Personality

(Ab)normal Multibillionaire

Published: 20. 6. 2020
Author: Lubor Winter
Photo: Shutterstock.com
logo Share

Investor, businessman, philanthropist, American, Warren Buffett, is about to celebrate his 90th birthday in a few months. He is the fourth richest person in the world. Despite of that he's come to the conclusion that it makes more sense to die owning no assets.

Already before he started going to school he had said he'd be rich someday. How does a little boy know that? As it happens, it was his background. Warren was born on 30th August 1930 to the middle class family of Leila and Howard Buffett. His father owned a small brokerage, which made his home full of talk about business and finance. The family lived in Omaha, Nebraska, and Warren was the middle child of three children - he had two sisters, Doris and Robert. He was a perfectly normal boy - bright and cheerful, but he was far from average with one thing: he loved numbers. “I always remembered the numbers. And I loved playing with them. I loved counting and memory based games. And I loved reading too. I actually discovered the first investment book I read in my dad's office, on the ground floor of our house. Dad influenced me a lot in every way; I always admired him.  He was the best gift I could have got in life. I loved my mom too, but I really got along with my dad, ” Warren Buffett recalls in one of his many interviews. He inherited the love for numbers more from his mother. “My mum was brilliant at mathematics. She knew the result before we typed the data into the calculating machine, ” Doris Buffett recalls.

Businessman Since Childhood

Warren's interest in business first became apparent when he was 6 years old. He began selling cans of Coca-Cola. He bought a pack of six cans for 25 cents in the city and then delivered them around the neighbourhood selling one can for 5 cents. He earned almost 20% on one pack. He didn't stop  at just a door-to-door selling. 
When he was 11 years old, he borrowed $ 114 from his father and bought shares! These were securities of Cities Service. One share cost $ 38, so Warren could afford to buy three. The shares dropped at first, but Warren kept them, believing they would go up. And indeed, the share price began to rise gradually. When she reached $ 40 each, Warren sold them, earned $ 6 and was actually happy. To the surprise of all, however, the value of Cities Service securities continued to rise to $ 200 each. Warren then regretted that he hadn`t kept them for a while. As a grown man he said several times that this was one of the most important business experiences of his life.

At the time his peers were playing Indians and cowboys, Warren was already fully engaged in his new business project - newspaper delivery. He didn`t make money only on distribution of the daily press, but he also sold calendars, chewing gums and other small goods that he was offering along with the paper. For some time he had been making $ 175 a month, much more than some Warren's teachers were making at that time.

But then he experienced a blow; Howard Buffett became a congressman for the Republicans and moved the whole family to Washington, which Warren didn't take well. He had to leave Omaha, Nebraska, his friends ... everything he loved. He attended W. Wilson's High School in Washington, but rather than spending time studying, he was more involved in coming up with ways how to upset the teachers. “Suddenly I wasn't interested in school. Everything was annoying me at home too, so I decided to run away with two of my friends. The patrol caught us that night. Dad just said to me: Look, you can do much better things than this. And I realized he was right, ”Warren says. The situation at school stabilized and Warren started another business. He invested on the stock market, which earned him money for which he had bought 40 hectares of farmland in his native Nebraska, which he had in turn leased to a local farmer. He was 14 years old.

The Oracle of Omaha

Warren's next direction was quite clear: he was going to go to university, study economics and business, and do business. He first started at the University of Pennsylvania, but he soon moved to the University of Nebraska. But he didn't stay too long there either. He enrolled at Columbia Business School in New York because he found out that economist Benjamin Graham, whom he knew from his books on investment, was lecturing there. It was this very man, who then fundamentally influenced Warren. He introduced him to the secrets of valuing property and making smarter investments. He taught him not to blindly respond to Wall Street and rather be active. Which meant mainly to look for companies whose shares are undervalued, but have great potential. And how do you figure that out? You dive into financial statements, annual reports, economic plans and so on. The point is to analyze series of figures. And Warren had his way with numbers… “Graham taught me how to find companies to invest in, as well as many other things. He taught me the basic rules of investing - there are two of them, and today they are called Buffett's rules of investment. Rule number one is: You must never lose money. And rule number 2: Never forget rule number 1, ”Buffett shared in the HBO document. Graham, well aware that Warren was extremely talented with a unique ability to work with figures, offered him to start working as an analyst for him right after school. Young Warren was doing very well, even so well, that he decided to start his own investment firm Buffett Partnership. Then he profited from everything he had learned from Graham. Deep knowledge of the theory, along with his phenomenal memory of numbers and the ability to intuitively find important relationships between numbers, made him a man who, before everyone else, could guess how a particular company would perform and change its investment strategy accordingly. It is no coincidence that Warren was known as the Oracle of Omaha during this time in the business circles.

Another major breakthrough in Buffett's career came in 1965 when he took control of Berkshire Hathaway. Originally, it was a large textile factory, but Warren decided to turn it into a capital investment firm, a company that buys other firms that may have a potential. Warren still manages Berkshire Hathaway and holds the majority of its shares. Under Buffett's leadership, the company ranked among the world's fifty largest companies and gradually acquired stakes in a number of global companies in many different industries. To name some: Coca-Cola, Gillette, Wells Fargo or American Express.

 

One Man, Two Women

Warren Buffett belongs to men who are fully devoted to their work. He had been like this since he was a young man. Things like parties, fun, and love affairs always felt a bit distant. “I never knew how to pick up girls. I always liked them, but when I was to ask them out, I felt self-conscious, ”he said.

But then Susan Thomson appeared. They'd known each other as children because her father was Warren's father - Howard's election manager. When they met again, it was thanks to Warren's sister Roberta, with whom Susan lived in the residence halls. Roberta invited her friend Susan to visit her home. And Warren was there too. "When I walked in, Warren sat in his chair and made a sarcastic comment. I stopped and thought, "What kind of a nerd is that? This is how we met," Susan once said. It may sound harsh, but it is certain that there was a spark between them, because a few weeks later they were already an item. They got married in 1952. Their first child, daughter Susan Alice, was born in 1953, and by the time they'd returned to their native Omaha in Nebraska in 1957, the young couple had two children, Susan Alice was joined by Howard Graham, and they were expecting their third child. Their youngest son Peter Andrew was born in 1958.

In Omaha, the Buffetts bought a house for $ 30,000 and lived a relatively contented life. And although they had grown rich quickly thanks to Warren's work and abilities, they kept a very regular lifestyle without luxuries and millionaire manners. “We were a normal family. As children we did not receive any expensive gifts, we did not go to elite schools, nothing like that. We never thought about being rich, we were like any other family. And we were happy, ”said Susan Alice, Buffett's daughter.

Susan, however, suffered more and more from her husband's absence and his workload. “Warren is really a strange man. It often happened that even though he was physically at home, his thoughts wandered somewhere in the business world. I still loved him, but gradually I realized we were not living together but next to each other. I realised I was ready to share my life any time, but he only sometimes. That's why I decided to change my life; ”Susan explained the reasons why one day she moved to San Francisco in 1977. The children were out of the game, they were already big, but Warren had a hard time digesting Susan's departure. Nevertheless, he understood her reasons. The two remained very close friends until Susan's death in 2004 and they actually never divorced.

Susan knew that Warren would need someone beside him after she left, because he couldn't handle everyday life things at all. So she approached the whole thing in a pragmatic way and introduced Warren to her close friend Astrid Menks, a waitress who had immigrated to the US from Soviet Latvia. She knew these two would be a perfect match, and the turn of events just confirmed that. Astrid, sixteen years younger, moved to live with Warren in 1978 and still lives with him. “They love each other. She takes great care of him and he really appreciates it. And I appreciate it too, Astrid is a wonderful woman, ”Susan said in an interview shortly before her death. Astrid and Warren got married in 2006. The ceremony took place in Omaha and took 15 minutes. Apart from the engaged couple, only Warren's daughter Susan Alice and Astrid's sister were there. Once the ceremony was over, they all went to a local fish restaurant Bonefish Grill for a dinner party. 

The Magic of Help

Although Warren Buffett meets dozens of people every day and everyone agrees that he is always nice and kind, it is fair to say he's a private person. “As a young man, I was ashamed to speak in public. When it was to happen, I threw up from stage fright. It was clear that I had to do something about this, because I couldn't do without public speaking. That's why I signed up for Dale Carnegie's rhetoric course, the ad for which I found in the newspaper. And it completely changed my life. So when you come to my office, there are no university degrees, but the certificates from Carnegie courses I took, ”Buffett says. 
While Warren had a lot of work to do in public, his private nature brings about rather useful qualities. One of them is perhaps the ability to easily focus on the issue at hand. “If I find something interesting, I want to know everything about it. I want to read about it, I want to talk about it, I want to meet people who understand the thing. Well, and if I don't care, it just goes in one ear and out with the other. I can't tell you what colour the walls in my bedroom are. But if you want to talk to me about business, I'm sure I'll be useful to you, ” Warren laughs.

Indeed, when it comes to being “useful” to others, Warren Buffett has become a living legend. In 2006, he announced that he would gradually give all of his shares of Berkshire Hathaway to charities. Since then, he has donated over $ 34.5 billion to charity, giving the biggest donation last summer when he donated $ 3.6 billion.

“What I am naturally good at is business. I enjoy earning money, it has always been a game for me- both in childhood and adulthood. But someday a moment comes when someone close to you asks: Well, what is all the money for? That's how my wife Susan asked me. Since then, I have often thought about that question and have been thinking about the answer as often, ” Warren Buffett says about the beginning of his new “career” as a philanthropist.

Susan was blessed with extraordinary empathy. She had a sparkling, friendly nature and sincerely believed that helping people was the noblest thing to do in the world. As a student, she was intensely interested in human rights, and later as Warren Buffett's wife, she made her effort to help shape particular institutions. Together with Warren, they founded the Buffett Foundation, which was renamed the Susan Thomson Buffett Foundation after her death. It was undoubtedly Susan who opened Warren Buffett's heart to help those in need. “The more I thought about it, the more Susan and I talked about it, the more it made sense. The world can be made be a better place, and I was just lucky to have the chance to help it move in the right direction. Why not be the one who makes use of it? ”, the 90-year-old multibillionaire smiles.

Best investment by WB

“Most people use only a minimum of their potential throughout their lives. This is a great pity, a terrible waste. We all have some potential - certain skills, abilities, talents ... Try to recognize what your domain is, and then develop it as much as possible. Invest in self-development and self-improvement. The energy you devote to it, whether it involves effort, money, time, is the best investment you can make. The return you get from it can be really high. It will bring you not only money but also satisfaction and happiness.”

5 things you probably don't know about him

1. s he needs silence in order to think without being undisturbed, he always closes the door to his office.

2. He spends six hours a day reading. He reads mainly newspapers, annual reports and economic and investment newsletters.

3. He loves cherry Coke.

4. He still lives in the house where he lived with his first wife Susan, which he had bought long before he became a millionaire. He bought the house for $ 30,000.

5. His closest friends are Bill and Melinda Gates. He gives most of his charity money to their foundation.

General Meeting as a Celebration

Berkshire Hathaway holds an annual General Meeting of Shareholders, where Warren Buffett presents the company's results. His openness with which he explains what he has done in the past year is remarkable. He explains how he has done it all and how much he has earned from these activities. He doesn’t hide anything. This is a huge contrast to the general meetings of other large companies, where management is mainly concerned with not exposing more information than is absolutely necessary. Warren Buffett usually stands on the stage for two hours, explaining everything in simple language, sandwiching the blocks of information with his famous dry jokes. And the fun goes on also after the presentation. The Berkshire Hathaway General Meeting feels like a festival. You can have a drink and meet new people, dance, see a show of baton twirlers or go jogging with the other shareholders ... “I love our general meeting. It is a real celebration with everything that belongs to it. There are always a lot of us here, so it's big, ”Warren Buffett says with a smile.

ad

https://www.weedy.cz https://www.weedy.cz https://www.weedy.cz

Keep reading

More articles