세상을 읽는 지침서
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버펫의 투자기법 형성에 15% 영향을 준 필립피셔는 수치화할 수 있는 기업의
기본적 가치 못지않게 질적인 측면이 중요하다고 여겼다. 따라서 경영진,
연구개발능력, 판매부서를 중시하고 동 업계에서 제조원가가 낮은 기업, 경영진과
종업원의 관계 등 중요한 정보를 경쟁사를 통하여 입수하여 투자판단을 해야
한다는 것이다. 그는 기본적으로 기업의 질적 가치를 중요시하고 이에 바탕을 두고
3, 4개 종목에 집중투자를 해야 한다고 했다.
1) 매년 지속적으로 매출액이 동 업계 평균 이상 증가하고 있는 기업
2) 연구 개발 능력을 중시하는 기업
3) 뛰어난 제품에 못지않게 소비자를 연구하고 이를 매출로 연결시킬 수 있는
판매조직을 가진 기업
4) 경기 확장기에 높은 수익을 낼 수 있으나 경기가 나빠지면 수익이 크게
악화되는 한계기업은 위험
5) 기업의 수익이 늘어나더라도 증자를 자주하면 주당 수익성이 떨어지기
때문에 증자없이 내부유보를 해나가는 기업
6) 단기적인 이익보다 중장기적인 이익을 우선하는 경영철학이 담긴 기업
7) 경영진과 종업원의 관계 등 동 업종 타사와 비교·분석하여 장단점을
파악했을 때 경쟁력 우위를 유지하는 기업
나는 전설이다 - 벤자민 그레이엄
http://sbscnbc.sbs.co.kr/read.jsp?pmArticleId=10000153532
<앵커>
매주 목요일 이 시간에는 세계 최고의 전설적인 투자자들을 소개하는
코너인데요, "나는 전설이다" 둘째 주인공은 누구인가요?
<김성진>
그레이엄은 오늘날의 증권 분석, 기업 분석의 모든 틀을 거의 혼자서 다
구축해냈습니다. 고학으로 어렵게 대학을 마치고 영어, 철학 등 여러 곳의 교수
제의를 다 뿌리치고 월가의 허드렛일하는 직원으로 취직, 결국 젊은 나이에
백만장자가 되었고 월가에서 애널리스트라는 직업을 처음으로 만들었던
장본인이기도 합니다.
투자의 아버지라 불리는 벤자민 그레이엄의 명언으로는
1) 독자적 판단이 가능할 때 투자해라 = 운에 기대지 말고 확실히 모든 것을 알
때까지 기다려라
2) 안전마진이 확보된 곳에만 투자한다 = 1번과 같은 뜻
3) 앞으로 2등이 될 10등 주식을 산다 = 1번과 같은 뜻
4) 감정을 다스리고 이성으로 판단한다 = 감정을 다스리는 것은 욕심을
버리라는 말과 동격으로 신의 경지를 말하는 것이므로 인간으로서 도달할 수
있는 경지가 아니어라
5) 투자 실패에서 배운다 = 두 번 실패하지 않는다 = 역시 신의 영역이어라
등이 있습니다.
그레이엄은 투자와 투기에 대한 정의를 내렸는데요, 투자란 철저한 분석, 원금의
안정성, 기대수익이 동시에 이뤄지는 행위를 말하며 이 요건에 부합하지 않는
행위는 투기라고 말했습니다. (그러므로 한국에서 이루어지는 모든 주식 행위는
투기에 해당함)
벤저민 그레이엄의 재미있는 투자명언을 몇 가지 더 살펴보면
1) 주식 거래는 아내를 선택하는 일과 비슷하다. 많은 구체적 사항들이 어느
정도 세심하게 검토되어지고 그런 다음 거기에 비합리적인 편애라는
강력하고 지배적인 요소가 더해진다, 절대로 투기용 자금과 투자용 자금을 한
계좌에 마구 섞어 운용해서는 안 되고 매매 자체고 구분해야 한다
라고 말했습니다.
벤자민 그레이엄은 투자와 투기를 철저히 구분했습니다. 그래서 항상 투기 자금과
투자자금은 나눠 운영해야 한다고 강조를 했습니다. 워렌버핏은 자신의
투자철학을 묻는 질문에 항상 이렇게 답을 하는데요, 그 이유는 투자에서 가장
중요하다고 할 수 있는 "안전마진"의 개념을 그레이엄에게서 배웠기 때문입니다.
필립피셔는 위대한 기업을 수십 년 보유한다면 지금 당장의 높은 가격은 문제가
되지 않는다고 밝혔지만 그레이엄은 오직 숫자로만 기업을 판단했기 때문에
가격을 매우 중요하게 생각했습니다. 그레이엄은 경영자나 브랜드, 진입장벽 같은
무형의 자산은 전혀 고려하지 않았습니다. 완전히 다른 스승의 투자방법을
워렌버핏은 "위대한 기업을 싼 가격에 사는 전략"으로 만들어 냅니다.
<앵커>
앞서 안전마진이라는 개념을 확립했다고 했는데요, 안전마진이란 게 뭔가요?
<김성진>
안전마진, 가치투자전략의 핵심으로는 먼저 안전마진은 한 기업의 이자비용 뺀 뒤
남은 영업이익이 소진될 때까지의 비율인데 파산했을 때의 자산가치와 현재
시가총액과 비교해 보더라도 안전마진 클수록 손실보다 이익을 볼 확률이
높았습니다. 결국 지속적인 수익을 내면서 재무상황도 건전하고 기업을 싸게 사는
방법이 투자의 핵심이라고 말했습니다.
<앵커>
벤저민 그레이엄은 어떻게 투자했나요?
<김성진>
기업 규모가 크면 클수록 좋다고 했고 이것은 워렌버핏 방법과 똑같습니다.
재무구조나 배당성향 등을 철저히 밝혔습니다. 최근에 증권가에서 보면 1분기
이익이 좋아졌다나 2분기 이익이 좋아졌다고 따지는데 벤저민 그레이엄은 최소 10
년 정도의 추세 이익을 좋아했습니다.
10년 동안 한번도 적자를 내지 않은 기업, 20년 이상 배당을 지속한 기업을
좋아했습니다. 이런 케이스의 종목 중에 주가가 폭락하는 종목을 좋아했습니다. 한
예로 우리나라에서도 과거 19년 동안 단 한번의 적자를 내지 않은 기업,
현대모비스가 있습니다.
두 번째로 보면 재무상태나 배당기록을 보면 과거 5~10년 최소 기준은 10년을
잡는데 유동자산이 150불 이상 그리고 부채가 110불 이하인 기업들을
좋아했습니다.
재미있는 것은 지난번 필립피셔의 경우 숫자도 중요하지만 CEO의 능력이나
진입장벽 등을 중요시 했습니다. 그런데 벤저민 그레이엄은 그런 것들을 철저히
무시했습니다. 다 필요 없고 숫자가 가장 좋은 종목 이러한 종목을 좋게 봤습니다.
<앵커>
그레이엄 방식으로 이렇게 투자를 하면 전부 성공하나요?
<김성진>
꼭 그렇지는 않습니다. 일반 투자자의 경우 벤저민 그레이엄 투자 방식을 선호하다
보니까 몇 개의 소수종목을 싸서 담아 놓았는데 실패하는 경우가 많습니다.
이것은 벤저민 그레이엄 투자 방식을 오해하고 있기 때문입니다. 벤저민
그레이엄도 인식을 했기 때문에 모든 주식을 담는 인덱스 펀드처럼 운용했습니다.
소수의 싼 주식을 담는 것이 아니라 수백 개의 종목을 담아서 이끌고 간 것입니다.
개인투자자들이 이런 것을 오해하다 보니까 싼 주식들을 가지고 있는데 몇 년이
지나도 그 자리인 종목이 있습니다.
분산투자 하는 것이 벤저민 그레이엄 방식의 가장 효과적인 방식인데요. 저평가된
주식을 사면 언젠가는 오른다? 이 부분에 대해서 벤저민 그레이엄은 아니라고
밝혔습니다.
수백 개의 기업에 투자하는 것이 가장 효율적이고 그런 점에서 그레이엄 투자
방식은 인덱스 펀드라고 볼 수 있습니다. 언제 어떤 주식이 오를지 모르기 때문에
다 담는 전략을 사용한 듯합니다.
<앵커>
벤저민 그레이엄이 주식시장을 '미스터 마켓'이라고 표현한 것도 봤는데 무슨
내용인가요?
<김성진>
매일 우리에게 주식가격을 알려주는 친절한 아저씨로 표현했는데 1 만원 짜리
주식을 2 만원에 사라고 달려오는데 똑같은 상황임에도 기분이 너무 나빠서 1만원
짜리 주식을 터무니없이 1000원에 제시하는 사람, 즉 주식시장을 미스터
마켓이라고 표현했습니다.
이를 잘 이용하면 돈을 잘 벌 수 있다고 하는데 보통 일반 투자자들은 '미스터
마켓'에 잘 속기 때문에 돈을 잃는다고 말했습니다. 최근 장이 좋지 않았는데
미스터 마켓을 잘 활용할 필요가 있겠습니다.
<앵커>
재미있는 일화를 하나만 소개해 주신다면요?
<김성진>
벤저민 그레이엄의 경우 아내가 많았는데 그런 아내를 파티장에 다 데리고 다녔던
재미있는 사람입니다. 벤저민 그레이엄이 교수시절 유일하게 A+ 준 학생이
워렌버핏이었습니다. 그런 워렌버핏이 무급으로 일하겠다고 일자리를 달라고
했는데도 일자리를 주지 않았습니다.
엉뚱한 사람이었는데 신발을 짝짝이로 신고 가다가 다른 사람이 지적을 했을 때
우리 집에 똑같은 신발이 한 켤레 더 있기 때문에 괜찮다 라는 재치를 발휘할 수
있는 사람이었습니다.
주식투자를 마지막에 그만 두었는데 돈 버는 것이 재미없어서 그만 두었다고
합니다. 그러나 현존하는 거장 투자자들을 모두 길러 낸 위대한 사람입니다. 대단한
사람이기도 하고 파란만장한 삶을 살았던 투자자입니다.
Benjamin Graham
From Wikipedia, the free encyclopedia
Benjamin Graham
Birth May 8, 1894
Death September 21, 1976 (aged 82)
Nationality United States
Institution Columbia Business School
Field Finance
Investment
Alma mater Columbia University
Influenced
Jean-Marie Eveillard
Warren Buffett
William J. Ruane
Irving Kahn
Hani M. Anklis
Walter J. Schloss
ContributionsSecurity Analysis (1934)
The Intelligent Investor (1949)
Benjamin Graham (May 8, 1894 – September 21, 1976) was an American
economist and professional investor. Graham is considered the first proponent of
value investing, an investment approach he began teaching at Columbia Business
School in 1928 and subsequently refined with David Dodd through various
editions of their famous book Security Analysis. Disciples of value investing
include Jean-Marie Eveillard, Warren Buffett, William J. Ruane, Irving Kahn, Hani
M. Anklis, and Walter J. Schloss. Buffett, who credits Graham as grounding him
with a sound intellectual investment framework, described him as the second most
influential person in his life after his own father. In fact, Graham had such an
overwhelming influence on his students that two of them, Buffett and Kahn,
named their sons, Howard Graham Buffett and Thomas Graham Kahn, after him.
Contents
[hide]
1 Life and career
o 1.1 Early life
o 1.2 Career
o 1.3 Legacy
o 1.4 Personal life
2 Bibliography
o 2.1 Books
o 2.2 Papers
3 See also
4 References
5 External links
Life and career
Early life
Benjamin Graham was born Benjamin Grossbaum in London, England [1] to Jewish
parents.[2] He moved to New York City with his family when he was one year old.
After the death of his father and experiencing poverty, he became a good student,
graduating from Columbia University, as salutatorian of his class, at the age of 20.
He received an invitation for employment as an instructor in English, Mathematics,
and Philosophy, but took a job on Wall Street eventually starting the Graham-
Newman Partnership.[3]
Career
His book, Security Analysis, with David Dodd, was published in 1934 and has
been considered a bible for serious investors since it was written.[citation needed] It and
The Intelligent Investor published in 1949 (4th revision, with Jason Zweig, 2003),
are his two most widely acclaimed books. Warren Buffett describes The Intelligent
Investor as "the best book about investing ever written."[4] Graham exhorted the
stock market participant to first draw a fundamental distinction between
investment and speculation. In Security Analysis, he proposed a clear definition of
investment that was distinguished from what he deemed speculation. It read, "An
investment operation is one which, upon thorough analysis, promises safety of
principal and an adequate return. Operations not meeting these requirements are
speculative."[5]
Graham wrote that the owner of equity stocks should regard them first and
foremost as conferring part ownership of a business. With that perspective in
mind, the stock owner should not be too concerned with erratic fluctuations in
stock prices, since in the short term, the stock market behaves like a voting
machine, but in the long term it acts like a weighing machine (i.e. its true value will
in the long run be reflected in its stock price). Graham distinguished between the
passive and the active investor. The passive investor, often referred to as a
defensive investor, invests cautiously, looks for value stocks, and buys for the
long term. The active investor, on the other hand, is one who has more time,
interest, and possibly more specialized knowledge to seek out exceptional buys in
the market.[citation needed] Graham recommended that investors spend time and effort
to analyze the financial state of companies. When a company is available on the
market at a price which is at a discount to its intrinsic value, a "margin of safety"
exists, which makes it suitable for investment.
Graham wrote that investment is most intelligent when it is most businesslike, a
statement which Warren Buffett regarded as the most important words about
investment ever written.[citation needed] Graham said that the stock investor is neither
right nor wrong because others agreed or disagreed with him; he is right because
his facts and analysis are right.[citation needed] The Intelligent Investor p. 524 (Revised
Ed 2006) Graham's favorite allegory is that of Mr. Market, a fellow who turns up
every day at the stock holder's door offering to buy or sell his shares at a different
price. Often, the price quoted by Mr. Market seems plausible, but often it is
ridiculous. The investor is free to either agree with his quoted price and trade with
him, or to ignore him completely. Mr. Market doesn't mind this, and will be back
the following day to quote another price. The point is that the investor should not
regard the whims of Mr. Market as determining the value of the shares that the
investor owns. He should profit from market folly rather than participate in it. The
investor is best off concentrating on the real life performance of his companies
and receiving dividends, rather than being too concerned with Mr. Market's often
irrational behavior.[citation needed]
Graham was critical of the corporations of his day for obfuscated and irregular
financial reporting that made it difficult for investors to discern the true state of the
business's finances. He was an advocate of dividend payments to shareholders
rather than businesses keeping all of their profits as retained earnings. He also
criticized those who advised that some types of stocks were a good buy at any
price, because of the prospect of sustained stock price growth, without a good
analysis of the business's actual financial condition. These observations remain
extremely relevant today.[citation needed]
Legacy
In recent years, Graham's "Mr. Market" approach has been challenged by Modern
Portfolio Theory, as advanced by such proponents as William J. Bernstein, whose
book The Intelligent Asset Allocator extends Graham's The Intelligent Investor via
an appreciation of long-term trends and the near impossibility of understanding
the market writ large. Modern Portfolio Theory posits that it is generally impossible
for any individual to outwit the market, and is widely taught in American and British
business schools. Nevertheless, Graham's approach retains a widespread and
dedicated following. Indeed, numerous academic studies, including "Contrarian
Investment, Extrapolation, and Risk",[6] "Good news for value stocks: Further
evidence on market efficiency",[7] "The Cross Section of Expected Stock Returns",
[8] and many others, have proven that value stocks outperform the market over
virtually all multi-year periods.
According to Warren Buffett, Graham said that he wished every day to do
something foolish, something creative, and something generous.[9] Buffett said
that Graham excelled most at the last.[10]
Personal life
According to The Snowball (Warren Buffett's Biography), he had an affair with his
deceased son's girlfriend (Marie Louise Amingues) and used to travel to France
frequently to visit her.[11] He later separated from his wife Estey in New York, after
she refused his novel idea of living in New York for six months and France for six
months. Marie Louise was content to live with Ben without marriage. Ben never
officially divorced Estey.[12]
Bibliography
Books
Security Analysis , editions 1934,[13] 1940,[14] 1951[15] and 1962[16] and 1988[17]
and 2008[18] ISBN 978-0-07-159253-6
The Intelligent Investor
Storage and Stability: A Modern Ever-normal GranaryNew York: McGraw Hill.
1937 ISBN 0-07-024774-9 [19]
The Interpretation of Financial Statements
World Commodities and World Currency, New York & London, McGraw-Hill
Book Company. 1944 ISBN 0-07-024806-0
Benjamin Graham, the memoirs of the dean of Wall Street[20]
Papers
——— (1917). "Some Calculus Suggestions by a Student". The American
Mathematical Monthly (The American Mathematical Monthly, Vol. 24, No. 6)
24 (6): 265–271. doi:10.2307/2973181. http://www.jstor.org/stable/2973181.
———, Benjamin (1943). "The Critique of Commodity-Reserve Currency: A
Point-by-Point Reply". The Journal of Political Economy 51 (1): 66–69.
doi:10.1086/255988. http://www.jstor.org/stable/1826594.
——— (1946). "The Undistributed Profits Tax and The Investor". The Yale
Law Journal (The Yale Law Journal, Vol. 46, No. 1) 46 (1): 1–18.
doi:10.2307/791630. http://www.jstor.org/stable/791630.
——— (1947). "Money as Pure Commodity". American Economic Review 37
(2): 304–307. http://www.jstor.org/stable/1821137.
——— (1947). "National Productivity: Its Relationship to Unemployment-in-
Prosperity". American Economic Review 37 (2): 384–396.
http://www.jstor.org/stable/1821149.
——— (1962). "Some Investment Aspects of Accumulation Through Equities".
The Journal of Finance (The Journal of Finance, Vol. 17, No. 2) 17 (2): 203–
214. doi:10.2307/2977419. http://www.jstor.org/stable/2977419.
——— (1962). "The Commodity-Reserve Currency Proposal Reconsidered".
In Yeager, Leland B. (ed.). In Search of Monetary Constitution. Cambridge,
MA: Harvard University Press. pp. 184–214.
See also
Philip Fisher
John Burr Williams
John Neff
Valuation using discounted cash flows
Gordon model
Benjamin Graham formula
William J. Bernstein
Janet Lowe
References
1. ̂ The Motley Fool. Investment Greats: Ben Graham. April 17, 2009.
2. ̂ However, he wrote in his Memoirs that, "I must confess here that I feel
little emotional loyalty to the Jewish people from whom I sprung". Graham,
Benjamin; Chatman, Seymour Benjamin. Benjamin Graham: The Memoirs of
the Dean of Wall Street, pp. 63-64. McGraw-Hill, 1996. ISBN 0070242690
3. ̂ Jason Zweig, on page xi of The Intelligent Investor, Revised Edition.
4. ̂ Warren Buffett, "Preface to the Fourth Edition", in Benjamin Graham,
"The Intelligent Investor", 4 ed., 2003.
5. ̂ Benjamin Graham, "The Intelligent Investor", 4 ed., 2003, Chapter 1,
page 18.
6. ̂ Josef Lakonishok, Andrei Shleifer and Robert W. Vishny, "Contrarian
Investment, Extrapolation, and Risk", The Journal of Finance, Vol. 49, No. 5
(Dec., 1994)
7. ̂ Rafael La Porta, Josef Lakonishok, Andrei Shleifer and Robert Vishny,
"Good news for value stocks: Further evidence on market efficiency", The
Journal of Finance, Vol. 52, No. 2 (Jun., 1997)
8. ̂ Eugene Fama and Kenneth French, "The Cross Section of Expected
Stock Returns", The Journal of Finance, Vol. 47, No. 2 (Jun., 1992)
9. ̂ Buffett, Warren E.: "Benjamin Graham", Financial Analyst Journal,
November/December 1976.
10. ̂ Financial Analysts Journal, November/December 1976. (Reprinted on
page x of the preface to revised Fourth Addition of The Intelligent Investor.)
11. ̂ Snowball, Page 164
12. ̂ Snowball, Page 391
13. ̂ Graham and Dodd. 1934. Security Analysis: Principles and Technique,
1E. New York and London: McGraw-Hill Book Company, Inc.
14. ̂ Graham and Dodd. 1940. Security Analysis: Principles and Technique,
2E. New York and London: McGraw-Hill Book Company, Inc.
15. ̂ Graham et al. 1951. Security Analysis: Principles and Technique, 3E.
New York: McGraw Hill Book Company, Inc.
16. ̂ Graham et al. 1962. Security Analysis: Principles and Technique, 4E.
New York: McGraw-Hill Book Company, Inc.
17. ̂ Graham and Dodd. 1988. Security Analysis: Principles and Technique,
5E. McGraw-Hill Professional
18. ̂ Graham and Dodd. 2008. Security Analysis: Principles and Technique,
6E. McGraw-Hill Professional
19. ̂ Benjamin Graham. 1937.ISBN 0-07-024774-9 Storage and Stability: A
Modern Ever-normal Granary. New York: McGraw Hill. 1937
20. ̂ Graham and Ed. Chatman. 1996. Benjamin Graham, the memoirs of the
dean of Wall Street. New York: McGraw Hill.
External links
Wikiquote has a collection of quotations related to: Benjamin Graham
Columbia University biography
Heilbrunn Center at the Columbia Business School
Storage and Stability, plus list of other major works by Graham
Stock screener based on Graham "Defensive Investor" strategy
ModernGraham.com - Site dedicated to the study of Benjamin Graham
The Graham Investor
The Rediscovered Benjamin Graham - selected writings of the wall street
legend, by Janet Lowe.
Retrieved from "http://en.wikipedia.org/wiki/Benjamin_Graham"
Warren Buffett
From Wikipedia, the free encyclopedia
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Warren Buffett
Buffett speaking to students from the University of Kansas School of
Business, May 6, 2005
Born
Warren Edward Buffett
August 30, 1930 (age 80)
Omaha, Nebraska, U.S.
Nationality American
Alma materUniversity of Nebraska
Columbia Business School
Occupation Chairman & CEO of Berkshire Hathaway, Investor
Salary US$100,000[1]
Net worth US$50 billion (2011)[2]
SpouseSusan Thompson Buffett (1952–2004)
Astrid Menks (2006–present)[3]
Children Susan Alice Buffett
Howard Graham Buffett
Peter Andrew Buffett
Signature
Warren Edward Buffett (pronounced /bʌfɨt/; born August 30, 1930) is an
American investor, industrialist and philanthropist. He is widely regarded as one of
the most successful investors in the world. Often called the "legendary investor,
Warren Buffett",[4][5] he is the primary shareholder, chairman and CEO of Berkshire
Hathaway.[6] He is consistently ranked among the world's wealthiest people. He
was ranked as the world's wealthiest person in 2008[7] and is the third wealthiest
person in the world as of 2011.[8]
Buffett is called the "Oracle of Omaha"[9] or the "Sage of Omaha"[10] and is noted
for his adherence to the value investing philosophy and for his personal frugality
despite his immense wealth.[11] Buffett is also a notable philanthropist, having
pledged to give away 99 percent[12] of his fortune to philanthropic causes, primarily
via the Gates Foundation. He also serves as a member of the board of trustees at
Grinnell College.[13]
Contents
[hide]
1 Early life
2 Career
o 2.1 As a millionaire
o 2.2 As a billionaire
o 2.3 Late 2000s recession
3 Personal life
o 3.1 Lineage
o 3.2 Recognition
o 3.3 Politics
o 3.4 Writings
o 3.5 Wealth
o 3.6 Philanthropy
4 Public positions
o 4.1 Buffett and tobacco
o 4.2 Buffett and coal
o 4.3 Klamath river
o 4.4 Trade deficit
o 4.5 Dollar and gold
o 4.6 Taxes
o 4.7 Expensing of stock options
o 4.8 Investing in China
5 Books about Buffett
6 Bibliography
7 See also
8 References
9 External links
Early life
Buffett was born in 1930 in Omaha, Nebraska, the second of three children and
only son of businessman & politician, Howard Buffett,[14] and his wife Leila (née
Stahl). Buffett began his education at Rose Hill Elementary School in Omaha. In
1942, his father was elected to the first of four terms in the United States
Congress, and after moving with his family to Washington, D.C., Warren finished
elementary school, attended Alice Deal Junior High School, and graduated from
Woodrow Wilson High School in 1947, where his senior yearbook picture reads:
"likes math; a future stock broker."[15]
Even as a child, Buffett displayed an interest in making and saving money. He
went door to door selling chewing gum, Coca-Cola, or weekly magazines. For a
while, he worked in his grandfather's grocery store. While still in high school, he
carried out several successful money-making ideas: delivering newspapers,
selling golfballs and stamps, and detailing cars, among them. Filing his first
income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle
and watch on his paper route.[16] In 1945, in his sophomore year of high school,
Buffett and a friend spent $25 to purchase a used pinball machine, which they
placed in the local barber shop. Within months, they owned several machines in
different barber shops.
Buffett's interest in the stock market and investing also dated to his childhood, to
the days he spent in the customers' lounge of a regional stock brokerage near the
office of his father's own brokerage company. On a trip to New York City at the
age of ten, he made a point to visit the New York Stock Exchange. At the age of
11, he bought three shares of Cities Service Preferred for himself, and three for
his sister.[17][18] While in high school he invested in a business owned by his father
and bought a farm worked by a tenant farmer. By the time he finished college,
Buffett had accumulated more than $90,000 in savings measured in 2009 dollars.
Benjamin Graham (1894–1976)
Phil Fisher (1907–2004)
Buffett entered college as a freshmen in 1947 at the Wharton Business School of
the University of Pennsylvania and studied there for two years from 1947 to 1949.
In the year 1950, when he entered his junior year, he transferred to the University
of Nebraska–Lincoln where at the age of nineteen, he graduated with a degree of
Bachelor of Science in Business Administration. After the completion of his
undergraduate studies, Buffett enrolled at Columbia Business School after
learning that Benjamin Graham (author of "The Intelligent Investor" – one of his
favorite books on investing) and David Dodd, two well-known securities analysts,
taught there. He received a M.S. in Economics from Columbia Business School in
1951. Buffett also attended the New York Institute of Finance. In Buffett’s own words:
“ I’m 15 percent Fisher and 85 percent Benjamin Graham.[19]
The basic ideas of investing are to look at stocks as business, use the
market's fluctuations to your advantage, and seek a margin of safety. That’s
what Ben Graham taught us. A hundred years from now they will still be the
cornerstones of investing.[20] ”
Career
See also: List of assets owned by Berkshire Hathaway
Warren Buffett was employed from 1951–54 at Buffett-Falk & Co., Omaha as an
investment salesman, from 1954–1956 at Graham-Newman Corp., New York as a
securities analyst, from 1956–1969 at Buffett Partnership, Ltd., Omaha as a
general partner and from 1970 – Present at Berkshire Hathaway Inc, Omaha as
its Chairman, CEO.
In 1950 (20 years old) Buffett had made and saved $9,800. In April 1952, Buffett
discovered Graham was on the board of GEICO insurance. Taking a train to
Washington, D.C. on a Saturday, he knocked on the door of GEICO's
headquarters until a janitor allowed him in. There he met Lorimer Davidson,
Geico's Vice President, and the two discussed the insurance business for hours.
Davidson would eventually become Buffett's life-long friend and a lasting
influence[21] and later recall that he found Buffett to be an "extraordinary man" after
only fifteen minutes. Buffett graduated from Columbia and wanted to work on Wall
Street, however, both his father and Ben Graham urged him not to. He offered to
work for Graham for free, but Graham refused.[22]
Buffett returned to Omaha and worked as a stockbroker while taking a Dale
Carnegie public speaking course.[citation needed] Using what he learned, he felt
confident enough to teach an "Investment Principles" night class at the University
of Nebraska-Omaha. The average age of his students was more than twice his
own. During this time he also purchased a Sinclair Texaco gas station as a side
investment. However, this did not turn out to be a successful business venture.
In 1952[23] Buffett married Susan Thompson at Dundee Presbyterian Church and
the next year they had their first child, Susan Alice Buffett. In 1954, Buffett
accepted a job at Benjamin Graham's partnership. His starting salary was $12,000
a year (approximately $97,000 adjusted to 2008 dollars). There he worked closely
with Walter Schloss. Graham was a tough man to work for. He was adamant that
stocks provide a wide margin of safety after weighting the trade-off between their
price and their intrinsic value. The argument made sense to Buffett but he
questioned whether the criteria were too stringent and caused the company to
miss out on big winners that had more qualitative values.[citation needed] That same
year the Buffetts had their second child, Howard Graham Buffett. In 1956,
Benjamin Graham retired and closed his partnership. At this time Buffett's
personal savings were over $174,000 ($1.2 million inflation adjusted to 2009
dollars) and he started Buffett Partnership Ltd., an investment partnership in
Omaha.
Buffett's home in Omaha
In 1957, Buffett had three partnerships operating the entire year. He purchased a
five-bedroom stucco house in Omaha, where he still lives, for $31,500. In 1958
the Buffett's third child, Peter Andrew Buffett, was born. Buffett operated five
partnerships the entire year. In 1959, the company grew to six partnerships
operating the entire year and Buffett was introduced to Charlie Munger. By 1960,
Buffett had seven partnerships operating: Buffett Associates, Buffett Fund, Dacee,
Emdee, Glenoff, Mo-Buff and Underwood. He asked one of his partners, a doctor,
to find ten other doctors willing to invest $10,000 each in his partnership.
Eventually eleven agreed, and Buffett pooled their money with a mere $100
original investment of his own. In 1961, Buffett revealed that Sanborn Map
Company accounted for 35% of the partnership's assets. He explained that in
1958 Sanborn stock sold at only $45 per share when the value of the Sanborn
investment portfolio was $65 per share. This meant that buyers valued Sanborn
stock at "minus $20" per share and were unwilling to pay more than 70 cents on
the dollar for an investment portfolio with a map business thrown in for nothing.
This earned him a spot on the board of Sanborn.
As a millionaire
In 1962, Buffett became a millionaire, because of his partnerships, which in
January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to
Buffett. Buffett merged all partnerships into one partnership. Buffett invested in
and eventually took control of a textile manufacturing firm, Berkshire Hathaway.
Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when
Buffett's partnerships aggressively began purchasing Berkshire, they paid $14.86
per share while the company had working capital of $19 per share. This did not
include the value of fixed assets (factory and equipment). Buffett took control of
Berkshire Hathaway at the board meeting and named a new president, Ken
Chace, to run the company. In 1966, Buffett closed the partnership to new money.
Buffett wrote in his letter: "... unless it appears that circumstances have changed
(under some conditions added capital would improve results) or unless new
partners can bring some asset to the partnership other than simply capital, I intend
to admit no additional partners to BPL."
In a second letter, Buffett announced his first investment in a private business —
Hochschild, Kohn and Co, a privately owned Baltimore department store. In 1967,
Berkshire paid out its first and only dividend of 10 cents. In 1969, following his
most successful year, Buffett liquidated the partnership and transferred their
assets to his partners. Among the assets paid out were shares of Berkshire
Hathaway. In 1970, as chairman of Berkshire Hathaway, Buffett began writing his
now-famous annual letters to shareholders. However, he lived solely on his salary
of $50,000 per year, and his outside investment income. In 1979, Berkshire began
the year trading at $775 per share, and ended at $1,310. Buffett's net worth
reached $620 million, placing him on the Forbes 400 for the first time.
In 1973, Berkshire began to acquire stock in the Washington Post Company.
Buffett became close friends with Katharine Graham, who controlled the company
and its flagship newspaper, and became a member of its board of directors. In
1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's
acquisition of WESCO, due to possible conflict of interest. No charges were
brought. In 1977, Berkshire indirectly purchased the Buffalo Evening News for
$32.5 million. Antitrust charges started, instigated by its rival, the Buffalo Courier-
Express. Both papers lost money, until the Courier-Express folded in 1982.
In 1979, Berkshire began to acquire stock in ABC. Capital Cities announced $3.5
billion purchase of ABC on March 18, 1985 surprised the media industry, as ABC
was some four times bigger than Capital Cities was at the time. Berkshire
Hathaway chairman Warren Buffett helped finance the deal in return for a 25%
stake in the combined company.[24] The newly merged company, known as Capital
Cities/ABC (or CapCities/ABC), was forced to sell off some stations due to FCC
ownership rules. Also, the two companies owned several radio stations in the
same markets.[25]
In 1987, Berkshire Hathaway purchased 12% stake in Salomon Inc., making it the
largest shareholder and Buffett the director. In 1990, a scandal involving John
Gutfreund (former CEO of Salomon Brothers) surfaced. A rogue trader, Paul
Mozer, was submitting bids in excess of what was allowed by the Treasury rules.
When this was discovered and brought to the attention of Gutfreund, he did not
immediately suspend the rogue trader. Gutfreund left the company in August
1991.[26] Buffett became Chairman of Salomon until the crisis passed; on
September 4, 1991, he testified before Congress.[27] In 1988, Buffett began buying
stock in Coca-Cola Company, eventually purchasing up to 7% of the company for
$1.02 billion. It would turn out to be one of Berkshire's most lucrative investments,
and one which it still holds.
As a billionaire
Buffett became a billionaire on paper when Berkshire Hathaway began selling
class A shares on May 29, 1990, when the market closed at $7,175 a share.[28] In
1998, he acquired General Re (Gen Re), (in a rare move, for stock). In 2002,
Buffett became involved with Maurice R. Greenberg at AIG, with General Re
providing reinsurance. On March 15, 2005, AIG's board forced Greenberg to
resign from his post as Chairman and CEO under the shadow of criticism from
Eliot Spitzer, former attorney general of the state of New York. On February 9,
2006, AIG and the New York State Attorney General's office agreed to a
settlement in which AIG would pay a fine of $1.6 billion.[29] In 2010, the federal
government settled with Berkshire Hathaway for $92 million in return for the firm
avoiding prosecution in an AIG fraud scheme, and undergoing 'corporate
governance concessions'.[30]
In 2002, Buffett entered in $11 billion worth of forward contracts to deliver U.S.
dollars against other currencies. By April 2006, his total gain on these contracts
was over $2 billion. In 2006, Buffett announced in June that he gradually would
give away 85% of his Berkshire holdings to five foundations in annual gifts of
stock, starting in July 2006. The largest contribution would go to the Bill and
Melinda Gates Foundation.[31] In 2007, in a letter to shareholders, Buffett
announced that he was looking for a younger successor, or perhaps successors,
to run his investment business.[32] Buffett had previously selected Lou Simpson,
who runs investments at Geico, to fill that role. However, Simpson is only six
years younger than Buffett.
Late 2000s recession
Buffett ran into criticism[33] during the subprime crisis of 2007–2008, part of the late
2000s recession, that he had allocated capital too early resulting in suboptimal
deals. “Buy American. I am.” he wrote for an opinion piece published recently in
the New York Times.[34] Buffett has called the 2007—present downturn in the
financial sector "poetic justice".[35] Buffett's Berkshire Hathaway suffered a 77%
drop in earnings during Q3 2008 and several of his recent deals appear to be
running into large mark-to-market losses.[36]
Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs.
[37] Some of Buffett's Index put options (European exercise at expiry only) that he
wrote (sold) are currently running around $6.73 billion mark-to-market losses.[38]
The scale of the potential loss prompted the SEC to demand that Berkshire
produce, "a more robust disclosure" of factors used to value the contracts.[38]
Buffett also helped Dow Chemical pay for its $18.8 billion takeover of Rohm &
Haas. He thus became the single largest shareholder in the enlarged group with
his Berkshire Hathaway, which provided $3 billion, underlining his instrumental
role during the current crisis in debt and equity markets.[39]
In 2008, Buffett became the richest man in the world dethroning Bill Gates, worth
$62 billion according to Forbes,[40] and $58 billion according to Yahoo.[41] Bill Gates
had been number one on the Forbes list for 13 consecutive years.[42] In 2009, Bill
Gates regained number one of the list according to Forbes magazine, with Buffett
second. Their values have dropped to $40 billion and $37 billion respectively,
Buffett having (according to Forbes) lost $25 billion in 12 months during
2008/2009.[43]
In October 2008, the media reported that Warren Buffett had agreed to buy
General Electric (GE) preferred stock.[44] The operation included extra special
incentives: he received an option to buy 3 billion GE at $22.25 in the next five
years, and also received a 10% dividend (callable within three years). In February
2009, Warren Buffett sold part of Procter & Gamble Co, and Johnson & Johnson
shares from his portfolio.[45]
In addition to suggestions of mistiming, questions have been raised as to the
wisdom in keeping some of Berkshire's major holdings, including The Coca-Cola
Company (NYSE:KO) which in 1998 peaked at $86. Buffett discussed the
difficulties of knowing when to sell in the company's 2004 annual report:
That may seem easy to do when one looks through an always-clean, rear-view
mirror. Unfortunately, however, it’s the windshield through which investors must
peer, and that glass is invariably fogged.[46]
In March 2009, Buffett stated in a cable television interview that the economy had
"fallen off a cliff... Not only has the economy slowed down a lot, but people have
really changed their habits like I haven't seen". Additionally, Buffett fears we may
revisit a 1970s level of inflation, which led to a painful stagflation that lasted many
years.[47][48]
In 2009, Warren Buffett invested $2.6 billion as a part of Swiss Re's raising equity
capital.[49][50] Berkshire Hathaway already owns a 3% stake, with rights to own
more than 20%.[51] In 2009, Warren Buffett acquired Burlington Northern Santa Fe
Corp. for $34 billion in cash and stock. Alice Schroeder, author of Snowball, stated
that a reason for the purchase was to diversify Berkshire Hathaway from the
financial industry.[52] Measured by market capitalization in the Financial Times
Global 500 Berkshire Hathaway as of June 2009 was the eighteenth largest
corporation on earth.[53]
In 2009, Buffett divested his failed investment in ConocoPhillips, saying to his
Berkshire investors,
I bought a large amount of ConocoPhillips stock when oil and gas prices were
near their peak. I in no way anticipated the dramatic fall in energy prices that
occurred in the last half of the year. I still believe the odds are good that oil sells
far higher in the future than the current $40–$50 price. But so far I have been
dead wrong. Even if prices should rise, moreover, the terrible timing of my
purchase has cost Berkshire several billion dollars.[54]
The merger with the Burlington Northern Santa Fe Railway (BNSF), closed upon
BNSF shareholder approval in 1Q2010. This deal is valued at approximately $34
billion and reflects an increase of a previously existing stake of about 22%.
In June 2010, Buffett defended the credit rating agencies for their role in the US
financial crisis, claiming that:
Very, very few people could appreciate the bubble. That's the nature of bubbles –
they're mass delusions.[55]
On March 18, 2011, Goldman Sachs acquired Federal Reserve approval to buy
back Berkshire's preferred stock in Goldman. Buffet has been reluctant to give up
the stock which average $1.4 million in dividend a day,[56] stating:[57]
I'm going to be the Osama bin Laden of capitalism. I'm on my way to an unknown
destination in Asia where I'm going to look for a cave. If the U.S. Armed forces
can't find Osama bin Laden in 10 years, let Goldman Sachs try to find me.[58]
Personal life
Buffett married Susan Buffett (née Thompson) in 1952. They had three children,
Susie, Howard and Peter. The couple began living separately in 1977, although
they remained married until her death in July 2004. Their daughter, Susie, lives in
Omaha and does charitable work through the Susan A. Buffett Foundation and is
a national board member of Girls, Inc. In 2006, on his seventy-sixth birthday,
Warren married his never-married longtime-companion, Astrid Menks, who was
then sixty years old. She had lived with him since his wife's departure in 1977 to
San Francisco.[59] It was Susan Buffett who arranged for the two to meet before
she left Omaha to pursue her singing career. All three were close and holiday
cards to friends were signed "Warren, Susie and Astrid".[60] Susan Buffett briefly
discussed this relationship in an interview on the Charlie Rose Show shortly
before her death, in a rare glimpse into Buffett's personal life.[61]
Warren Buffett disowned his son Peter's adopted daughter, Nicole, in 2006 after
she participated in the Jamie Johnson documentary, The One Percent. Although
his first wife had referred to Nicole as one of her "adored grandchildren",[62] Buffett
wrote her a letter stating, "I have not emotionally or legally adopted you as a
grandchild, nor have the rest of my family adopted you as a niece or a cousin." He
signed the letter "Warren."[63][64][65]
His 2006 annual salary was about $100,000, which is small compared to senior
executive remuneration in comparable companies.[66] In 2007, and 2008, he
earned a total compensation of $175,000, which included a base salary of just
$100,000.[67][68] He lives in the same house in the central Dundee neighborhood of
Omaha that he bought in 1958 for $31,500, today valued at around $700,000
(although he also owns a $4 million house in Laguna Beach, California).[69] In 1989
after having spent nearly 6.7 million dollars of Berkshire's funds on a private jet,
Buffett sheepishly named it "The Indefensible". This act was a break from his past
condemnation of extravagant purchases by other CEOs and his history of using
more public transportation.[70]
He remains an avid player of the card game bridge, which he learned from Sharon
Osberg, and plays with her and Bill Gates.[71] He spends twelve hours a week
playing the game.[72] In 2006, he sponsored a bridge match for the Buffett Cup.
Modeled on the Ryder Cup in golf, held immediately before it, and in the same
city, a team of twelve bridge players from the United States took on twelve
Europeans in the event. He is a dedicated, lifelong follower of Nebraska football,
and attends as many games as his schedule permits. He supported the hire of Bo
Pelini following the 2007 season stating, "It was getting kind of desperate around
here".[73] He watched the 2009 game against Oklahoma from the Nebraska
sideline after being named an honorary assistant coach.[74]
Warren Buffett worked with Christopher Webber on an animated series with chief
Andy Heyward, of DiC Entertainment, and then A Squared Entertainment. The
series features Buffett and Munger, and teaches children healthy financial habits
for life.[75][76] Buffett was raised Presbyterian but has since described himself as
agnostic [77] when it comes to religious beliefs. In December 2006 it was reported
that Buffett does not carry a cell phone, does not have a computer at his desk,
and drives his own automobile,[78] a Cadillac DTS.[79] Buffett wears tailor-made
suits from the Chinese label Trands; earlier he wore Ermenegildo Zegna.[80]
Lineage
Buffett's DNA report revealed that his paternal ancestors hail from northern
Scandinavia, while his maternal ancestors most likely have roots in Iberia or
Estonia.[81]
Recognition
In 1999, Buffett was named the top money manager of the twentieth century in a
survey by the Carson Group, ahead of Peter Lynch and John Templeton.[82] In
2007, he was listed among Time' s 100 Most Influential People in the world.[83] In
2011, President Barack Obama awarded him the Presidential Medal of Freedom.
[84] Most recently, Buffett, along with Bill Gates, was named the most influential
global thinker in Foreign Policy's 2010 report.[85]
Politics
Buffett and President Obama at the Oval Office, July 14, 2010
In addition to other political contributions over the years, Buffett has formally
endorsed and made campaign contributions to Barack Obama's presidential
campaign. On July 2, 2008, Buffett attended a $28,500 per plate fundraiser for
Obama's campaign in Chicago hosted by Obama's National Finance Chair, Penny
Pritzker and her husband, as well as Obama advisor Valerie Jarrett.[86] Buffett
backed Obama for president, and intimated that John McCain's views on social
justice were so far from his own that McCain would need a "lobotomy" for Buffett
to change his endorsement.[87] During the second 2008 U.S. presidential debate,
candidates John McCain and Barack Obama, after being asked first by
presidential debate mediator Tom Brokaw, both mentioned Buffett as a possible
future Secretary of the Treasury.[88] Later, in the third and final presidential debate,
Obama mentioned Buffett as a potential economic advisor.[89] Buffett was also
finance advisor to California Republican Governor Arnold Schwarzenegger during
his 2003 election campaign.[90]
Writings
Warren Buffett's writings include his annual reports and various articles. Buffett is
recognized by communicators[91] as one of the great story-tellers, as evidenced by
his annual letters to shareholders. He warned about the pernicious effects of
inflation:[92]
The arithmetic makes it plain that inflation is a far more devastating tax than
anything that has been enacted by our legislatures. The inflation tax has a
fantastic ability to simply consume capital. It makes no difference to a widow with
her savings in a 5 percent passbook account whether she pays 100 percent
income tax on her interest income during a period of zero inflation, or pays no
income taxes during years of 5 percent inflation.
—Buffett, Fortune (1977)
In his article The Superinvestors of Graham-and-Doddsville, Buffett refuted the
academic Efficient-market hypothesis, that beating the S&P 500 was "pure
chance", by highlighting a number of students of the Graham and Dodd value
investing school of thought. In addition to himself, Buffett named Walter J.
Schloss, Tom Knapp, Ed Anderson (Tweedy, Brown Inc.), Bill Ruane (Sequoia
Fund, Inc.), Charles Munger (Buffett's own business partner at Berkshire), Rick
Guerin (Pacific Partners, Ltd.), and Stan Perlmeter (Perlmeter Investments).[93] In
his November 1999 Fortune article, he warned of investors' unrealistic
expectations:[94]
Let me summarize what I've been saying about the stock market: I think it's very
hard to come up with a persuasive case that equities will over the next 17 years
perform anything like—anything like—they've performed in the past 17. If I had to
pick the most probable return, from appreciation and dividends combined, that
investors in aggregate—repeat, aggregate—would earn in a world of constant
interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%!
—Buffett, Fortune (1999)
Wealth
In 2008 he was ranked by Forbes as the richest person in the world with an
estimated net worth of approximately US$62 billion.[95] In 2009, after donating
billions of dollars to charity, Buffett was ranked as the second richest man in the
United States with a net worth of US$37 billion[96][97] with only Bill Gates ranked
higher than Buffett. His net worth is up to $47 billion in the past 12 months.[98]
Philanthropy
The following quotation from 1988 highlights Warren Buffett's thoughts on his wealth and why he long planned to re-allocate it:
“ I don't have a problem with guilt about money. The way I see it is that my
money represents an enormous number of claim checks on society. It's like I
have these little pieces of paper that I can turn into consumption. If I wanted
to, I could hire 10,000 people to do nothing but paint my picture every day
”
for the rest of my life. And the GDP would go up. But the utility of the product
would be zilch, and I would be keeping those 10,000 people from doing
AIDS research, or teaching, or nursing. I don't do that though. I don't use
very many of those claim checks. There's nothing material I want very much.
And I'm going to give virtually all of those claim checks to charity when my
wife and I die. (Lowe 1997:165–166)
From a NY Times article: "I don't believe in dynastic wealth", Warren Buffett said,
calling those who grow up in wealthy circumstances "members of the lucky sperm
club".[99] Buffett has written several times of his belief that, in a market economy, the rich earn outsized rewards for their talents:
“ A market economy creates some lopsided payoffs to participants. The right
endowment of vocal chords, anatomical structure, physical strength, or
”
mental powers can produce enormous piles of claim checks (stocks, bonds,
and other forms of capital) on future national output. Proper selection of
ancestors similarly can result in lifetime supplies of such tickets upon birth. If
zero real investment returns diverted a bit greater portion of the national
output from such stockholders to equally worthy and hardworking citizens
lacking jackpot-producing talents, it would seem unlikely to pose such an
insult to an equitable world as to risk Divine Intervention.[100]
His children will not inherit a significant proportion of his wealth. These actions are
consistent with statements he has made in the past indicating his opposition to the
transfer of great fortunes from one generation to the next.[101] Buffett once
commented, "I want to give my kids just enough so that they would feel that they
could do anything, but not so much that they would feel like doing nothing".[102]
In June 2006, he announced a plan to give away his fortune to charity, with 83%
of it going to the Bill & Melinda Gates Foundation.[103] He pledged about the
equivalent of 10 million Berkshire Hathaway Class B shares to the Bill & Melinda
Gates Foundation (worth approximately US$30.7 billion as of June 23, 2006),[104]
making it the largest charitable donation in history, and Buffett one of the leaders
of philanthrocapitalism.[105] The foundation will receive 5% of the total donation on
an annualised basis each July, beginning in 2006. (Significantly, however, the
pledge is conditional upon the foundation's giving away each year, beginning in
2009, an amount that is at least equal to the value of the entire previous year's gift
from Buffett, in addition to 5% of the foundation's net assets.) Buffett also will join
the board of directors of the Gates Foundation, although he does not plan to be
actively involved in the foundation's investments.[106][107]
This is a significant shift from previous statements Buffett has made, having stated
that most of his fortune would pass to his Buffett Foundation.[108] The bulk of the
estate of his wife, valued at $2.6 billion, went to that foundation when she died in
2004.[109] He also pledged $50-million to the Nuclear Threat Initiative, in
Washington, where he has served as an adviser since 2002.[110]
In 2006, he auctioned his 2001 Lincoln Town Car[111] on eBay to raise money for
Girls, Inc. [112] In 2007, he auctioned a luncheon with himself that raised a final bid
of $650,100 for a charity.[113] On June 27, 2008, Zhao Danyang, a general
manager at Pure Heart China Growth Investment Fund, won the 2008 5-day
online "Power Lunch with Warren Buffett" charity auction with a bid of $2,110,100.
Auction proceeds benefit the San Francisco Glide Foundation.[114][115] The following
year, executives from Toronto-based Salida Capital paid US$1.68 million to dine
with Buffett.[116]
In a letter to Fortune Magazine's website in 2010 Buffett remarked:
“ “My luck was accentuated by my living in a market system that sometimes
produces distorted results, though overall it serves our country well... I’ve
worked in an economy that rewards someone who saves the lives of others
on a battlefield with a medal, rewards a great teacher with thank-you notes
from parents, but rewards those who can detect the mispricing of securities
with sums reaching into the billions. In short, fate’s distribution of long straws
is wildly capricious.”
. (Buffett Says ‘Capricious’ Economy Requires Charity (Update1) by Hugh
Son, Bloomberg, June 16, 2010 16:17 EDT) ”
This statement was made as part of a joint proposal with Bill Gates to encourage
other wealthy individuals to pool some of their fortunes for charitable purposes.
Bill Gates's wife urged people to learn a lesson from the philanthropic efforts of
the family that sold its home and gave away half of its value, as detailed in The
Power of Half.[117][118] On December 9, 2010, Buffett, Bill Gates, and Mark
Zuckerberg (Facebook's CEO), signed a promise they called the "Gates-Buffett
Giving Pledge", in which they promised to donate to charity at least half of their
wealth over the course of time, and invited others among the wealthy to donate
50% or more of their wealth to charity.[119][120]
Public positions
Buffett's speeches are known for mixing business discussions with humor. Each
year, Buffett presides over Berkshire Hathaway's annual shareholder meeting in
the Qwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors
from both United States and abroad, giving it the nickname "Woodstock of
Capitalism".[121] Berkshire's annual reports and letters to shareholders, prepared
by Buffett, frequently receive coverage by the financial media. Buffett's writings
are known for containing literary quotes ranging from the Bible to Mae West,[122] as
well as Midwestern advice, and numerous jokes.
Buffett and tobacco
During the RJR Nabisco, Inc. hostile takeover fight in 1987, Buffett was quoted as
telling John Gutfreund:[123]
I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a
dollar. It’s addictive. And there’s fantastic brand loyalty.
—Buffett, quoted in Barbarians at the Gate: The Fall of RJR Nabisco
Speaking at Berkshire Hathaway Inc.'s 1994 annual meeting, Buffett said
investments in tobacco are:[124]
fraught with questions that relate to societal attitudes and those of the present
administration. I would not like to have a significant percentage of my net worth
invested in tobacco businesses. The economy of the business may be fine, but
that doesn't mean it has a bright future.
—Buffett, Berkshire Hathaway annual meeting (1994)
Buffett and coal
In 2007, Buffett's PacifiCorp, a subsidiary of his MidAmerican Energy Company,
canceled six proposed coal-fired power plants. These included Utah's
Intermountain Power Project Unit 3, Jim Bridger Unit 5, and four proposed plants
previously included in PacifiCorp's Integrated Resource Plan. The cancellations
came in the wake of pressure from regulators and citizen groups, including a
petition drive organized by Salt Lake City commercial real estate broker Alexander
Lofft and directed at Buffett personally. The 1,600 petitioners, who described
themselves in a letter to Buffett as "a collection of citizens, business owners and
managers, service professionals, public servants, and organization
representatives ... your friends and new customers here in Utah," explained that,
in their view, any further expansion of coal generation in Utah would "compromise
our health, obscure our viewsheds, shrink and contaminate our watersheds, and
thin out our most beloved snow pack," concluding that "our attractiveness as a
place to live and work is also threatened, and so is our economic competitiveness
as a major metro area and a state, compromising our recent gains in income and
property values".[125]
Klamath river
American Indian tribes and salmon fisherman sought to win support from Warren
Buffett for a proposal to remove four hydroelectric dams from the Klamath River.
He had David Sokol respond that the FERC would decide the question.[126][127]
Trade deficit
Buffett views the United States' expanding trade deficit as a trend that will devalue
the US dollar and US assets. He believes that the US dollar will lose value in the
long run, as a result of putting a larger portion of ownership of US assets in the
hands of foreigners. In his letter to shareholders in March 2005, Warren Buffett
predicted that in another ten years’ time the net ownership of the U.S. by outsiders
would amount to $11 trillion.
Americans ... would chafe at the idea of perpetually paying tribute to their creditors
and owners abroad. A country that is now aspiring to an ‘ownership society’ will
not find happiness in — and I’ll use hyperbole here for emphasis — a
'sharecropping society’.
Author Ann Pettifor has adopted the image in her writings and has stated: "He is
right. And so the thing we must fear most now, is not just the collapse of banks
and investment funds, or of the international financial architecture, but of a
'sharecropper society, angry at its downfall".[128]
Dollar and gold
This induced Buffett to enter the foreign currency market for the first time in 2002.
However, he substantially reduced his stake in 2005 as changing interest rates
increased the costs of holding currency contracts. Buffett continues to be bearish
on the dollar, and says he is looking to make acquisitions of companies which
derive a substantial portion of their revenues from outside the United States.
Buffett emphasized the non-productive aspect of a gold standard for the USD in
1998 at Harvard:
It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig
another hole, bury it again and pay people to stand around guarding it. It has no
utility. Anyone watching from Mars would be scratching their head.
In 1977 Buffett was also quoted as saying about stocks, gold, farmland, and
inflation:
Stocks are probably still the best of all the poor alternatives in an era of inflation —
at least they are if you buy in at appropriate prices.[129]
Taxes
Buffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total
federal taxes (due to their being from dividends & capital gains), while his
employees paid 33% of theirs, despite making much less money.[130] “How can this
be fair?” Buffet asked, regarding how little he pays in taxes compared to his
employees. “How can this be right?” He also added:
“There’s class warfare, all right, but it’s my class, the rich class, that’s making
war, and we’re winning.”[131][132]
Buffett favors the inheritance tax, saying that repealing it would be like "choosing
the 2020 Olympic team by picking the eldest sons of the gold-medal winners in
the 2000 Olympics".[133] In 2007, Buffett testified before the Senate and urged
them to preserve the estate tax so as to avoid a plutocracy.[134] Some critics have
argued that Buffett (through Berkshire Hathaway) has a personal interest in the
continuation of the estate tax, since Berkshire Hathaway has benefited from the
estate tax in past business dealings and had developed and marketed insurance
policies to protect policy holders against future estate tax payments.[135] Buffett
believes government should not be in the business of gambling, or legalizing
casinos, calling it a tax on ignorance.[136]
Expensing of stock options
He has been a strong proponent of stock option expensing, on the Income
Statement. At the 2004 annual meeting, he lambasted a bill before the United
States Congress that would consider only some company-issued stock options
compensation as an expense, likening the bill to one that was almost passed by
the Indiana House of Representatives to change the value of Pi from 3.14159 to
3.2 through legislative fiat.[137]
When a company gives something of value to its employees in return for their
services, it is clearly a compensation expense. And if expenses don't belong in the
earnings statement, where in the world do they belong?[138]
Investing in China
Buffett invested in PetroChina Company Limited and in a rare move, posted a
commentary[139] on Berkshire Hathaway's website stating why he would not divest
from the company despite calls from some activists to do so, due to its connection
with the Sudanese civil war that caused Harvard to divest from the company in
2005. He did, however, sell this stake soon afterwards, sparing him the billions of
dollars he would have lost had he held on to the company in the midst of the steep
drop in oil prices beginning in the summer of 2008.
In October 2008, Buffett invested in new energy automobile business by paying
$230 million for 10% of BYD Company (SEHK: 1211), which runs a subsidiary of
electric automobile manufacturer BYD Auto. In less than one year, the investment
has reaped him over 500% return of profit.[140]
Books about Buffett
Numerous books have been written about Warren Buffett and his investment
strategies. In October 2008, USA Today reported that there were at least 47
books in print with Buffett's name in the title. The article quoted the CEO of
Borders Books, George Jones, as saying that the only other living persons named
in as many book titles were U.S. presidents, major world political figures, and the
Dalai Lama.[141] Buffett said that his own personal favorite is a collection of his
essays called The Essays of Warren Buffett,[142] which he described as "a
coherent rearrangement of ideas from my annual report letters" as edited by Larry
Cunningham.[141]
Some best-selling, or otherwise notable, books about Buffett:
Roger Lowenstein , Buffett, Making of an American Capitalist
Robert Hagstrom, The Warren Buffett Way.[141][143]
Alice Schroeder , The Snowball: Warren Buffett and the Business of Life.[144]
(Written with Buffett's cooperation.)[145]
Mary Buffett and David Clark, Buffettology[146] and four subsequent books.
(Combined sales of more than 1.5 million copies.)[141]
Janet Lowe , Warren Buffett Speaks: Wit and Wisdom from the World's
Greatest Investor.[147]
John Train , The Midas Touch: The Strategies That Have Made Warren Buffett
'America's Preeminent Investor'.[148]
Andrew Kilpatrick, Of Permanent Value: The Story of Warren Buffett.[149] (The
longest of the books about Buffett, with 330 chapters, 1,874 pages and 1,400
photos, weighing 10.2 pounds.)[141]
Robert P. Miles (2004). Warren Buffett wealth: principles and practical
methods used by the world's greatest investor. John Wiley and Sons.
ISBN 9780471465119. http://books.google.com/?id=OOZWykmT-
KUC&pg=PA26&lpg=PA26&dq=buffett+city+services+preferred#v=onepage&
q&f=false.
John P. Reese , "The Guru Investor: How to Beat the Market Using History's
Best Investment Strategies".[150] (Includes step-by-step stock-picking method
based on Buffett's approach)
Janet M. Tavakoli , Dear Mr. Buffett: what an investor learns 1,269 miles from
Wall Street, John Wiley and Sons, 2008, ISBN 9780470406786 [151]
Bibliography
The Essays of Warren Buffett : Lessons for Corporate America, Warren
Buffett and Lawrence A. Cunningham, The Cunningham Group; revised
edition (April 11, 2001), ISBN 978-0966446111
The Essays of Warren Buffett: Lessons for Corporate America, Second
Edition, Warren E. Buffett and Lawrence A. Cunningham, The Cunningham
Group; 2nd edition (April 14, 2008), ISBN 978-0966446128
See also
Forbes list of billionaires
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External links
Wikiquote has a collection of quotations related to: Warren Buffett
Wikimedia Commons has media related to: Warren Buffett
Berkshire Hathaway official website
Latest Holdings In Berkshire Hathaway Portfolio, Dynamically Updated
Buffett Partnership Letters
Berkshire Hathaway SEC 13F Filings
Appearances on C-SPAN
Warren Buffett on Charlie Rose
Warren Buffett collected news and commentary at The New York Times
Warren Buffett collected news and commentary at The Guardian
Works by or about Warren Buffett in libraries (WorldCat catalog)
Stempel, Jonathan (February 12, 2008). "FACTBOX: Warren Buffett at a
glance". Reuters. http://www.reuters.com/article/idUSN1223441620080212.
Philip Arthur Fisher
From Wikipedia, the free encyclopedia
Jump to: navigation, search
Phil Fisher
Born September 8, 1907
Died March 11, 2004 (aged 96)
Nationality American
Occupation Stock investor
Known for
Common Stocks and
Uncommon Profits (1958)
Philip Arthur Fisher (September 8, 1907 – March 11, 2004) was an American
stock investor best known as the author of Common Stocks and Uncommon
Profits, a guide to investing that has remained in print ever since it was first
published in 1958. His money management company, Fisher & Co., was founded
in 1931.[1]
Philip Fisher is considered a pioneer in the field of growth investing.[2] Morningstar
has called him "one of the great investors of all time".[1] In Common Stocks and
Uncommon Profits, Fisher said that the best time to sell a stock was "almost
never". His most famous investment was his purchase of Motorola, a company he
bought in 1955 when it was a radio manufacturer and held until his death. [3]
His son Kenneth L. Fisher also founded an investment firm. Perhaps the best-
known of Fisher's followers is Warren Buffett who has said on some occasions
that "he is 85% Graham and 15% Fisher".
[edit] Books by Philip A. Fisher
Common Stocks and Uncommon Profits (ISBN 047111927X), Harper & Bros.,
1958
Paths to Wealth through Common Stocks, Prentice-Hall, Inc., 1960
Conservative Investors Sleep Well, Harper & Row, 1975
Developing an Investment Philosophy (Monograph), The Financial Analysts
Research Foundation, 1980
[edit] See also
Warren Buffett
Kenneth L. Fisher
Benjamin Graham
Thomas Rowe Price, Jr.
John Burr Williams
Growth investing
Wall Street
[edit] References
1. ^ a b http://news.morningstar.com/classroom2/course.asp?
docId=145662&CN=COM&page=1
2. ̂ http://www.new2shares.com.au/popup.php?name=fisher
3. ̂ http://www.fool.com/investing/general/2004/04/15/thanks-philip-
fisher.aspx
[edit] External links
Fisher obituary by his son Kenneth L. Fisher at Forbes.com
Fisher obituary at Fool.com
Learning from the Long Men , National Review Online
Retrieved from "http://en.wikipedia.org/wiki/Philip_Arthur_Fisher"
Categories: 1907 births | 2004 deaths | American finance and investment writers |
Equity securities
Hidden categories: Articles with hCards