25 reasons why warren buffett is a multi-billionaire

of 27 /27
25 Reasons Why Warren Buffett Is a Multi- Billionaire

Upload: the-motley-fool

Post on 11-Aug-2014

18.461 views

Category:

Career


9 download

DESCRIPTION

Warren Buffett is a multi-billionaire, but how did he get there?

TRANSCRIPT

Page 1: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

25 Reasons Why Warren Buffett Is a

Multi-Billionaire

Page 2: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

25. He started investing young

Warren Buffett bought his first stock

at age 11.Buffett quickly became

hooked on all things

business – he bought a

paper route at 13 and never looked back.

Page 3: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

24. He learned from the best

As a 20 year-old, Warren Buffett

studied and worked under the tutelage of

Benjamin Graham.Graham is known as the father of “value

investing”

Page 4: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

23. He didn’t stop learning

Even today, Buffett says he spends time

reading and thinking: “I insist on a lot of time being spent, almost every day,

to just sit and think. That is very uncommon in American business. I read and think.”

Photo: Timeless Books

Page 5: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

22. He lives by two simple rules“1. Never lose money.2. Never forget rule

No. 1”

Page 6: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

21. He owns up to his mistakesBeing a professional investor

for six decades, you’re bound to make a few mistake.

Buffett has made plenty of mistakes, but

he owns them and learns from them.

Page 7: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

20. He found a good business partner

Warren Buffett met Charlie Munger in 1959. The duo

teamed up in 1978.Meeting Munger changed what Buffett looked for in

a stock and company. Munger stressed the

importance of qualitative factors – not just the

numbers.

Page 8: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

19. They got lucky“Charlie and I are extraordinarily lucky.

We were born in America; had terrific parents who saw that we got good

educations; have enjoyed wonderful families and great health; and came

equipped with a “business” gene that allows us to prosper in a manner hugely

disproportionate to other people who contribute as much or more to our

society’s well-being.”-Buffett

Page 9: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

18. He buys stocks and holds them… forever

Warren Buffett and Berkshire Hathaway bought shares of

Coca-Cola in 1988.Berkshire’s original $1.3 billion position is now worth

over $16 billion.

Buffett has said he never plans on selling a single

share.

Page 10: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

17. He lives within his meansDespite being worth over $60 billion, Buffett still lives in the modest Omaha-home that he

bought in the 1950’s.

Page 11: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

16. He values reputation“It takes 20 years to build a reputation and five minutes to ruin it. If you think about

that, you’ll do things differently.”

Page 12: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

15. He loves the unlovedMost people get caught up with

the newest and hottest tech gadget – not Buffett."I will tell you now that we have embraced the 21st century by entering such cutting-

edge industries as brick, carpet, insulation and paint. Try to control your excitement.“

-Buffett

Page 13: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

14. He waits. And then waits some more

Perhaps no investor is more patient than Warren Buffett.

Buffett bought shares of Washington Post in 1973 for $10 million. Nearly a year after his initial investment, he

had endured a 20% unrealized loss on the position.

By 2004, Buffett had an unrealized gain of $1.7 billion on the position.

Waiting paid off.

Page 14: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

13. He knows how to be “different”

During the 2008 financial crisis, most investors didn’t want anything to do with stocks.

Buffett did.He penned this article for the New York Times and was proved correct when the

world didn’t end.

Page 15: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

12. He stays within his circle of competence

Warren Buffett isn’t dumb. But, he also knows he can’t be an

expert on everything.He sticks to the

industries (banks, insurance, consumer goods) that he knows and avoid the ones (tech) he doesn’t.

Page 16: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

11. He trusts othersBerkshire Hathaway owns dozens of subsidiaries.

Warren Buffett micro-manages 0 of them.

Page 17: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

10. He focuses on what he can control

Warren Buffett is an investor and businessman. He’s not a

politician, scientist, or fortune-teller.Buffett only focuses on

the factors he can control: His emotions

and his own decisions.

Page 18: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

9. He realized the power of insuranceAn insurance policy buyer pays the insurer cash up front for a

service they might receive. This gets cash in the hands of Warren to invest quickly and

often. Buffett calls insurance:

“Berkshire’s core operation and the engine that has consistently propelled

our expansion since 1967.”

Page 19: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

8. He is humbleIf most of us had over $60

billion, we’d probably have an ego the size of Omaha.Not Buffett. He still

sings the praises of others.

Buffett on the head of Berkshire’s insurance operations (Ajit Jain):

"If Charlie, I and Ajit are ever in a sinking boat – and you can only save one of us – swim to Ajit

Page 20: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

7. He doesn’t pay a dividendDividends can be great. It’s cold-hard cash in investors’

pockets. But Buffett understood early that he could earn more on that money by keeping in Berkshire’s pockets and rewarding

investors by growing the business.

Page 21: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

6. He doesn’t check stock prices daily

Daily stock prices mean basically nothing when you are

investing for decades.“Games are won by players who focus on the playing field -- not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock

prices, give it a try on weekdays.”-Buffett

Photo: Rafael Matsunaga

Page 22: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

5. Rhetoric doesn’t scare himTurn on the local or national

news, and you will probably be told something terrible is

happening.Buffett looks at the glass half-full.

“Of course, the immediate future is uncertain; America has faced the unknown

since 1776.”

Page 23: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

4. He loves his jobYou don’t work for over 60 years by hating your job.

"I found what I love to do very early...when I was seven or eight years old I knew that this particular game really,

really intrigued me. And then I had some great teachers

along the way." -Buffett

Page 24: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

3. He collaborates for successSome powerful people want to control everything themselves.

Not Buffett.He recently teamed up with a private equity firm, 3G Capital, to buy Heinz.

Buffett saw how 3G could help the company and didn’t let pride stand in the

way.

Page 25: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

2. He thinks in “generations”Warren Buffett is 83 years old,

but he’s running Berkshire Hathaway as if he’ll be around

for another 83 years.Lesser minds would try to squeeze out all of the glory while they are still around. Berkshire’s big moves into

the energy and railroad business show Buffett’s willingness to think beyond most people’s timeframes.

Page 26: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

1. He never retiredWarren Buffett could have

easily retired in this 30s. But he didn’t.In fact, an estimated

99.6%of his net $65 billion net worth was accumulated after his 50th birthday!

Page 27: 25 Reasons Why Warren Buffett Is a Multi-Billionaire

Warren Buffett and Berkshire Hathaway own nearly 9 million shares of this company. Click below

to learn more!