The Greatest of All Time

SOURCE: www.forbes.com

How can one man go from being your average Omaha, Nebraska citizen, to being worth over $62 billion? Warren Buffett is regarded as the most successful investor ever. His unique methods and knack for finding an undervalued company separates him from his peers. The story of his road to the top of the investing world is shared in the article, “Warren Buffett: The Road To Riches" found on the leading finance website, Investopedia. Warren Buffett is now considered a household name not only for his fortune but also for his character. He is essentially a Wall-Street Guru and there is a lot to be learned from him. Warren Buffett was successful because he learned how to do value investing and how he managed Berkshire Hathaway.

Unlike amatuer investors, Buffett has been surrounded the investing knowledge from a very young age. His dad, Howard Buffett, was the owner of a brokerage firm in his home town of Omaha, Nebraska. Howard Buffett always stressed the importance of education to his son and urged him to apply to the University of Pennsylvania, where he later enrolled. Buffett was not impressed by the university and transferred to the University of Nebraska after two years. “Upon graduation, his father once again convinced him of the value of education, encouraging him to pursue a graduate degree.” He ended up studying at Columbia University “under Benjamin Graham, the father of value investing.” This is where the foundation of Buffett’s investing skills were acquired.

“Value investing, according to Graham, involved seeking stocks that were selling at an extraordinary discount to the value of the underlying assets, which he called the "intrinsic value"”. However, Buffett took this tactic a step further; “he wanted to look beyond the numbers and focus on the company's management team and its product's competitive advantage in the marketplace.” This the basis of the method that Warren Buffett used through his over 60 year career in investing. These tactics, that focused on evaluating the whole company, took Buffett to the top of the investing world. Buffett is now the owner of the Berkshire Hathaway, one of the largest holding companies in the world.

Buffett is not only recognized for his world renowned investing tactics, but also for his character. Many would ask what someone worth over $60 billion dollars does with all that money. Buffett would answer that question easily. He gives it to charity. A large portion of his money will go to the Bill and Melinda Gates Foundation. “Buffett's donations will come in the form of Class B shares of Berkshire Hathaway stock. His total donation to the Gates Foundation is 10 million shares. It will be given out in 5% increments until Buffett's death or until the foundation fails to meet the spending stipulation or the stipulation that either Bill or Melinda Gates remain actively involved in the foundation's activities. Buffett's 2006 donation was 500,000 shares, valued at approximately $1.5 billion. At a June 2008 share value, the entire donation to the Gates Foundation is worth about $37 billion. Buffett expects stock price appreciation to increase that amount over time.”

The story of Warren Buffett may seem unfathomable to many investors. To some extent, this is true. Buffett had to have a lot of things go right for him to amass his huge fortune, however, every investor has something to learn something from him. His diligence and preciseness when choosing to invest in a company was his greatest asset. Although all investors won’t be as successful as Buffett, they can all use his story as a template on how to invest prosperously.  

FUTURE RESEARCH: In my next blog post, I plan on researching how investors pick stocks for long-term financial success?