Warren Buffett: From Paperboy to the ‘Oracle of Omaha’

by | 24 Jan, 2019

 

His name is one every aspiring investor should know. He’s someone every seasoned investor should aspire to be. And he’s one of the most influential people in the world.

But just how much do you know about the ‘Oracle of Omaha’, Warren Buffett?

Let’s fill in some blanks.

The Early Years

Born 30 August, 1930 in Omaha, Nebraska to Howard and Leila Buffett, Warren Edward Buffett was perhaps always destined for greatness. His father was a stockbroker, and later a U.S. Congressman, and gave Warren an early introduction to the markets.

Aged 10, he made his first visit to the New York Stock Exchange, and by age 11, he had purchased his first stock; three shares of Cities Service for $38 per share. When he sold them at $40 per share, and they subsequently rose in value to $200, he quickly learned a lesson that would serve him well throughout his career – the virtue of patience.

 

A Precocious Businessman

From his early teens, Buffett demonstrated a remarkable skill for entrepreneurism, selling chewing gum, Coca-Cola bottles, and magazines. He also made money delivering papers, and selling golf balls and stamps. As a high school sophomore in 1945, he and a friend purchased a pinball machine and placed it in a local barber shop. Soon after, they purchased a few more machines, and placed them in three more barber shops across Omaha. They sold the business later that year to a war veteran for $1,200.

By the time Buffett had finished college – graduating with a business degree from the University of Nebraska – he had accumulated around $9,800 in savings (worth about $103,000 today).

 

The 50s, 60s, and Berkshire Hathaway

In 1950, Buffett was rejected by Harvard Business School. Undeterred, he enrolled at Columbia to study under noted investor – and future mentor – Benjamin Graham.

Upon graduating, he returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public speaking course. He used what he learned to teach a night class at the University of Nebraska called “Investment Principles”. He was only 21, and many of his students were twice his age.

By 1954, Benjamin Graham offered Buffett a job at his partnership with a starting salary of $12,000 a year. Having left college six years earlier, his personal savings had grown from $9,800 to over $140,000.

Graham closed his partnership in 1956, and once again the Buffett family (wife Susan and daughter Susie) returned to Omaha. In May of that year, he created Buffett Associates, Ltd. From this moment on, he would never work for someone else again.

In 1959, Warren met Charlie Munger, who would one day become the Vice Chairman of Berkshire Hathaway.

 

Into the Sixties – The Decade That Changed Everything

By 1962, the Buffett Partnership was worth $7.2 million and the minimum investment was raised from $25,000 to $100,000.

In the same year, Warren discovered a textile manufacturing firm by the name of Berkshire Hathaway. It was selling for under eight dollars a share, and so Warren started purchasing stock. By 1963, the Buffett Partnership would become the largest shareholder of the company.

A 1964 fraud scandal saw American Express shares fall to $35. Buffett started buying when many others were selling. He also took control of Berkshire Hathaway during ‘64, installing Ken Chace as President.

By 1967, Warren Buffett had a personal net worth of $10 million. Meanwhile, American Express had bounced back to $180 a share, making the partnership a profit of $20 million on a $13 million investment.

By 1968, the Buffett Partnership was worth $104 million. The following year, it was closed.

Buffett liquidated the partnership and transferred its assets – including shares in Berkshire Hathaway – to his partners. At only 39 years old, his personal fortune stood at $25 million.

 

The 70s, 80s, and $8,000 a Share

When the 70s began, Warren Buffett owned 29 percent of Berkshire Hathaway. He named himself chairman, and the year marked his first annual letter to its shareholders.

Falling stock prices in 1974 saw Warren’s personal wealth more than half, however by 1979, Berkshire was trading at $290 a share, and Warren’s net worth was $140 million.

By the end of 1983, Berkshire had a corporate stock portfolio worth $1.3 billion. Shares in the company had risen from $775 to $1,310 a share, and Warren was now worth $620 million.

Buffett finally shut Berkshire’s textile mills in 1985. What began as a textile manufacturer was now a multinational conglomerate holding company. By 1986, it was trading at $3,000 a share.

In 1988, Buffett began purchasing stock in Coca-Cola, some forty or so years after selling their bottles to make some extra cash. Berkshire would eventually own around seven percent of the company at a cost of $1.02 billion.

By 1989, shares in Berkshire had risen from $4,800 to over $8,000.

By 1990, Warren was a billionaire.

The 90s to the Present Day

Throughout the 90s and beyond, Berkshire Hathaway has continued to acquire companies and take significant minority holdings in businesses across a range of industries.

In 2006, Buffett pledged to give away his entire fortune to charity. He committed 85 percent of his wealth to the Bill and Melinda Gates Foundation. In 2010, he and Gates worked together to form The Giving Pledge, urging other wealthy individuals to support important philanthropic causes.

Today, shares in Berkshire Hathaway trade for over $300,000, and the company is the largest financial services provider by revenue in the world. As for the Oracle of Omaha? He boasts an estimated net worth of $84.5 billion.

Not bad for a paperboy from Nebraska!

Feeling Inspired? Start Your Own Journey

Warren Buffett’s story is a remarkable one, and has served as inspiration for a great many investors around the world. If you’re feeling inspired to follow in his footsteps and trying your hand at investing, it’s worth remembering a quote from the man himself:

“Risk comes from not knowing what you’re doing.”

In other words, practice makes perfect. Download Invstr today and hone your investment skills by playing Fantasy Finance™. Invest virtual cash, build a portfolio, climb the leaderboard and win real prizes. And when you’re ready, invest for real from as little as $1.

Invstr is available from Google Play and the Apple App Store.

Happy Investing!

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Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.

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There is no minimum initial deposit required to open an investing account with DriveWealth. Expenses and Fees associated with the DriveWealth platform in conjunction with Beanstox includes either a monthly membership fee of $4.99 with a commission charge of $0.01 per share* or, in the event the membership fee is not paid, a commission charge of $0.0125 per share applies, subject to a minimum of $2.99 per transaction. There are no monthly minimum fees, or required ongoing minimum account balance. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost). View a full list of our fees at http://bit.ly/DWFees

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This communication is not an offer or solicitation to purchase or sell securities. Investing in securities carries risk, including the loss of principal. Past performance is not indicative of future returns, which may vary. Online trading has inherent risk due to system response and access times that may be affected by various factors, including but not limited to market conditions and system performance. An investor should understand such facts before trading. The risks associated with investing in international securities, including US-listed ADRs and ETFs that contain non-US securities include, among others, country/political risk relating to the government in the home country; exchange rate risk if the country's currency is devalued; and inflationary/purchasing power risks if the currency of the home country becomes less valuable as the general level of prices for goods and services rises. Before investing in an ETF, an investor should consider the investment objectives, risks, charges, and expense of the investment company carefully. ETF prospectuses are accessible within the mobile application via a link under each company’s “Description.”

A fractional share is a share of equity ownership that is less than one full share. Fractional share investing has certain limitations and restrictions that investors should understand prior to purchasing fractional shares: ownership of less than one full share does not give the fractional share owner the right to vote on company matters; fractional shares are non-transferrable, meaning they cannot be transferred to another brokerage firm; and fractional share orders will be accepted as market orders only. For more information and details on fractional shares, and any associated limitations or restrictions please visit: https://drivewealth.com/fractional-shares-disclosure

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:

Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.

Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.

Brokerage services of US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth, LLC a registered broker-dealer and member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. 

DriveWealth provides no tax, legal, or investment advice of any kind, nor does DriveWealth give advice or offer opinions with respect to the nature, potential value, or suitability of any securities transaction or investment strategy. DriveWealth acts as the clearing firm for securities transactions entered on the Invstr mobile platform. DriveWealth is not affiliated with Invstr. Invstr does not participate in DriveWealth’s decision-making.

There is no minimum initial deposit required to open an investing account with DriveWealth. Expenses and Fees associated with the DriveWealth platform in conjunction with Beanstox includes either a monthly membership fee of $4.99 with a commission charge of $0.01 per share* or, in the event the membership fee is not paid, a commission charge of $0.0125 per share applies, subject to a minimum of $2.99 per transaction. There are no monthly minimum fees, or required ongoing minimum account balance. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost). View a full list of our fees at http://bit.ly/DWFees

The monthly subscription charge is four dollars and ninety-nine cents (US$4.99) per month plus one cent (US$0.01) per share traded (as examples, for a Transaction of 0.90 shares, the per share traded charge is one cent (US$0.01), and for a Transaction of 1.6 shares, the per share traded charge would be two cents ($0.02), and the quarterly subscription charge is fourteen dollars and ninety-nine cents (US$14.97) every 3 months plus one cent (US$0.01) per share traded. The monthly and quarterly subscription charges may be greater or less depending on additional services offered by a DriveWealth partners as part of the subscription model offering, or based on any subsidies provided by a DriveWealth partner as part of the subscription model offering. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost).View a full list of our fees at http://bit.ly/DWFees

This communication is not an offer or solicitation to purchase or sell securities. Investing in securities carries risk, including the loss of principal. Past performance is not indicative of future returns, which may vary. Online trading has inherent risk due to system response and access times that may be affected by various factors, including but not limited to market conditions and system performance. An investor should understand such facts before trading. The risks associated with investing in international securities, including US-listed ADRs and ETFs that contain non-US securities include, among others, country/political risk relating to the government in the home country; exchange rate risk if the country's currency is devalued; and inflationary/purchasing power risks if the currency of the home country becomes less valuable as the general level of prices for goods and services rises. Before investing in an ETF, an investor should consider the investment objectives, risks, charges, and expense of the investment company carefully. ETF prospectuses are accessible within the mobile application via a link under each company’s “Description.”

A fractional share is a share of equity ownership that is less than one full share. Fractional share investing has certain limitations and restrictions that investors should understand prior to purchasing fractional shares: ownership of less than one full share does not give the fractional share owner the right to vote on company matters; fractional shares are non-transferrable, meaning they cannot be transferred to another brokerage firm; and fractional share orders will be accepted as market orders only. For more information and details on fractional shares, and any associated limitations or restrictions please visit: https://drivewealth.com/fractional-shares-disclosure

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