Warren Buffett is an American investor, business tycoon, and philanthropist. Known as the “Oracle of Omaha,” Buffett is best known for his strict adherence to value investing and frugality despite his immense wealth. Warren Buffet owns an investment firm, Berkshire Hathaway. He owns 238,624 Class A shares which give him control over the company. His stake in the company is valued at over $100 billion.
Table of Contents
Early life
Buffetโs career as an investor started early.
At the tender age of 11, he purchased six shares of preferred stock in Cities Service for $38 a share.
Buffett split the purchase down the middle, with himself and sister Doris owning three shares each.
Shares in the public utility company briefly fell to $27 before rebounding to $40. Warren and Doris then sold for a profit, but not before the share price went to $200.
Buffett supplemented his income with a car detailing business, a paper/magazine route, and a soft drink stand.
He also purchased 40 acres of land for $1,200 which he then rented for a profit.
College education
Pressured by his father, Buffett put his entrepreneurial flair to one side for a moment and enrolled at the Wharton School of the University of Pennsylvania in 1947.
He then transferred to the University of Nebraska, earned a Bachelor of Science in business administration, and subsequently enrolled at Columbia university after he was rejected from Harvard.
At Columbia, Buffett was instructed and mentored by Benjamin Graham, the so-called father of value investing.
Upon learning that Graham was on the board of GEICO insurance, Buffet took a train to the companyโs headquarters on a Saturday morning.
Once let in, he questioned executive Lorimer Dawson about the company for four hours.
Based on this discussion, Buffett invested around $13,000 in GEICO and today owns the company in its entirety.
Buffet and Graham
After graduating from Columbia, Buffett was dissuaded from working on Wall Street by both his father and Graham.
He then offers to work for Graham for free but is rebuffed.
Working as a stockbroker, he attended one of Dale Carnegie’s public speaking courses and started to teach a night class called “Investment Principles” at the University of Nebraska. Buffet was only 21 at the time and most of his students were twice his age.
Three years later, in 1954, Graham offered Buffett a job at his investment firm Graham-Newman Corp.
In 1956, Graham retired and folded his company while Buffett founded Buffett Associates Ltd. and a further four investment partnerships before the end of 1957.
Berkshire Hathaway
In 1962, Buffett merged his partnerships into one entity and started aggressively purchasing shares in a textile manufacturing company called Berkshire Hathaway.
Now a millionaire, he took control of the company at a board meeting, fired the owner, and moved the business into the insurance sector. In 1970, Buffett started writing his annual letter to shareholders.
Charlie Munger โ whom Buffett met in 1959 after both were invited to dinner by a local Omaha businessman โ became chairman of Berkshire Hathaway in 1978. By 1979, Buffett was worth around $140 million but continued to live on his $50,000 per annum salary.
Buffett likes to hold stock from undervalued and well-managed companies indefinitely, with Gillette, American Express, and Coca-Cola some of the stalwarts of Berkshireโs portfolio.
Some companies, such as GEICO, Dairy Queen, and Fruit of the Loom, have been purchased outright by the billionaire but given the autonomy to manage their day-to-day operations.
Key takeaways
Warren Buffett is an American business magnate, philanthropist, and perhaps the most quoted investor of all time. Buffett showed entrepreneurial flair from a young age but was pressured by his father to attend university.
At Columbia University, Buffett was instructed and mentored by Benjamin Graham, the so-called father of value investing. In 1954, Graham offered Buffett a job at his investment firm Graham-Newman Corp. Buffett then founded his own investment company in 1956 after Graham retired.
Buffett met friend and business partner Charlie Munger at a chance dinner in 1959, with Buffett buying into textile company Berkshire Hathaway in 1962. He eventually took control of the company and moved it into insurance while retaining the name. Since that time, Berkshire Hathaway has embodied Buffettโs value investing philosophy.
Value investing is a strategy advocating the purchase of stocks that are underappreciated by other investors or the broader market. Value investing was popularised by investor Warren Buffett, but the approach was pioneered by Benjamin Graham and David Dodd at Columbia Business School in the early 1920s. Graham would later go on to release the seminal book The Intelligent Investor in 1949.
The Buffet Indicator is a measure of the total value of all publicly-traded stocks in a country divided by that countryโs GDP. It’s a measure and ratio to evaluate whether a market is undervalued or overvalued. It’s one of Warren Buffet’s favorite measures as a warning that financial markets might be overvalued and riskier.
The circle of competence describes a personโs natural competence in an area that matches their skills and abilities. Beyond this imaginary circle are skills and abilities that a person is naturally less competent at. The concept was popularised by Warren Buffett, who argued that investors should only invest in companies they know and understand. However, the circle of competence applies to any topic and indeed any individual.
Economic or market moats represent long-term business defensibility. Or how long a business can retain its competitive advantage in the marketplace over the years. Warren Buffet who popularized the term โmoatโ referred to it as a share of mind, opposite to market share, as such it is the characteristic that all valuable brands have.
The Golden Circle attempts to explain how certain businesses can inspire others and differentiate themselves in the market. Originally developed by author Simon Sinek, the concept helps businesses identify their purpose and then communicate that purpose to consumers in a meaningful way so that the brand can be highly differentiated in the marketplace.
The 5 Whys method is an interrogative problem-solving technique that seeks to understand cause-and-effect relationships. At its core, the technique is used to identify the root cause of a problem by asking the question of why five times. This might unlock new ways to think about a problem and therefore devise a creative solution to solve it.
First-principles thinking โ sometimes called reasoning from first principles โ is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and any eventuality. It also discourages the tendency for individuals to default to the most obvious choice.
By 2022, most of Tesla’s shares are still owned by Elon Musk, among the company’s co-founders and the CEO. Elon Musk is the top individual investor, with a 23.5% stake in the company. At current rates, this is valued at around $145-50 billion, making Elon Musk one of the wealthiest men on earth. In addition, Musk also holds a significant stake in Twitter and SpaceX, which makes him worth anywhere between $180-90 billion.
Bernard Arnault’s wealth is around $203 billion. Indeed Arnault is the CEO and chairman of the luxury goods conglomerate LVMH Moรซt Hennessy Louis Vuitton, a massive luxury group that generated over โฌ79 billion in revenue ($83 billion) in 2022, spanning across wines, fashion, cosmetics, and retail. The Arnault family group owns 48.18% of the capital for LVMH with 63.9% voting power, making Bernard Arnault the principal owner and decision-maker. His stake is worth over $203 billion.
Warren Buffett is an American investor, business tycoon, and philanthropist. Known as the “Oracle of Omaha,” Buffett is best known for his strict adherence to value investing and frugality despite his immense wealth. Warren Buffet owns an investment firm, Berkshire Hathaway. He owns 238,624 Class A shares which gives him control over the company. His stake in the company is valued at over $100 billion.
Jeff Bezos’ net worth is primarily based on his ownership stake in Amazon. Indeed, as of 2023, Bezos owned a 12.7% stake in Amazon, worth over $120 billion.
Tim Cook’s net worth is primarily comprised of his Apple stocks. As of 2023, he owned 3,279,898 worth about $480 million at the current rate. However, Tim Cook has sold part of his Apple stocks over the years for hundreds of millions of dollars, making him a billionaire.
Bill Gates was the co-founder and former CEO of Microsoft until 2000, and he was on the board of Microsoft until 2020. However, over the years, Gates sold various stakes in Microsoft and diversified away from it. As of 2019, Gates had a 1.34% stake in Microsoft, which he might still own, valued at about $25 billion.
As of 2022, Satya Nadella had 763,518, valued at $190 million at Microsoft’s current market value. Nadella also got a $2.5 million base salary in 2022, plus $42.27 million in stock awards and over $10 million in non-stock incentives. Nadella sold hundreds of millions of dollars of Microsoft stocks in the last ten years, making him a centi-millionaire. In 2022, 96% of Nadella’s salary was performance-based, whereas only 4% comprised a base salary.
Larry Page co-founded Google (now Alphabet) and Sergey Brin. He controls the company tightly via a dual share ownership structure (made of Class A and B stocks). Alphabet is worth over a trillion dollars, valuing Larry Page’s stake in the company at around $70 billion.
Sergey Brin co-founded Google (now Alphabet) together with Larry Page. He controls the company tightly via a dual share ownership structure (made of Class A and B stocks). Alphabet is worth over a trillion dollars, valuing Sergey Brin’s stake at around $66 billion.
Mark Zuckerberg is the co-founder and principal shareholder of Facebook (now Meta), in which he owns a controlling stake worth over $68 billion. Thus Mark Zucberkerbs’ net worth is around $68 billion in 2023.
Eduardo Luiz Saverin is a billionaire entrepreneur and angel investor. He co-founded Facebook with Mark Zuckerberg; he was later ousted. Yet later on, Facebook settled a lawsuit with Saverin giving him a good chunk of the company’s stock, now worth over ten billion dollars. Thus, Eduardo Saverin’s net worth is around $10.45 billion in 2023.
While Larry Ellison is a shareholder in various tech companies (such as Tesla), his primary wealth comes from his ownership stake in the company he founded, Oracle. He owns almost 43% of the company’s stock, valued at over $100 billion, making him among the wealthiest people on earth.
Howard Schultz’s net worth is over $2.2 billion. Indeed, he is the founder of Starbucks and a major institutional shareholder, with 1.88% ownership of the company, valued at over $2.2 billion at the current market value, making him a billionaire.
Daniel Ek is one of the founders and one of the principal shareholders of Spotify. Indeed, in 2023 with 16.5% of Spotify’s shares, he’s worth around $3.7 billion.
The Pinault family is the main shareholder behind the Kering Group luxury empire, with a stake of 41.7%, valued around โฌ30 billion, thus $32-33 billion. The Kering Group owns iconic brands like Gucci, Yves Saint Laurent and Bottega Veneta.
Pierre Omidyar is a technology entrepreneur andPierre Omidyar is a technology entrepreneur and founder of eBay. As of 2020, before he stepped down from the company’s board of directors, he still owned 4.69% of the company’s stocks, valued at over one billion dollars. Yet, over the years, he sold a good chunk of his stocks, making him a billionaire. founder of eBay. As of 2020, before he stepped down from the company’s board of directors, he still owned 4.69% of the company’s stocks, valued at over one billion dollars. Yet, over the years, he sold a good chunk of his stocks, making him a billionaire.
Marc Benioff’s net worth is $5 billion. His net worth primarily comes from his stake in Salesforce. Indeed, he owns 3% of the company’s stock, valued at around $5 billion at current market value, making Marc Benioff a billionaire.
Reed Hastings is the co-founder, former CEO, and now executive chairman of Netflix. He’s also one of the major shareholders, with 1.7% ownership in the company, valued at $2.4 billion at the current rate.
Evan Thomas Spiegel is the co-founder and CEO of Snapchat. He’s also the main shareholder. Indeed, he both owns and controls Snapchat, and his stake in the company is currently valued at around $3 billion.
Brian Chesky is an industrial designer and businessman who is also Airbnb’s co-founder and current CEO. Since the company was founded in 2007, Chesky has been in charge of it, amassing a net worth of about $10 billion, thanks to his shares in the company.
Phil Knight, the founder of Nike, controls the company via a personal stake of shares for 7% ownership, plus the shares held via the family’s owned Swoosh, LLC, in addition to the shares in possession of his son’s Trust. Phil Knight directly controls a significant stake in Nike’s Class A and B shares, valued at over $40 billion.
Michale Jordan is a billionaire but doesn’t own the Jordan brand, which is part of Nike. Yet, he gets 5% royalties on the sales of Jordan. For instance, as of May 31, 2022, Nike had endorsement contract obligations of $7.6 billion, of which over $250 million were to be paid out to Michael Jordan as royalties on the sales of Jordan in 2022 (the company made over 5$ billion in sales in that year). We estimated that between 2018-2022 alone, Nike paid (or is paying) Michael Jordan almost one billion dollars in royalties for Jordan’s brand sales.
Kevin Plank is Under Armour’s primary owner and founder, of which he’s also chairman. His stake in the company is worth over a billion dollars at current market value, making him a billionaire.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
