Crowned by a miscellany of catchy titles from the ‘Sage of Omaha’ to the ‘Wizard of Omaha’ and even dubbed the ‘Oracle of Omaha’ is the infamous American business magnate, Warren Buffett. Probably one of the most successful key investors to ever set foot on American soil, Buffett has been a raging success when the green notes are dragged into the equation – with a strong sense of personal frugality to boot. But how did he become one of Forbes most coveted billionaires?
Exactly when and where did he ascend the throne to success?
The Early Days
Bestowed with a keen sense of frugality since he was a young urchin, Buffett was pretty much an ordinary child from a relatively normal parental background in Omaha. His fascination with mathematics and investment stocks christened him with the title ‘future stockbroker’ in his high school yearbook in 1947. Buffett’s interest in stock brokerage burgeoned to a full-blown passion by the time he set afoot at the Wharton Business School in the University of Pennsylvania for two years, before transferring to the University of Nebraska-Lincoln at the tender age of nineteen.
His passion to learn and navigate the tight corners of the budding business world never wavered – he went on to pursue a Masters in Economics at the Columbia Business School shortly later.
Success did not fall from the sky for Buffett. As soon as he earned his Masters, Buffett started out as an investment salesman at Buffett-Falk & Co., followed by a security analyst at Graham-Newman Corp and then went on as a general partner at Buffett Partnership, Ltd., before landing the highly sought after CEO seat at Berkshire Hathaway Inc.
His clamber up the career ladder started from his savings of $9800 at the age 20, which helped him on an interesting divine collision course with GEICO insurance’s Vice President, Lorimer Davidson. After sparing a lengthy conversation regarding insurance businesses which left a positive long-lasting impression on Davidson, Buffett returned to his stockbroker duties in Omaha. Buffett later went on to teach an ‘Investment Principles’ night class before settling down with Susan Thompson in 1952.
The couple conceived their first child the following year, and Buffett scored a partnership job at Benjamin Graham’s that paid off an annual salary of only $12,000 a year. As Buffett had his second child shortly later, Benjamin Graham had decided to close his partnership in 1956, leaving Buffett with the golden opportunity to start his very own investment partnership in Omaha – the Buffett Partnership Ltd.
After operating three partnerships in 1957 which blossomed to five partnerships in 1958, Buffett had his third child and watched his company expand to seven partnerships in 1960.
Buffett made his millions by the time 1962 rolled around due to the overwhelming success of one of his partnerships. This enticed Buffett to merge all his remaining ventures into a single cohesive unit, which he later utilized to purchase shares from Berkshire Hathaway and Seabury Stanton. As Buffett began to aggressively purchase shares in 1965, the partnership eventually fell to a close as Buffett sought out a new venture and moved on to the insurance industry.
His entrance into a new playing field created a financial stir for key investors as Buffett’s net worth soared to $620 million by 1979, thus earning him a spot on the Forbes 400 list. As Buffett acquired stock in ABC in 1979, his slip into the media industry was rewarded with a 25% stake that landed him some extra cash.
Buffett then went on to become the director of Berkshire Hathaway in 1987 and purchased a stake measuring 12% in Salomon Inc. Buffett then purchased 7% of the Coca Cola Company’s stock, making it a lucrative investment and the keystone of Buffett’s raging success.
Buckets of Billions
Buffett began raking in billions by selling class A shares in 1990. He then acquired Gen Re (General Re) as a cash capital, and purchased $11 billion worth of forward US dollar contracts in 2002. Buffett then began his journey down the philanthropy lane in 2006, whereby he made the startling announcement of donating 85% of his Berkshire holdings to five different foundations.
Giving it All Away
Buffett has so far given away $18.4 million worth of his company’s B class shares that carry a total value of $1.52 billion to the Bill and Melinda Gates foundation. His generous donations stem from the Gates Foundation’s promise to provide improved health care and education facilities to impoverished third world and developing countries. Apart from this, Buffett also provided $20 million worth of shares to eight anonymous charities, and 10 shares each to several elementary school kids that emerged as finalists in a business contest.
This keen business mogul also donated $1.78 billion to four charities in 2012, with the majority of it siphoned into the Gates Foundation. Buffett has also inspired 81 other billionaires to pledge themselves to giving away half their wealth to charity, citing that philanthropy alone cannot undo the cords of damage wrapped tightly around the present social issues scattered across the globe.
Buffett has also went on to donate $3.1 billion to three foundations run by his children – the NoVo Foundation that strives against gender inequity and inequality, the Howard G. Buffett Foundation that strives to boost agriculture and supply clean water, and the Sherwood Foundation that supports other non-profit organizations in Omaha besides funding early childhood education experiences.