How Warren Buffett ACTUALLY Got Rich (No, it's NOT Stocks)

Summary

Warren Buffett, known as the 'Oracle of Omaha,' has been a model for investors worldwide. Starting with a keen interest in business as a child, he made his first investment at 11 and worked various jobs to fund his future. Despite early setbacks, Buffett's strategic investments, such as his acquisition of Berkshire Hathaway, transformed him into one of the wealthiest and most respected businessmen globally. Known for his frugality and straightforward approach, Buffett's story is one of persistence, smart decision-making, and a lifelong dedication to investing and charity.

Takeaways

• 😀 Warren Buffett is a globally recognized role model for investors, known for his rich investment history starting from when he was 11 years old.
• 😀 Buffett's first investment at age 11 resulted in a small profit, but he later regretted selling too early when the stock rose much higher.
• 😀 As a teenager, Warren demonstrated strong business skills, including working as a paperboy and investing in a 40-acre farm, making him a substantial profit.
• 😀 At 17, Buffett and a friend started a pinball machine business, which they sold for a significant profit, showing his early entrepreneurial spirit.
• 😀 After being rejected by Harvard, Warren attended Columbia Business School and earned a Master of Science in Economics, learning from his mentor, Benjamin Graham.
• 😀 Buffett worked at Benjamin Graham’s firm, which helped shape his investment philosophy and contributed to his eventual success in the business world.
• 😀 By 1956, Warren started his own partnership with friends and family, initially investing just $100, but growing the stake significantly through reinvested management fees.
• 😀 By 1960, Buffett had become a millionaire, thanks to his partnerships, with assets exceeding $7 million, a portion of which belonged to him.
• 😀 Warren's acquisition of Berkshire Hathaway, originally a failing textile company, marked the beginning of his transformation of it into a successful holding company.
• 😀 The purchase of insurance companies in 1967 was a pivotal moment for Berkshire Hathaway, as their cash flow was used to fund further acquisitions, making the company a powerhouse.
• 😀 Warren Buffett's wealth grew to over $84 billion, with major charitable contributions, including a massive donation of Berkshire Hathaway shares to the Bill & Melinda Gates Foundation.

Q & A

What is Warren Buffett known for in the investment world?

Warren Buffett is known as one of the most successful investors of all time, earning the nickname 'Oracle of Omaha'. His investment strategies and decisions have made him one of the richest and most respected businessmen globally.

When did Warren Buffett make his first investment, and what was the outcome?

Warren Buffett made his first investment at the age of 11, purchasing three shares of Cities Service Preferred at $38 each. Although he sold the stock for a small profit when it rose to $40, he later regretted this decision when the stock price soared to $200 a share, learning an early lesson in patience.

How did Warren Buffett earn money as a teenager?

As a teenager, Warren Buffett worked as a paperboy, delivering newspapers early in the morning. He also sold magazine subscriptions and calendars, and by the age of 15, he had saved up $2,000, equivalent to about $26,000 in today's money.

What was Warren Buffett's first business investment as a teenager?

At 15, Warren Buffett invested $1,200 of his paper route earnings into a 40-acre farm, where he had a profit-sharing agreement with a Nebraska farmer.

How did Warren Buffett's partnership with a friend in high school help his early business ventures?

In high school, Warren Buffett partnered with a friend to buy a used pinball machine for $25, which they placed in a local barber shop. This venture grew quickly, and by the end of the year, they had several machines generating a steady income of about $25 a week, which they later sold for $1,200.

What academic path did Warren Buffett take before entering the business world?

Warren Buffett graduated from the University of Nebraska with a Bachelor of Science degree. He then applied to Harvard Business School but was rejected. Instead, he enrolled at Columbia Business School, where he earned a Master of Science in Economics in 1951, studying under his mentor, Benjamin Graham.

How did Warren Buffett begin his professional career?

After graduating, Warren Buffett worked as a stockbroker and also took a Dale Carnegie public speaking course. He later taught night classes at the University of Nebraska and worked for his mentor Benjamin Graham at Graham's investment firm.

What was the turning point in Warren Buffett's career that led to the success of Berkshire Hathaway?

The turning point in Warren Buffett's career came in 1967 when he began purchasing insurance companies, using the substantial cash flow from these companies to finance further acquisitions. This strategy helped transform Berkshire Hathaway into the colossal company it is today.

What was Warren Buffett's biggest mistake in his early investment career?

Warren Buffett considered his acquisition of Berkshire Hathaway in 1962 his worst investment. The company, a New England textile manufacturer, was struggling, and despite his efforts to change management, it continued losing money. However, he later shifted Berkshire's focus to a holding company model, which eventually led to its success.

What is Warren Buffett's approach to wealth and frugality?

Despite his immense wealth, Warren Buffett is known for his frugality. He still lives in a house he purchased for $31,500 in Omaha, Nebraska, showing that he values practical living and is not inclined toward extravagant spending.

What is Warren Buffett's contribution to charity?

Warren Buffett is a significant philanthropist, with one of his largest donations being 185 million shares of Berkshire Hathaway, valued at $28.3 billion, to the Bill and Melinda Gates Foundation. He continues to be recognized for his charitable contributions.