Considered the best investor of the century, Warren Buffett has led an extraordinary life. Director of the investment fund “Berkshire Hathaway” and an philanthropist, he has successfully built an empire. The boy who started with a hundred dollars in his pocket now has more than $85 billion in his bank account. He is the living example that even someone starting from nothing can reach stratospheric heights. An inspiration to generations of traders, Warren Buffett is still full of surprises. Discover his crazy story in this article!
Warren Buffett’s innate gift for trading
Warren Buffett was born in Omaha, Nebraska in 1930. His father, Howard Buffett, was a stock broker and Congressman. The young Warren occasionally accompanied his father to his workplace. At the age of 11, he bought his first six shares in the Cities Service Company. He bought three for himself and three for his sister. Each share was worth $38. The company’s price fell to $27 before rebounding to $40. Warren sold his securities a little too early, missing their meteoric rise in the following weeks. It was his first lesson about the stock market. He learned that a premature exit from a good investment can be a wasted opportunity.
Two years later, Warren Buffet told a family friend that he would be a millionaire by the age of 30. If not, he would “jump from the tallest building in Omaha.” To make money whilst at school, he delivered “The Washington Post”. With the money he earned, Warren invested $1,200 in 16 hectares of farmland. And he was only 14 years old at the time!
Later, Warren Buffett received a master’s degree in economics from Columbia University. He studied in the classes of Benjamin Graham, who would go on to become his mentor. He was also the only student to receive the top possible grade from his teacher, an A +. Further proof of his exceptional skills.
A stockbroker for a father, his first investment at the age of 11, and flying colours in his economic studies. You could say that Warren Buffett had an innate gift for trading. And he knew how to take advantage of it. This is what we will see in the rest of this article.
Millionaire at the age of 30 from a $100 investment
You will remember that when he was 13, Warren Buffett said he would be a millionaire by 30. And as crazy as it sounds, he succeeded!
After finishing his studies in 1956, he returned to Omaha and created his first company: Buffet Associates, Ltd. There he managed stock market portfolios, pooling the money of his friends and family alongside his own. His relatives invested $105,000 dollars in it while he only invested $100 dollars! At the end of his third year in the role, Warren Buffett had doubled the initial investor stake. In 1961, multi-million dollar partnerships enabled him to make his first million dollar investment. Since the very beginning, his investments have achieved capital gains of almost 30% on average per year. In a market where the average is between 7% and 11%, this performance is exceptional.
And under the leadership of Warren Buffett, the Berkshire Hathaway fund has seen incredible results. It has outperformed the market benchmarks such as the S&P 500 and the Dow Jones for more than 40 years. These performances are exceptional when we consider that more than 80% of investors do not beat their stock market index. Today, this fund holds several hundred billion dollars.
A visionary, Warren Buffett looks to the long term. His strategy is to invest in companies that he considers undervalued, but which have great potential in the long term. The definition of companies where Warren Buffet likes to invest is as follows: “Wonderful castles, surrounded by deep, dangerous moats, where the leader inside is an honest and decent person. Preferably, the castle gets its strength from the genius inside; the moat is permanent and acts as a powerful deterrent to those considering an attack; and inside, the leader makes gold but doesn’t keep it all for himself. Roughly translated, we like great companies with dominant positions, whose franchise is hard to duplicate and has tremendous staying power or some permanence to it.”
A winning strategy! His investments achieve great returns over time. Unlike other investors, Buffett also participates in the management of the companies in which he is a shareholder. This is another reason he achieves higher than average returns. Warren Buffett’s strategy has a name: “The snowball effect”. This is how starting from nothing with an investment of $100, you can become a billionaire!
The Old Sage who knows how to stay young!
He’s almost 89 years old and has $85 billion in his bank account. Warren Buffett has lived through World War II, man’s first steps on the moon and the two oil shocks. But he is still as dynamic as a thirty-something! Anyone who starts their days reading “USA Today” and “Forbes” will continue to surprise.
And if you think Warren Buffett has his breakfast at luxury hotels, you would be wrong. Every morning, the billionaire gets up at 6:45 a.m. having had an eight-hour night’s sleep. And he goes to McDonald’s for breakfast. One very funny thing is that his spending money and therefore his menu depend on the stock market price and his wife. On bad days, he goes out with about $2.60. On good days, it exceeds $3, so he allows itself some extras. He also claims to drink five cans of Cherry Coke a day. You’ll remember of course that he is a shareholder in the soda giant. As you can see, Warren Buffett’s diet is more like a college student’s than a billionaire’s.
But he also likes childish foods. He spoke about this very jokingly with the magazine “Fortune”. “I checked the actuarial tables, and the lowest death rate is among six-year-olds. So I decided to eat like a six-year-old.” Hence his penchant for strawberry milkshakes!
A passionate ukulele-player, Warren Buffett also has a surprising relationship with money. He distributes a large part of his fortune to charities. And he often repeats that he has no use for money. This is proven by the fact that he still lives in the first house he bought in 1958 for just $31,500. Given that we know that his fortune is estimated at several billion, here is another reason to call his story crazy!
Conclusion
If you want to know more about the life of Warren Buffet, we recommend you read his biography: “The Snowball Effect“ This book will tell you how he created and built up his fund Berkshire Hathaway. But it will also tell you how this man was able to reach the heights and overcome the difficulties. This will provide you with an even better insight into the character of Warren Buffet, the best investor of the century.
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