It is the birthday of Mr. Warren Edward Buffet, the American philanthropist who is counted in the list of wealthiest people of the world and is widely considered as the most successful investor of the 20th century. Because of his amazing value investing philosophy and simplicity in everyday life, he has earned the nickname ‘the Oracle of Omaha’ or ‘the Sage of Omaha.’ He once said-“ Someone’s sitting in the shade today because someone planted a tree a long time ago.” It is this kind of foresight that has lead him to the pinnacle of success.
As a child, young Warren displayed a keen knack for financial matters. He was somewhat of a mathematical prodigy, and was able to add large columns of numbers in his head- an ability he still likes to show off to his friends and associates. Warren’s father was a stockbroker and served as U.S. Congressman. Warren made his first investment when he was all of 11 years old! He bought three shares of Cities Service Preferred at $38 per share. The stock quickly dropped to only $27, but Buffett held on tenaciously until they reached $40. When later asked about this, he commented- “I made my first investment at age 11. I was wasting my life up until then.”
Warren Buffet undertook his first entrepreneurial venture at age 13, an age when most of us can’t count money properly. He was running his own businesses as a paperboy and selling his own horse racing tip sheet. During that year, he also filed his first tax return, claiming his bike as a $35 tax deduction. It was easy to see that young Warren was destined for big things.
During his high school tenure, Buffet dabbled in different ways to try and make money. One of his successful ventures was when he bought a pinball machine with a friend for $25. They installed it in a Washington barbershop and used the profits to buy more machines. He finally sold his business to a war veteran for $1200, 48 times his initial investment! When asked about smart investment, he famously said-“Rule number one: Never lose money. Rule number two: Never forget rule number one.””
Buffet went to Wharton School of business at 16 and moved to University of Nebraska, 2 years later, to finish up his degree. He attended Columbia University for his advanced degree and shortly after graduation, he formed the Buffet Partnership firm in Omaha. He became rich and famous for buying undervalued companies whose stocks shortly began to rise. This long-sightedness also earned him the aforementioned sobriquet-“The Oracle of Omaha.” He helped rescue Salomon Brothers from corporate raiders (1987) and took charge of the New York City house(1992) when it was hit by an insider trading scandal.
After a career spanning roughly 50 years, which saw him amass a net worth of over 50 billion dollars, Warren Buffet shocked the world when he pledged his entire fortune away to charity, committing 85% of it to the Bill and Melinda Gates foundation. This donation became the largest act of charity in the history of the United states. His words explaining the rationale behind this move are both profound and enlightening-
I don’t have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It’s like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don’t do that though. I don’t use very many of those claim checks. There’s nothing material I want very much. And I’m going to give virtually all of those claim checks to charity when my wife and I die.”
As of today, having battled prostate cancer, Warren Buffet continues to power on.