Warren Buffett

Warren Buffett

Warren Edward Buffett is an American major investor , entrepreneur and patron . Almost all

of his fortune is invested in the Berkshire Hathaway investment company , which he built and
runs , of which he is himself the largest shareholder . In August 2015 he still held almost 19% of
the company shares, although he has been donating shares continuously since 2006.
Buffett has long been one of the top three richest people in the world according to lists such
as Forbes' The World's Billionaires , where he was number 1 in 2008, for example.  Through
years of fundraising campaigns, he has lately significantly reduced his wealth; As of July 17,
2020, he was still the 6th richest billionaires in the world according to the Bloomberg
Billionaires Index.

Warren Edward Buffett was born on August 30, 1930, to his mother Leila and father Howard, a
stockbroker-turned-Congressman. The second oldest, he had two sisters and displayed an
amazing aptitude for both money and business at a very early age. Acquaintances recount his
uncanny ability to calculate columns of numbers off the top of his head—a feat Warren still
amazes business colleagues with today.

At only six years old, Buffett purchased six-packs of Coca-Cola from his grandfather's grocery
store for twenty-five cents and resold each of the bottles for a nickel, pocketing a five-cent profit.
While other children his age were playing hopscotch and jacks, Warren was making money. Five
years later, Buffett took his first step into the world of high finance.

At eleven years old, he purchased three shares of Cities Service Preferred at $38 per share for
both himself and his older sister, Doris. Shortly after buying the stock, it fell to just over $27 per
share. A frightened but resilient Warren held his shares until they rebounded to $40. He promptly
sold them—a mistake he would soon come to regret. Cities Service shot up to $200. The
experience taught him one of the basic lessons of investing: Patience is a virtue. When he was
14, he bought a 16 acre farm in Omaha for $ 1,200 and leased it out. When he was 17, he and
friends bought a wrecked Rolls-Royce for $ 350. After they fixed it, they could rent it out for $
35 a day. 

Education

In 1947, Warren Buffett graduated from high school when he was 17 years old. It was never his
intention to go to college; he had already made $5,000 delivering newspapers (this is equal to
$42,610.81 in 2000). His father had other plans and urged his son to attend the Wharton Business
School at the University of Pennsylvania.
Buffett only stayed two years, complaining that he knew more than his professors. He returned
home to Omaha and transferred to the University of Nebraska-Lincoln. Despite working full-
time, he managed to graduate in only three years.

Buffett approached graduate studies with the same resistance he displayed a few years earlier. He
was finally persuaded to apply to Harvard Business School, which rejected him as "too young."
Slighted, Warren then applifsafeed to Columbia, where famed investors Ben Graham and David
Dodd taught—an experience that would forever change his life.

1950: Buffett applies for admission to Harvard Business School and is turned down. He
eventually enrolls at Columbia after learning that Ben Graham and David Dodd, two well-known
security analysts, are professors.

1951: Warren discovers Graham is on the board of GEICO insurance. On a Saturday morning,

he takes a train to Washington, D.C., and knocks on the door of its headquarters until a janitor
lets him in. After asking if anyone is working, he finds Lorimer Davison, an executive at
GEICO. They talk for four hours while Warren questions him on the business and insurance in
general. After their discussion, Buffett is so excited about GEICO, that the following Monday he
spends 65% of his $20,000 savings to purchase GEICO stock, which eventually grows into a
huge fortune.

Mentor Ben Graham

Ben Graham had become well known during the 1920. At a time when the rest of the world was
approaching the investment arena as if it were a giant game of roulette, Graham searched for
stocks that were so inexpensive they were almost completely devoid of risk. One of his best-
known calls was the Northern Pipe Line, an oil transportation company managed by the
Rockefellers.

The stock was trading at $65 a share, but after studying the balance sheet, Graham realized that
the company had bond holdings worth $95 for every share. The value investor tried to convince
management to sell the portfolio, but they refused. Shortly thereafter, he waged a proxy war and
secured a spot on the Board of Directors. The company sold its bonds and paid a dividend in the
amount of $70 per share.

When he was 40 years old, Ben Graham published "Security Analysis," one of the most notable
works ever penned on the stock market. At the time, it was risky. (The Dow Jones had fallen
from 381.17 to 41.22 over the course of three to four short years following the crash of 1929). It
was around this time that Graham came up with the principle of "intrinsic" business value, a
measure of a business's true worth that was completely and totally independent of the stock price.

Using intrinsic value, investors could decide what a company was worth and make investment
decisions accordingly. His subsequent book, "The Intelligent Investor," which Buffett celebrates
as "the greatest book on investing ever written," introduced the world to Mr. Market, an
investment analogy.

Through his simple yet profound investment principles, Ben Graham became an idyllic figure to
the twenty-one-year-old Warren Buffett. Reading an old edition of "Who's Who," Warren
discovered his mentor was the chairman of a small, unknown insurance company named GEICO.
He hopped a train to Washington, D.C. one Saturday morning to find the headquarters. When he
got there, the doors were locked. Not to be stopped, Buffett relentlessly pounded on the door
until a janitor came to open it for him. He asked if there was anyone in the building.

As luck (or fate) would have it, there was. It turns out that there was a man still working on the
sixth floor. Warren was escorted up to meet him and immediately began asking him questions
about the company and its business practices; a conversation that stretched on for four hours. The
man was none other than Lorimer Davidson, the Financial Vice President. The experience would
be something that stayed with Buffett for the rest of his life. He eventually acquired the entire
GEICO company through his corporation, Berkshire Hathaway.

Flying through his graduate studies at Columbia, Buffett was the only student ever to earn an A+
in one of Graham's classes. However, both Graham and Buffett's father advised him not to work
on Wall Street after he graduated.

Absolutely determined, Buffett offered to work for the Graham partnership for free. Ben turned
him down. He preferred to hold his spots for Jews who were not hired at other firms at the time.
Warren was crushed.

Returning Home

Returning home, he took a job at his father's brokerage house and began seeing a girl by the
name of Susie Thompson. The relationship eventually turned serious, and in April of 1952, the
two were married. They rented out a three-room apartment for $65 a month; it was run-down,
and the young couple shared the space with a family of mice. It was here their daughter, also
named Susie, was born. In order to save money, they made a bed for her in a dresser drawer.

During these initial years, Buffett's investments were predominately limited to a Texaco station
and some real estate, but neither were successful. It was also during this time he began teaching
night classes at the University of Omaha.

Then, Graham called one day, inviting the young stockbroker to come to work for him. Buffett
was finally given the opportunity he had long awaited.
Working for Ben Graham

Buffett and Susie moved into a house in the suburbs of New York. Buffett spent his days
analyzing S&P reports, searching for investment opportunities. It was during this time that the
differences between the Graham and Buffett philosophies began to emerge.

Buffett became interested in how a company worked—what made it superior to competitors.

Graham simply wanted numbers, while Warren was more interested in a company's management
as a major factor when deciding to invest. Graham looked only at the balance sheet and income
statement; he could care less about corporate leadership.

Between 1950 and 1956, Buffett built his personal capital up to $140,000 from a mere $9,800.
With this war chest, he set his sights back on Omaha and began planning his next move.

On May 1, 1956, Warren Buffett rounded up seven limited partners, which included his sister
Doris and Aunt Alice, raising $105,000 in the process. He put in $100 himself to create the
Buffett Associates, Ltd. Before the end of the year, he was managing around $300,000 in capital.

Buffett purchased a house for $31,500, affectionately nicknamed "Buffett's Folly," and managed
his partnerships originally from one of the home's bedrooms, then later, a small office. By this
time, his life had begun to take shape. He had three children, a beautiful wife, and a very
successful business.

Over the course of the next five years, Buffett's partnerships racked up an impressive 251.0%
profit, while the Dow was up only 74.3%. A somewhat-celebrity in his hometown, Warren never
gave stock tips despite constant requests from friends and strangers alike.

By 1962, the partnership had capital in excess of $7.2 million, of which $1 million was Buffett's
personal stake. He didn't charge a fee for the partnership; he was entitled to one-fourth of the
profits above 4%.

He also had more than 90 limited partners across the United States. In one decisive move, he
melded the partnerships into a single entity called Buffett Partnerships Ltd., upped the minimum
investment to $100,000, and opened an office in Kiewit Plaza on Farnam street.

In 1962, a man by the name of Charlie Munger moved back to his childhood home of Omaha
from California. Though somewhat snobbish, Munger was brilliant in every sense of the word.
He had attended Harvard Law School without a bachelor's degree. Introduced by mutual friends,
Buffett and Munger were immediately drawn together, providing the roots for a friendship and
business collaboration that would last for the next forty years.

Ten years after its founding, the Buffett Partnership assets rose more than 1,156%, compared to
the Dow's 122.9%. Acting as lord over assets that had ballooned to $44 million dollars, Buffett
and Susie's personal stake was $6,849,936. Mr. Buffett, as they say, had arrived.

Wisely enough, just as he was firmly establishing success, Buffett closed the partnership to new
accounts. The Vietnam war raged full force on the other side of the world, and the stock market
was being driven up by those who hadn't been around during the depression. The partnership
pulled its biggest coup in 1968, recording a 59.0% gain in value and catapulting to over $104
million in assets.

The next year, Buffett went much further than closing the fund to new accounts; he liquidated
the partnership. In May 1969, he informed his partners that he was "unable to find any bargains
in the current market." Buffett spent the remainder of the year liquidating the portfolio, with the
exception of two companies: Berkshire and Diversified Retailing.

The shares of Berkshire were distributed among the partners with a letter from Buffett informing
them that he would, in some capacity, be involved in the business, but was under no obligation to
them in the future. He didn't reveal his intention to hold onto his own stake in the company (he
owned 29% of the Berkshire Hathaway stock).

Buffett's role at Berkshire Hathaway had actually been somewhat defined years earlier. On May
10, 1965, after accumulating 49% of the common stock, Warren named himself director. Terrible
management had run the company nearly into the ground, and he was certain that with a bit of
tweaking, it could be better managed.

Immediately, Mr. Buffett made Ken Chace president of the company, giving him complete
autonomy over the organization. Although he refused to award stock options on the basis that it
was unfair to shareholders, Buffett agreed to cosign a loan for $18,000 for his new president to
purchase 1,000 shares of the company's stock.

Two years later, in 1967, Warren asked National Indemnity's founder and controlling
shareholder, Jack Ringwalt, to his office. Asked what he thought the company was worth,
Ringwalt told Buffett the company was worth at least $50 per share, a $17 premium above its
then-trading price of $33.

Buffett offered to buy the whole company on the spot: A move that cost him $8.6 million dollars.
That same year, Berkshire paid out a dividend of 10 cents on its outstanding stock. It never
happened again; Warren said he "must have been in the bathroom when the dividend was
declared."

In 1970, Buffett named himself Chairman of the Board of Berkshire Hathaway and for the first
time, wrote the letter to the shareholders (Ken Chace had been responsible for the task in the
past). That same year, the chairman's capital allocation began to display his prudence.
Textile profits were a pitiful $45,000, while insurance and banking each brought in $2.1 million
and $2.6 million dollars. The paltry cash brought in from the struggling looms in New Bedford,
Massachusetts had provided the stream of capital necessary to start building Berkshire Hathaway
into what it has become today.

A year or so later, Warren Buffett was offered the chance to buy a company by the name of See's
Candy. The gourmet chocolate maker sold its own brand of candies to its customers at a
premium to regular confectionary treats. The balance sheet reflected what Californians already
knew: They were more than willing to pay a bit extra for the special See's taste.

The businessman decided Berkshire would be willing to purchase the company for $25 million in
cash. See's owners were holding out for $30 million, but soon conceded. It was the biggest
investment Berkshire or Buffett had ever made.

Following several investments and an SEC investigation, Buffett began to see Berkshire
Hathaway's net worth climb. From 1965 to 1975, the company's book value rose from $20 per
share to around $95. It was also during this period that Warren made his final purchases of
Berkshire stock. (When the partnership dolled out the shares, he owned 29%.)

Years later, he had invested more than $15.4 million dollars into the company at an average cost
of $32.45 per share.) This brought his ownership to over 43% of the stock, with Susie holding
another 3%. His entire fortune was placed into Berkshire. With no personal holdings, the
company had become his sole investment vehicle.

In 1976, Buffett once again became involved with GEICO. The company had recently reported
amazingly high losses, and its stock was pummeled down to $2 per share. He wisely realized that
the basic business was still intact; most of the problems were caused by an inept management
team.

Over the next few years, Berkshire built up its position in this ailing insurer and reaped millions
in profits. Graham, who still held his fortune in the company, died in in September of the same
year, shortly before the turnaround. Years later, the insurance giant would become a fully owned
subsidiary of Berkshire.

Changes in Warren Buffett's Personal Life

It was shortly thereafter one of the most profound and upsetting events in Buffett's life took
place. At forty-five, Susan Buffett left her husband. Although she remained married to Warren,
the humanitarian and singer secured an apartment in San Francisco and, insisting she wanted to
live on her own, moved there.

Warren was absolutely devastated; throughout his life, Susie had been "the sunshine and rain in
his garden." The two remained close, speaking every day, taking their annual two-week-long
New York trip, and meeting the kids at their California beach house for Christmas get-togethers.
The transition was hard for the businessman, but he eventually grew somewhat accustomed to
the new arrangement. Susie called several women in the Omaha area and insisted they go to
dinner and a movie with her husband; eventually, she set Warren up with Astrid Menks, a
waitress. Within the year, she moved in with Buffett, all with Susie's blessing.

By the late '70s, his reputation had grown to the point that the rumor Buffett was buying a stock
was enough to shoot its price up 10%. Berkshire Hathaway's stock was trading at more than $290
a share, and Buffett's personal wealth was almost $140 million. The irony was that he never sold
a single share of his company, meaning his entire available cash was the $50,000 salary he
received. During this time, he made a comment to a broker, "Everything I got is tied up in
Berkshire. I'd like a few nickels outside."

This prompted Warren to start investing for his personal life. According to Roger Lowenstein's
book, "Buffett," Warren was far more speculative with his own investments than he was with
Berkshire's. At one point he bought copper futures, which were unadulterated speculation. In a
short time, he had made $3 million dollars. When prompted to invest in real estate by a friend, he
responded: "Why should I buy real estate when the stock market is so easy?"

Berkshire Hathaway Announces Charitable Giving Program

Later, Buffett once again showed his tendency of bucking the popular trend. In 1981, the decade
of greed, Berkshire announced a new charity plan which was thought up by Munger and
approved by Buffett. The plan called for each shareholder to designate charities which would
receive $2 for each Berkshire share the stockholder owned.

This was in response to a common practice on Wall Street of the CEO choosing who received
the company's hand-outs (often they would go to the executive's schools, churches, and
organizations). The plan was a huge success and over the years the amount was upped for each
share. Eventually, the Berkshire shareholders were giving millions of dollars away each year, all
to their own causes.

The program was eventually discontinued after associates at one of Berkshire's subsidiaries, The
Pampered Chef, experienced discrimination because of the controversial pro-choice charities
Buffett chose to allocate his prorated portion of the charitable contribution pool. Another
important event around this time was the stock price, which hit $750 per share in 1982. Most of
the gains could be attributed to Berkshire's stock portfolio, which was valued at more than $1.3
billion dollars.

Major Purchases

For all the fine businesses Berkshire had managed collect, one of the best was about to come
under its stable. In 1983, Warren Buffett walked into Nebraska Furniture Mart, the multimillion-
dollar furniture retailer built from scratch by Rose Blumpkin. Speaking to Mrs. B, as local
residents called her, Buffett asked if she would be interested in selling the store to Berkshire
Hathaway.

1983: Berkshire ends the year with $1.3 billion in its corporate stock portfolio.Berkshire begins
the year at $775 per share and ends at $1,310. Warren's personal net worth is $620 million. He
makes the Forbes list for the first time.Buffett purchases Nebraska Furniture Mart for $60
million. It turns out to be one of his best investments yet.

Blumpkin's answer was a simple "yes," to which she added she would part for "$60 million". The
deal was sealed on a handshake and a one-page contract was drawn up. The Russian-born
immigrant merely folded the check without looking at it when she received it days later.

Scott & Fetzer was another great addition to the Berkshire family. The company itself had been
the target of a hostile takeover when an LPO was launched by Ralph Schey, the chairman. The
year was 1984, and Ivan Boesky soon launched a counteroffer for $60 a share (the original
tender offer stood at $50 a share—$5 above market value).

The maker of Kirby vacuum cleaners and World Book encyclopedia, S&F was panicking.
Buffett, who had owned a quarter of a million shares, dropped a message to the company asking
them to call if they were interested in a merger. The phone rang almost immediately. Berkshire
offered $60 per share in cold, hard, cash.

When the deal was wrapped up less than a week later, Berkshire Hathaway had a new $315
million dollar cash-generating powerhouse to add to its collection. The small stream of cash that
was taken out of the struggling textile mill had built one of the most powerful companies in the
world. Far more impressive things were to be done in the coming decade. Berkshire would see its
share price climb from $2,600 to as high as $80,000 in the 1990s.

In 1986, Buffett bought a used Falcon aircraft for $850,000. As he had become increasingly
recognizable, it was no longer comfortable for him to fly commercially. The idea of the luxury
was a lifestyle that was hard for him to accept, but he loved the jet immensely. The passion for
jets eventually, in part, led him to purchase Executive Jet in the 90s.

The 80s went on with Berkshire increasing in value as if on cue, the only bump in the road being
the crash of 1987. Warren, who wasn't upset about the market correction, calmly checked the
price of his company and went back to work. It was representative of how he viewed stocks and
businesses in general. This was one of Mr. Market's temporary aberrations. One-fourth of
Berkshire's market cap was wiped out. Unfazed, Warren plowed on.

Buffett and Coke

A year later, in 1988, he started buying up Coca-Cola stock like an addict. His old neighbor, who
became the president of Coca-Cola, noticed someone was loading up on shares and became
concerned. After researching the transactions, he noticed the trades were being placed from the
Midwest.

He immediately thought of Buffett, whom he called. Warren confessed to being the culprit and
requested they don't speak of it until he was legally required to disclose his holdings at the 5%
threshold. Within a few months, Berkshire owned 7% of the company, or $1.02 billion dollars
worth of the stock. Within three years, Buffett's Coca-Cola stock would be worth more than the
entire value of Berkshire when he made the investment.

Money and Reputation On the Line During the Solomon Scandal

By 1989, Berkshire Hathaway was trading at $8,000 a share. Buffett was now, personally, worth
more than $3.8 billion dollars. Within the next ten years, he would be worth ten times that
amount. Before that would happen, there were much darker times ahead, including being
involved in a scandal called The Solomon Scandal.

Buffet at the Turn of the Millennium

During the remainder of the 1990s, the stock catapulted as high as $80,000 per share. Even with
this astronomical feat, as the dot-com frenzy began to take hold, Warren Buffett was accused of
"losing his touch." In 1999, when Berkshire reported a net increase of 0.5% per share, several
newspapers ran stories about the demise of the "Oracle of Omaha."

Confident that the technology bubble would burst, Warren Buffett continued to do what he did
best: Allocate capital to great businesses that were selling below intrinsic value. His efforts were
rewarded. When the markets finally did come to their senses, Warren Buffett was once again a
star. Berkshire's stock recovered to its previous levels after falling to around $45,000 per share,
and the man from Omaha was once again seen as an investment icon.

Foundations and initiatives

In 2006, Buffett announced that 85% of his assets would be gradually donated to
five foundations and left for charity . The majority is to go to the Bill & Melinda Gates
Foundation , a smaller portion is to be distributed across a total of four family foundations. 
In June 2010, he started along with Bill Gates , the campaign The Giving Pledge ( Engl. "The
promise to give up something") should be the so-called American "super-rich" donate money to
charity. In August 2010, 40 US billionaires had already promised themselves this campaign. 
In June 2012, Buffett auctioned a lunch with him for $ 3.5 million, the proceeds going to the
Glide campaign, which cares for the homeless and poor in San Francisco. A year earlier, such an
auction brought in $ 2.6 million.

No Retirement in Sight for Buffett 1990–2015

1991: As interim chairman, Buffett drastically cuts Salomon Brothers' bonuses for the year-end
and takes other actions to keep Salomon from a financial collapse.

2003: Berkshire terminates the charitable contributions program when subsidiary The Pampered
Chef becomes targeted by anti-abortion foes protesting some of the program's contributions.

2004: Buffett's wife, Susan Thompson, dies after 52 years of marriage; they had been separated
since the 70s, leaving behind their three children, Susan, Howard, and Peter.

2006: After Berkshire Hathaway's significant investment in Coca-Cola, Buffett serves as director

of the company from 1989 to 2006. He is also director of Citigroup Global

Markets Holdings, Graham Holdings Company, and The Gillette Company.

Buffett marries his longtime romantic companion Astrid Menks, at age 76.

Buffett announces he will give away his entire fortune to charitable causes, committing 85% of
his wealth to the Bill and Melinda Gates Foundation.

2010: Bill Gates and Buffett work together, forming The Giving Pledge campaign to bring other
wealthy individuals together to support philanthropic causes.

2011: Buffett is awarded the Presidential Medal of Freedom.

2012: Buffett announces that he has been diagnosed with cancer of the prostate. In July he starts
treatment, and the treatment is declared successful in November.

2013: Buffett, along with private equity group 3G Capital, purchase H. J. Heinz for $28 billion.
Over the next two years, Buffett also acquires Duracell and Kraft Foods Group.

2015: Buffett endorses Hillary Clinton as the Democratic presidential nominee.

 The Quotes and Wisdom of Warren Buffett

Warren Buffett has been an active investor, business magnate, and philanthropist since 1951, and
he's still going strong in 2020. He's considered one of the world's most successful investors, and
his net worth of more than $72.4 billion made him the fourth-wealthiest person in the world as of
May 2020, according to Forbes. Buffett has a longer track record of success in beating the
market than any other legendary investor.
Many media outlets refer to Buffett as the "Oracle of Omaha" or the "Wizard" because of his
successful value-investing strategy and the way he lives with such frugality in his personal
life.Buffett is a well-known philanthropist and has pledged that he will give away 99% of his
wealth to support philanthropic causes, mainly through the Bill and Melinda Gates
Foundation. Over the years, Buffett has shared many thoughts on successful investing, creating a
long list of quotes worth contemplating for investors.

When to Buy

One of the topics Buffett has addressed frequently is the right mindset to have when investing in
a company:

"When Berkshire buys common stock, we approach the transaction as if we were buying into a
private business.""Accounting consequences do not influence our operating or capital-allocation
decisions. When acquisition costs are similar, we much prefer to purchase $2 of earnings that are
not reportable by us under standard accounting principles than to purchase $1 of earnings that are
reportable."

Management
The quality of management and the mindset it brings is an important aspect to consider when
assessing a company's potential, according to Buffett:
 "The .350 hitter expects, and also deserves, a big payoff for his performance—even if he
plays for a cellar-dwelling team. And a .150 hitter should get no reward, even if he plays
for a pennant winner."
 "Many stock options in the corporate world have worked in exactly that fashion: They
have gained in value simply because management retained earnings, not because it did
well with the capital in its hands."
 "We do not view the company itself as the ultimate owner of our business assets but
instead view the company as a conduit through which our shareholders own assets."

Investing and Research

When deciding whether or not to invest in a company, Buffett has a lot to say about what to
consider:
  "You are neither right nor wrong because the crowd disagrees with you. You are right
because your data and reasoning are right."
 "Do not take yearly results too seriously. Instead, focus on four- or five-year averages."
 "Focus on return on equity, not earnings per share."
 "Turnarounds seldom turn."

Financial Analysis

In-depth analysis is one of Buffett's secrets to success. He looks at financial statements and the
quality of the front-line management team of his target companies. He has offered instruction on
some key things to look at while assessing the success of a company and its potential stock
performance. These aren't direct quotes, but summarize Buffett's approach.

 Look for companies with high profit margins.

 Is management rational?
 Is management candid with the shareholders?
 Does management resist the institutional imperative?
 Does the business have favorable long-term prospects
 Does the business have a consistent operating history?

Common Themes

Warren Buffett's investing methods have some common themes. Among them, he insists that
buying stock in fewer companies serves investors better. He recommends buying stock in
companies in which investors have a personal interest, such as being a consumer of the
company's products or a lover of the company's business philosophy, to bring greater stock
portfolio returns. He also feels strongly that investors should hold onto stock investments for the
long term.

 "Wide diversification is only required when investors do not understand what they are
doing."
 "Never invest in a business you cannot understand."
 "Unless you can watch your stock holding decline by 50% without becoming panic-
stricken, you should not be in the stock market."
 "Why not invest your assets in the companies you really like? As Mae West said, ‘Too
much of a good thing can be wonderful.'"
 "Risk can be greatly reduced by concentrating on only a few holdings."
  "It is optimism that is the enemy of the rational buyer."

Buffett advises, "The ability to say ‘No’ is a tremendous advantage for an

investor."

 "An investor needs to do very few things right as long as he or she avoids big mistakes."
 "The advice ‘you never go broke taking a profit’ is foolish."
 "It is more important to say ‘No’ to an opportunity than to say ‘Yes.’"
 "Always invest for the long term."
 "It is not necessary to do extraordinary things to get extraordinary results."

Long-Term Investing

Buffett has often spoken about more high-level thoughts on a successful investing mindset. He
prefers long-term holds and a focus on the quality of a company's philosophy, management, and
operations:

 "Stop trying to predict the direction of the stock market, the economy, interest rates, or
elections."
 "Buy companies with strong histories of profitability and with a dominant business
franchise."

,,Be fearful when others are greedy and greedy only when others are fearful,"
Buffett cautions.

 "Much success can be attributed to inactivity. Most investors cannot resist the temptation
to constantly buy and sell."
 "Lethargy bordering on sloth should remain the cornerstone of an investment style."
 "An investor should act as though he had a lifetime decision card with just 20 punches on
it."
 "Growth and value investing are joined at the hip."
 "Remember that the stock market is manic-depressive."
 "Buy a business; don't rent stocks."
 "An investor should ordinarily hold a small piece of an outstanding business with the
same tenacity that an owner would exhibit if he owned all of that business."

The Final Chapter 2016–2020

2016: Buffett launches a website called Drive2Vote to encourage his fellow Nebraska
inhabitants to come out and vote, offering assistance to get voters registered and provide rides to
polling locations if needed.

2017: Buffett begins selling off some of his estimated 81 million shares of IBM stock,
mentioning that he no longer assigned as high a value to the company as he did six years
previously.2 1 His net remaining shares sit at about 37 million. He increased his investment in
Apple, and it became Berkshire Hathaway's largest investment in one company's common stock.
After exercising some warrants, Buffett also became Bank of America's largest shareholder,
owning about 700 million shares.

2018: The "Oracle of Omaha" has an estimated net worth of $84.5 billion. Buffett adds
JPMorgan Chase and Bank of New York Mellon to Berkshire Hathaway's investment portfolio.

2019: Buffett's annual letter to Berkshire Hathaway shareholders is released on Feb. 23. He
mentions that Berkshire's success has been a product of what he calls "The American Tailwind."
In an interview with CNBC on Feb. 25, Buffett admits to having overpaid for Kraft Heintz and is
not planning to either buy or sell shares in the company.

2020: In his Feb. 22 Berkshire Hathaway shareholder letter, Buffett addresses the topic of
succession and says the culture will live on beyond himself and Munger. He says the book
"Margin of Trust" by Larry Cunningham and Stephanie Cuba will be released at the annual
meeting in Omaha on May 2. In addition, Berkshire Hathaway executives Ajit Jain and Greg
Abel will receive more visibility and field questions at the meeting.

That same letter outlines how Buffett intends for his shares to be handled after his death. Each
year, a certain number of A shares will be converted to B shares, then distributed to various
foundations to use promptly. He estimates it will take 12 to 15 years for the shares he owns to
move into the market.

Warren Buffett has kept the same investing philosophy for decades

 Despite over 30 years since his first televised profile, Warren Buffett still touts a bargain-
based philosophy complete with the occasional quip or baseball analogy.

 “You literally every day have thousands of the major American corporations offered to
you,” Buffett said in 1985. “And you don’t have to make any decisions ... There are no
called strikes.”

 If you’d invested $10,000 in Berkshire at the start of 1985 you’d now have $2.4 million;
the same principal in the S&P 500 would be worth about $227,000.
In one of Warren Buffett’s first televised profiles, the “Oracle of Omaha” explained a simple
method of investing that prioritizes an insatiable hunt for bargains, patience, and the occasional
baseball analogy

In one of Warren Buffett’s first televised profiles, the “Oracle of Omaha” explained a simple
method of investing that prioritizes an insatiable hunt for bargains, patience, and the occasional
baseball analogy. A video of the interview circulated on Twitter on Monday after being shared
by user Lyall Taylor.

“In the securities business, you literally every day have thousands of the major American
corporations offered to you at a price and at a price that changes daily. And you don’t have to
make any decisions. Nothing is forced upon you. There are no called strikes in the business,”
Buffett said.

“They may be wonderful pitches to swing at, but if you don’t know enough, you don’t have to
swing. And you can sit there and watch thousands of pitches and finally you get one right there
where you want it ... and then you swing,” he continued.

If Buffett’s advice from PBS’s “Adam Smith’s Money World” more than 30 years ago rings a
bell, it’s likely because he’s hardly changed his tune over his many profitable years on Wall
Street.

Berkshire Hathaway has posted average annual returns of 17.1% since 1985, well ahead of the
broader stock market’s 10.5% including dividends. If you’d invested $10,000 in Berkshire
Hathaway at the start of 1985 you’d now have $2.4 million; the same principal in the S&P 500
would now be worth about $227,000.

No called strikes

In one part of the 1985 interview, Buffett explains that the key to good value investing is about
exploiting one’s “area of competence” in determining the real value of a business. Then, taking
advantage of one’s expertise in a group of stocks, an investor can sometimes find upside
opportunities when the market prices the securities below their actual worth.

Fourteen years later, at Berkshire Hathaway’s 1999 stakeholder meeting, Buffett would tell
investors that “different people understand different businesses. And the important thing is to
know which ones you do understand and when you’re operating within what I call your ‘circle of
competence.’”

“There are all kinds of things I’m not competent to value ... There are few I am competent to
value,” Buffett said in 1985. “There are all kinds of things I don’t know about, and that may be
too bad, but why should I know all about them?”

Buffett, the chairman and CEO of Berkshire Hathaway, has served as a model for a generation of
investors with a frugal, bargain-based buying strategy stemming from his education under
“Father of Value Investing” and Columbia professor Benjamin Graham.
In addition to inspiring legions of value investors across the globe, Buffett’s investment
philosophy also contributed to his immense personal wealth of over $80 billion, according
toForbes. Though the sum makes him the world’s third richest person behind Amazon CEO Jeff
Bezos and Microsoft founder Bill Gates, Buffett has pledged to donate more than 99% of his
worth to charitable causes.

You don’t need tons of IQ in this business

While Buffett has long credited his focus on his own “circle of competence” for his success, he
also tends to invest in companies with minimal debt, reliable cash flows and sounds management
teams. He also told “Money World” host George Goodman in 1985 that a good investment
manager isn’t a necessarily a genius, but someone with a calm disposition.

“You don’t need tons of IQ in this business. I mean, you have to have enough IQ to get from
here to downtown Omaha, but you do not have to be able to play three-dimensional chess,”
Buffett quipped.

“You need a stable personality,” he continued. “You need a temperament that neither derives
great pleasure from being with the crowd or against the crowd because this is not a business
where you take polls. It’s a business where you think.”

Another investment tenant the 89-year-old has touted throughout his career is remembering to
think about each holding as proof of ownership.

“Most of the professional investors focus on what the stock is likely to do in the next year or two.
And they’ve all kind of arcane methods of approaching that, but they do not really think of
themselves as owning a piece of a business,” Buffett told Goodman.

“The real test of whether you’re investing from a value standpoint or not is whether you care
whether the stock market is open tomorrow,” he explained. “If you’re making a good investment
in a security, it shouldn’t bother you if they closed the stock market for five years.”
 CONTENTS

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4. Berkshire Hathaway. "Warren Buffett's 2018 Letter to Shareholders," Page 11. Accessed
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5. S&C Messina Capital Management. "What Was the Fee Structure of Warren Buffett's First
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6. Business Insider. "Warren Buffett Lives in a Modest House That's Worth .001% of His
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7. Omaha World-Herald. "Warren Buffett and Charlie Munger: Billion-Dollar Partnership."

Accessed March 18, 2020.
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12. Macrotrends. "Berkshire Hathaway - 49 Year Dividend History

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