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• As a child, Warren Buffett showed a strong sense of business and acquired his first shares
• He studied under Benjamin Graham at Columbia University and worked as a securities analyst
• Later Buffett went freelance and became a millionaire at 30 and a billionaire at 55
The competition for the three podium places among the richest people in the world is currently fairly close. While ranked first and second, with Amazon boss Jeff Bezos and Microsoft founder Bill Gates, fairly solidified, the occupancy of the third place has not yet been clearly clarified. The luminary Warren Buffett is generally considered the third richest person in the world. However, it can be seen from the “Bloomberg Billionaires Index” that there is a constant change with the French billionaire Bernard Arnault. This Buffett has now overtaken. And Facebook boss Mark Zuckerberg is also on his heels. However, the circumstances can change again at any time. Ultimately, Warren Buffett will probably not care whether he is in the top three or top five in the world. The head of the investment company Berkshire Hathaway has never boasted with its immense wealth. Still, many people are interested in how he built his fortune. For this, it is worth taking a look at his resume.
A child with business acumen
Warren Edward Buffett was born in Omaha on August 30, 1930. He is the second child of Leila and Howard Buffett. His father was a broker by trade and later became a member of Congress.
Buffett showed a willingness to make money at a very young age. At the age of six, he is said to have bought Coca-Cola six packs for 25 cents in the supermarket and sold the individual bottles for five cents each. He later worked as a newspaper messenger, sold used golf balls and rented pinball machines. Buffett acquired his first securities at the age of eleven. These were three “Cities Service” preference shares, which he bought for $ 38 and then resold for $ 40. In the meantime, the price fell to $ 27, so the young investor was probably happy to be able to get rid of the shares without a loss. Three years later, Buffett bought and leased a 16-acre farm in Omaha for $ 1,200. With friends, he also got a pretty run-down Rolls-Royce at the age of 17, for which they paid $ 350. After servicing the car, they rented it for $ 35 a day.
Training under Benjamin Graham
After high school, Buffett studied at the Wharton School of the University of Pennsylvania and the University of Nebraska. He then earned a Master of Economics from Columbia University in New York. One of his teachers was the famous Benjamin Graham. He is considered the “father of fundamental securities analysis”. He was also an influential economist and investor in his day. After working first in his father Howard’s company, Buffett accepted an offer from his mentor Graham in 1954 and moved to the brokerage firm Graham-Newman as a securities analyst. According to the GOBankingRates page, Buffett is said to have received an annual salary of $ 12,000. This sounds surprisingly little by today’s standards. But in 1950 the average income of an American citizen was around $ 3,180 a year. Accordingly, Warren Buffett bagged almost four times.
The path to independence
When Graham retired from business in 1956, Buffett made the decision to found his own limited partnership called “Buffett Partnership”. He collected a total of $ 105,000 from friends and relatives. His own deposit was only $ 100. The investment pool grew continuously in the following period and until 1969 achieved an above-average return of 29.5 percent annually. At 30, Warren Buffett finally got there. He broke the magic barrier and is said to have had assets of over one million US dollars.
Buffett has been investing in the Berkshire Hathaway textile company since 1962. Over time, he noticed that the textile industry was declining and the financial situation of society was deteriorating. After a verbal offer from the managing director Seabury Stanton, Buffett was willing to sell his shares back to him for a price of $ 11.50 per share. A few weeks later, however, the price of the written offer was only $ 11.38. The broken promise prompted the investor to instead buy Berkshire Hathaway and fire Stanton. He then dissolved his Buffett Partnership in 1969 and offered investors to exchange their shares for Berkshire shares.
The emotional decision initially turned out to be a mistake for the otherwise rather rational Buffett. The company’s economic imbalance could no longer be remedied with the previous business concept. So Buffett underwent a major restructuring of Berkshire Hathaway. The remaining capital was invested in other companies. This gradually gave up activities in the textile business and increased the number of investments. The company changed to today’s holding company. At the age of 55, Warren Buffett’s strategy eventually became a billionaire.
The star investor today
Today Berkshire Hathaway’s stock is the most expensive no-par share in the world. Your current price is around $ 250,000. It has never been split and has not paid a dividend since 1967. Buffett holds approximately 37 percent of the company’s shares.
The star investor, who is also known as the “oracle of Omaha” due to his golden hand in stock selection, now has assets of around $ 70 billion. Nevertheless, he does not lead a luxurious and excessive lifestyle. He still lives in the same house he bought in 1958 for $ 31,500. With his good friend Bill Gates, he mainly devotes himself to philanthropy. In 2006 Buffett decided to transfer a large part of his assets to the non-profit “Bill and Melinda Gates Foundation”. His gift to the foundation was 10 million of his Berkshire shares, which are paid out in annual installments. In 2006, their value was approximately $ 31 billion. In addition, he has also supported charity projects of his family members.
In 2010 friends Buffett and Gates started the campaign “The Giving Pledge”. This is based on a promise by the super-rich to return large parts of their immense assets to society through donations. To date, over 200 of the world’s wealthiest people have followed this promise.
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