Intelligent Investor
Investor Profile Warren Buffet’s Early Years
Warren Buffet
Warren Buffett was the only son of the Howard Buffett and Lelia Stahl. Howard worked as an investment broker and spent four terms in Congress as a U.S. representative. Howard Buffett was an extremely conservative man. Presently, the John Birch Society is associated with the extreme right of American Politics. Warren was very close to his father often following him to work. Leila was prone to immense anger and violent outbursts.
When Warren was six he bought and sold bottles of Cola making an easy 5 cent profit on each six pack. Other childhood business ventures included pinball machines, horse racing tip sheets, and buying and selling stock.
Having bought three stock shares which cost him $38 he immediately saw that stock price fall to $27, and then increase to $40. Much to Warren’s dismay the stock continue to increase in price and remained stable at $200. Warren Buffett loved number crunching – his love for math and money combined with the everyday encouragement of his father, in an investment firm environment inspired Warren to attend Wharton School of Business. Warren read Ben Graham’s The Intelligent Investor. Luckily, for the investment world, Harvard Business school failed to accept Warren and he went on to attend Columbia University where Graham was a professor of business. Graham and Buffett shared similar beliefs in regards to investing and they soon became fast friends.
In 1954 Graham offered Warren a job for $12,000 a year at his firm.
Buffett spent two years learning from his revered teacher gaining skills, confidence, and a net worth of $140,000. After Graham retired and his company was closed, Warren once again returned to Omaha to open his own business – Buffett Partnership.
Investor Profile Warren Buffet’s Methodology
Warren Buffett’s investment methodology is carefully studied by up and coming investors. The methodology centers on establishing what a particular company is worth. Warren outlines six easy steps to determine the true value of any company. To find out if a company has consistently performed well, the net income of the company must be divided by the income that the shareholders receive. In step two the investor must verify the amount of debt attributed to the company.
If the company has too much outstanding debt it becomes a high risk investment. Then the investor must shift his attention to the profits. Buffett continues with additional things to consider – how long has the company been public, do the company’s products rely on commodity, and if the stocks of the company are selling at 25% discount to it’s real value. “Buffett is one of the few business leaders whose reputation has remained unblemished by the unravelling of so much of corporate America,” is how Patrick Hosking describes Buffett’s continuing success and respect in the business word. Warren Buffett is all business which makes it difficult to find his personal life philosophy and separate it full from his business ethics. Buffett’s greatest strength may be his loyalty.
Buffett is the physical embodiment of the American Dream. “Warren Buffett’s story is quintessentially American, ” states Cornell Rupert of the Independent. Warren approaches and employs honesty, hard work, trustworthiness in dealing with life. Warren Buffett’s unflinching and simple approach to life, business, and ethics is extremely appealing to the average citizen.
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