Greatest Fundamental Investors Series: Warren Buffett
Biography of Warren Buffett
Warren Buffett was born in Nebraska, Omaha, USA on 30 August 1930.
He is the 3rd wealthiest person in the world according to Forbes'' Top 20 Billionaires 2018, with a total net worth of $84 billion.
The second of three siblings, Warren Buffett demonstrated a keen interest in investing from a young age, purchasing his first stock at the age of 11.
He was also involved in small businesses, such as buying bottles of cola at low prices and reselling them for a profit.
Today, he is a renowned and successful fundamental investor recognised worldwide. Learn the difference between fundamental and technical analysis here.
The One Secret That Made Warren Buffett The Greatest Investor In The World
In the stock market, there are many traders and investors who can generate returns exceeding 100% on a single stock.
Some have even achieved returns of over 1,000% in a very short period!
However, no one can match his greatness. So, what is his secret?
"The 8th wonder of the world"
Yes, Warren Buffett succeeded because he capitalised on the 8th wonder of the world - "compound interest" - whilst many other investors and traders failed to do so.
He consistently achieved returns of around 20% per year whilst managing funds worth billions of dollars.
Two Rules Of Investing
"Rule number one: never lose money."
"Rule number two: never forget rule number one."
Warren Buffett seeks out companies that become increasingly valuable year after year and remains committed to holding their shares.
For example, he and his business partner, Charlie Munger, purchased See''s Candies in 1972 and invested over $1 billion in Coca-Cola shares in 1988.
To this day, Warren Buffett still holds shares in these companies.
How Warren Buffett Makes Money Through Berkshire Hathaway Inc
Warren Buffett is the Chairman and CEO of Berkshire Hathaway.
He began purchasing shares in the company in 1962, when its primary business was textile manufacturing. However, he soon realised that the textile industry was in decline.
In 1967, Buffett decided to expand the company''s business into the insurance industry and other investments.
Today, among the well-known company shares owned by Berkshire Hathaway are The Coca-Cola Company, Apple, Bank of America, Kraft Heinz Company, and American Express.
In 2010, during a television interview, Buffett admitted that buying Berkshire Hathaway was not a wise investment decision.
This was because he had purchased the company when its business performance was declining.
Buffett estimated that he lost nearly $200 billion as a result of that decision.
Words Of Wisdom
- "Price is what you pay, value is what you get."
- "Risk comes from not knowing what you are doing."
- "Our favourite holding period is forever."
- "The difference between successful people and really successful people is that really successful people say no to almost everything."
- "If you aren''t thinking about owning a stock for 10 years, don''t even think about owning it for 10 minutes."
FAQ About Warren Buffett''s Investment Strategy
Who is Warren Buffett?
Warren Buffett is the Chairman and CEO of Berkshire Hathaway, widely regarded as one of the greatest fundamental investors of all time. He is consistently ranked among the world''s wealthiest individuals.
What is Warren Buffett''s investment secret?
Buffett''s key secret is harnessing the power of compound interest - the "8th wonder of the world." He achieves consistent returns of around 20% per year over decades, allowing compounding to work its magic.
What are Warren Buffett''s two rules of investing?
Rule number one: never lose money. Rule number two: never forget rule number one. This reflects his conservative, value-oriented approach to investing.
What companies does Berkshire Hathaway own?
Berkshire Hathaway holds shares in major companies including The Coca-Cola Company, Apple, Bank of America, Kraft Heinz Company, and American Express, among many others.
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