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Warren
Buffett
Warren Edward Buffett was born in Omaha in 1930.
Warren Buffett's father, Howard was a stockbroker and
Republican congressman. When he was just 11, Warren
Buffett bought his first stock - three shares of
Cities Service Preferred. The price initally dropped
but Buffett held and sold at a small profit. However,
he did not put into play what was to become a hallmark
of his investment strategy - patience. After Warren
Buffett sold the stock, the price rose eventually from
$40 to $200 a share.
After graduating from the University of Nebraska,
Warren Buffett was rejected by the Harvard Business
School and went to study at the Columbia University
Business School with Ben Graham, author of Security
Analysis.
According to Graham the way to treat the market was
like it was a manic-depressive. When it's manic sell
to it, when it's depressed offer to buy from it.
In 1957, Warren Buffett returned to Omaha and started
his first investment partnership. His painstaking
research started to pay off. He stayed in Omaha, which
is emblematic of his preference for his original
shareholders over meetings with analysts.
Buffett adapted Graham's approach. Whereas the latter
took a pure statistical approach, Buffett has said
(according to Adam Smith's excellent book, The Roaring
'80s): "Valuing a business is part art and part
science..."
"The Oracle of Omaha" or "The Sage of
Omaha" as Warren Buffett is known, has achieved
an excellent long-term investment record, which has
propelled him into Number 2 spot in the list of the
world's richest men. His friend, Bill
Gates, is Number One.
In May 2005, Berkshire Hathaway shareholders
rubber-stamped the appointment of Bill Gates to their
board. At the annual meeting Warren Buffett played the
ukulele and told jokes. He also faced questions about
a federal investigation into a reinsurance transaction
between insurance company American International Group
Inc. and Berkshire subsidiary General Re.
On March 11 2005, Forbes estimated Warren Buffett's
wealth to be $44 billion. He and his wife, Susan were
listed as the second largest charitable donors in
2004.
The Berkshire Hathaway letters to shareholders make
interesting and informative reading. They are posted
on the Berkshire Hathaway's website. They provide
insight into Warren Buffett's life and his ideas.
Warren Buffett has said that only in the case of
physical or mental incapacity would he consider
retiring as chairman and chief executive officer of
Berkshire. In which event Warren Buffett's eldest son,
Howard, a Berkshire board member, would take over as
chairman.
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