company. So, once speaking to his shareholders, he voiced his opinion that soon one of the major companies in the reinsurance market would collapse. Analysts, having analyzed the debts of various companies to primary insurers, determined that this is the seventh-ranked German insurance company Gerling Global Re in the world. Warren's statement was enough to stop customers from using this truly unprofitable company.

At the beginning of the new century, analysts wondered why Buffett did not invest in the development of modern technologies? Journalists even scoffed at the old-fashionedness of the billionaire who does not use a computer or a calculator (Warren determines profit from childhood by multiplying two- and three-digit numbers in his head). However, after a couple of years, the NASDAQ technology market index began to systematically decrease, and investor companies suffered significant losses. What did Warren Buffett say to that? His quotes on this subject are laconic - “And I warned you …”

In 2006, a famous investor predicted a catastrophe in the US real estate market. To do this, he used "his" indicator - housing prices should not grow much faster than costs. Events 2007–2008years - housing bought out on a mortgage by citizens began to be massively alienated from them for debts.

Worried about the US budget deficit, in 2003 and 2004 he twice predicted the fall of the US dollar, investing part of his funds in other currencies.

First steps in business

His father was a brokerage owner and congressman. However, since childhood, Warren has been trying to earn his money and do his own thing. His first deal was speculative: the boy bought several cans of Coca-Cola from his grandfather in the store and sold them to his family at twice the price. Thus began the path of Warren Buffett in business. At the age of 11, he first tried to play the courses, first buying and then selling three shares. Then he hastened to sell the shares because of the minimum profit. However, their price soon increased six times. There was no need to rush. This served as a lesson to Warren.

From the age of thirteen he worked in the post office delivering the Washington Post. The work was piecework and, having developed his system, he began to earn more than the head of the post office. At the age of 15-17, together with a friend, they bought and installed three used slot machines in the city. By the age of 17, he had funds in the amount of $5,000, which, adjusted for the inflation index, amounted to more than $40,000. Warren was "charged" to earn money and become a millionaire by the age of 30. But his father convinced him of the need to get an education. The University of the District of Columbia brought him together with a prominent theorist of the financial market and investment, Graham, who managed to interest his slendertheory of the young man. The Tao of Warren Buffett has been found! Now he knew for sure what he would do in life - to invest.

The financial market is Warren Buffett's calling

After graduation, Warren started working as a manager in his father's company. At 22, he married Susan Thompson. Two years later, he organizes a company on the shares of friends and acquaintances. He then had experience working for his teacher Ben Graham's company, the Graham-Newman investment fund on Wall Street. At this stage, he already has a fortune of 140 thousand US dollars. Despite the opening prospects, Warren decides to build his own business. He returns to Omaha and, having managed to raise funds from friends and relatives, establishes his own foundation company, Buffett Associates. Since the beginning of the 60s, the shares of this company have grown by 251% in the first 5 years, while on average the American stock market “rises” by 74% during this time. The next 5 years, this gap will increase even more: 156% for companies invested by Warren and 122% for the rest of the market. A childhood dream comes true - he becomes a millionaire. Warren Buffett has established himself as a fine mergers and acquisitions specialist. He has large investments in America's insurance business.

The second stage of his activity began in 1969, when he invested all the proceeds from the Buffett Associates fund (which is $ 102 million) into the bankrupt textile company Berkshire Hathaway, thereby giving it an impetus to development. An experienced analyst noticed, based onthe assessment of the assets that the real price of one share was $20, while it was selling for $8. But the textile business turned out to be not the end point, but an intermediate base for the next investment. The profit from the sale of products was directed to them in the purchase of securities of insurance companies. America at that time formed its own insurance market, and significant government benefits were the key to high profitability of the insurance business. A wise and far-reaching strategy was chosen by Warren Buffett. His biography as an investor on a national scale began precisely from this stage, when the five largest US insurance companies became his property.

Further on, an investment mechanism was launched based on the redistribution of insurance premiums from clients to these companies. For part of the funds received "in advance" bankrupt "solid" companies were bought up. Having received financial support, almost immediately they came out on a profit. Thus, thanks to the profits of skillfully invested enterprises, Warren Buffett received another source of funding. His biography testifies: having exchanged his fifth decade, he became the owner of a 28 billion fortune.

Omaha Oracle's Biggest Investment

His investment is more than convincing. Investing in companies undervalued by the market gave a striking effect. The shares of Coca-Cola he bought for $1.3 billion rose to $13.4 billion; Gillette - from $0.6 billion to $4.6 billion; and 0.01 billion dollars,$1 billion invested in the Washington Post.

The billionaire also has a 4.3% stake in McDonalds.

Note, this person invests in what is familiar to him from childhood and what is close to him as a person. Recall (we've already talked about this) the first commercial experience of six-year-old Warren selling six cans of Coca-Cola bought from his grandfather to his parents. Moreover, the Oracle drinks five cans of Cherry Coke daily. Or the Washington Post newspaper: was it not young Buffett who delivered it on a bicycle, receiving a decent income for the first time in his life? Namely, hamburgers are the genius investor's favorite food.

The principles of investing by Warren Buffett - thoughtful and successful, which has been proven by practice, have long become well known. They are organically consistent with his life principles.

Somehow, in working order, gradually, in the process of management, Warren Buffett created the "Essay on Investment", in which he developed the ideas of Ben Graham. Initially, these were his business letters to the shareholders of a diversified corporation that grew out of the textile company Berkshire Hathaway (and still continues to bear this name). The reason for publishing this book is purely practical: the author's reasonable formulation of the ideas of the financial market and the destruction of the myths that exist there. Subtly reveals the nature of investment and building a business. The author emphasizes that meaningful investments are impossible without a proper audit of accounting documents, an analysis of the company's economic life.

After buying a company, Buffett appoints its CEO, determines the order for himpayment. This is the only thing he, the investor, does. The Oracle of Omaha did not touch the operational management of the company. The management structure has not changed. The director he appointed, stimulated by the opportunity to participate in the option of the company's shares, raised the capitalization himself.

Life principles of a great investor

Firstly, the Oracle of Omaha believes that we alth is a state of mind. If a person associates himself with we alth, then he will become rich.

However, he does not associate the success of a person only with a bank account. It is important that he does what he likes, and that there are people around who love him. He also recommends that people learn to spend less than they earn, not to get involved in consumer loans. He recommends spending time with people who are more successful than you, as it will mobilize you to make further progress. The final principle of the Oracle is that those who want to receive more must also give more.

He is dedicated to his company to the point where he holds 99% of his capital in its shares. By the way, his colleague Charlie Munger, following his example, also invested 90% of his fortune in the company's shares. This, according to Warren, is the best guarantee of the unanimity and unity of the Berkshire Hathaway shareholders with its managers, which is necessary for its effective management. In 2004, after the death of his wife Susan Buffett, Warren's best friend, Bill Gates, joined the board of directors.

It should be noted the peculiarity of this company. In its more than 40-year history, not a single Berkshire Hathaway stock haswas not sold. During this time, the value of each share increased from $8 (remember, when buying a textile company) to $90.5 thousand. The shareholders of this company, not least due to the charisma of its leader, are not scattered businessmen, but an elite club, a single, monolithic, charged to work together.

He doesn't like computers. He doesn't have any in his house. The Oracle of Omaha's only weakness is private jets.

Thrift or Greed?

He, despite his we alth, did not go to live in the "state of millionaires" - California, did not erect himself an amazing real estate. Although the funds allow him to build himself almost a city. Warren Buffett's house on Farnham Street was bought by him in the 50s in his native Omaha for 34 thousand dollars. He basically does not receive dividends from the corporation he owns (Berkshire Hathaway). Lives on a paycheck, drives a used Lincoln. Dines in the same canteen where he ate when he was a clerk.

He dresses in ordinary stores. Once, when asked by a malicious journalist about the cost of his suits, he answered in such a way that he made all of America laugh. According to his answer, the suits are very expensive, they just look cheap on him.

Surprises those around the tightfistedness of this person, even in relation to his own children. When son Howard wanted to farm and came to his father with a request that he buy him a farm, he set a condition: he buys it himself - in his own name, and his son rents a farm from him, whilepaying him rent. Susie's daughter once approached him, asking for a small sum to pick up a car from the paid parking lot of the airport. Of course, he gave money, but at the same time he asked his daughter to write a receipt for the received $20.

Warren Buffett loves cartoons. Favorite - "DuckTales" with Scrooge McDuck - the main character. It's not even about animation. The catchphrase of the "duck redneck": "A dollar saved is a dollar earned" W alt Disney noticed and "stole" from the main character of our article.

But there was still a mistake

Is Warren Buffett a writer? He purposely did not write books. But he worked so creatively that his letters to shareholders, collected and systematized, are published, readable and of value.

Only once - in 2005, the forecast of the great financier did not come true. He bet on the fall of the dollar. It turned out the opposite - growth. The prototype of Scrooge McDuck lost about 900 million dollars on this, which, however, was covered by the profit of the company led by him in 2 billion dollars. But there is an unconvincing, but still - justification for this: in the same 2005, Bill Gates and Soros "flew", betting on the same thing.

Why did this happen? Answering this question to reporters, Buffett, with his usual humor, said that if in physics mechanical movements obey Newton's laws, then in society human madness cannot be measured.

Warren Buffett became a writer against his will. His books are in demand, he has the talent to write simply about the complex, probably the point isintelligence and experience.

Oracle's Testament

In the will after his death for his family, he leaves a small percentage. Almost the entire fortune - 99% will go to the Warren Buffett Foundation. The fund is managed by Allen Greenberg, the former son-in-law of a brilliant investor. If during the life of the father-in-law he contributes only a small percentage of his fortune to this fund - $ 10 million, then you can imagine what a solid company he will turn into overnight after his death. Another question: what will become of Berkshire Hathaway, led by the charisma of the Oracle of Omaha, after this mournful event? However, for compatriots, the Oracle of Omaha leaves an optimistic forecast, indicating that the stock market will rise in the future.