Thursday, May 5, 2011

Warren Buffet Biography

Early life

Warren Buffet was born in 1930 in Omaha, Nebraska, the son of a stockbroker and Congressman, and has become probably the world’s most successful investor.

As a boy, irrespective of his family background, he delivered newspapers to make extra money and this probably sparked his interest in the media where he has made several successful investments including the Washington Post Company, a stock that has made him a lot of money and which he vows never to sell.

Imbued with a determination to make good and an entrepreneurial nature, Warren dabbled in several part time businesses but his destiny was chartered early in the piece when, after graduating from the University of Nebraska, he studied business at the Columbia Graduate Business School under the legendary Benjamin Graham.

Working with Benjamin Graham

He tried to get a position with Graham’s firm and was at first unsuccessful. He finally got the job and, as he generously acknowledges, learned a lot about stock investment from The Master.

Graham eventually retired and Buffett started a limited partnership in Omaha, using capital contributed by family and friends. The partnership was a great success and Buffett is said to have averaged an annual rate of return for the partnership in excess of 23 per cent, far in excess of the market.

Buying Berkshire Hathaway

Buffett, after several years, decided to wind up the partnership, returning the lucky investors their capital and their share of the profits, and bought an interest in Berkshire Hathaway, a textile company, giving his original investors the the chance to invest. The smart ones did so.

Buffett’s early days at Berkshire Hathaway were not great. The company was in an industry facing real challenges from exports and high manufacturing costs. Warren Buffett had not, however, forgotten what he had learned under Graham, and arranged for the company to buy out two Nebraska insurance companies.

This was the start of Buffett’s interest in insurance and the rise to financial fame of both himself and Berkshire Hathaway. The insurance game is a hard one but under Buffett, the company has become, not only a successful share investor, but a leading provider of insurance.

Buffett and Charlie Munger

Buffett struck up a friendship with Charles T Munger, a lawyer and investor and Charlie Munger eventually joined Warren at Berkshire Hathaway as his Vice-Chairman, alter ego, and friend. Warren Buffett is always the first to acknowledge the contribution that Charlie Munger has made to Berkshire Hathaway. (Listen to an interview with Charlie Munger, or read our biography). Under Buffett and Munger, Berkshire Hathaway has become an investment giant that wholly owns a number of successful companies that include:
  • Geico Corporation
  • Nebraska Furniture Mart
  • See’s Candy Shops

Warren Buffet, the man

Warren Buffett, the man, is just as hard to define as Warren Buffett, the investor. He projects a homespun frugality but one suspects that he plays his personality as close to the chest as he does his investment secrets. He always claims that it is his partner, Charlie Munger, who keeps his feet planted firmly in the ground.

Warren Buffet has become a legend and is generally ranked, along with his mentor, Benjamin Graham, first in a stellar cast of investors that includes Peter Lynch, John Neff, and Philip Fisher.

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