Warren Edward Buffett is a highly successful American businessman, investor and philanthropist. He was born on 30 August 1930 to his mother Ellie and father Howard Buffett in Omaha, Nebraska. He was the couple’s second-oldest child, and brother to two sisters, Roberta Buffett Elliott and Doris Buffett.
The early life of Warren Buffett
At a very early age, Warren Buffett demonstrated a capacity for business and money. He displayed an incredible ability to mentally add up columns of numbers. It is a skill that still amazes associates and colleagues today.
At the age of six, Warren’s enthusiasm for investment was on display when he purchased six packs of Coca-Cola from a store owned by his grandfather for 25 cents and proceeded to sell each bottle for 5 cents. He was able to derive a 5-cent profit from this venture.
It wasn’t until five years later that Buffett finally took his very first steps into the world of high finance.
At the age of eleven, he invested in Cities Service stock. He purchased three shares for his older sister, Doris, and himself at $38 (£28) a share. Not long after this, the price dropped to $27 (£20) a share.
As with most greenhorn traders, Buffett was naturally nervous, but he ended up holding out. His resilience gained its reward when the price rebounded to $40 (£30) a share, at which point he sold the stock. As Buffett came to realise, this was a mistake as the price later pumped to $200 (£145).
Patience: that was the lesson Warren Buffett learned from his first stock trading experience.
Warren Buffett’s education
At the age of 16, Warren Buffett attended the Wharton School of Business at the University of Pennsylvania. He was only there for two years before moving back to Omaha, where he enrolled at the University of Nebraska to complete his business degree.
Warren eventually graduated from Columbia University with a master’s degree in economics in 1951. During his time at the university, he studied under famed economist Benjamin Graham, author of the acclaimed book, The Intelligent Investor, and David Dodd.
Buffett was a brilliant student. After he graduated, he offered to work for Graham’s partnership. So great was his ambition that he offered to work for free. Graham rejected the offer. Warren was disappointed, but his determination did not end.
Warren Buffett’s investing career
In the early days of Buffett’s investing career, he spent most of his time analysing S&P (Standard & Poor’s) reports looking for excellent investment opportunities.
As a student of Ben Graham’s school of value investing, his goal was to try and identify undervalued securities that did not match their intrinsic value. It was a form of bargain hunting.
However, Buffett’s approach towards determining intrinsic value differed slightly from Graham’s philosophy. Warren Buffett focused more on the company’s management and its internal workings as the primary indicator of whether it was worth investing in. Ben Graham, on the other hand, relied more on numbers – income statements and balance sheets – to determine the suitability of an investment.
In 1956, equipped with this knowledge and experience, Warren Buffett finally established his own investment company, Buffett Associates Ltd, raising around $105,000 (£76,000) from his family members and friends.
In the years leading up to 1965, Warren Buffett grew the value of his holdings to around £5.2 million. He eventually consolidated all partnerships into a single entity, naming it Buffett Partnerships Ltd.
In 1965, after aggressively buying up shares of Berkshire Hathaway, Buffett finally took over the company as its majority shareholder and named Ken Chase as CEO.
Warren Buffett: personal life
In 1952, Warren Buffett married his first wife, Susan Thompson. They had three children together: Susie, Howard and Peter. However, Buffett’s intense dedication to his work and perceived infidelity would eventually lead the couple to separate in 1977. Susan secured an apartment in California and began pursuing a singing career.
The following year, Susan introduced Buffett to Astrid Menks, a Latvian immigrant and close friend. Susan had met her when she started singing at the restaurant where Astrid was a hostess. Menks and Buffett quickly struck up a relationship and eventually moved in together.
The trio remained very close until Susan passed away after a battle with cancer in 2004. At the time of her death, she was still married to Warren Buffett.
Two years later, in 2006, Astrid and Buffett married in a modest ceremony.