How did Warren Buffet build his $500 billion empire?
Warren Buffet is the fourth richest man in the world right now, and if not for all the money he has given away in the last couple of years, he might have ended up as number one. Now, how did he do this? Some people have been asking this same question over and over again. The real answer is he did this through patient-years of intelligent investing, sticking to crucial investment principles, and building a team of like minds. He did not just become a billionaire overnight because he started his investment journey at a very young age. Let me take a minute to introduce Warren Buffet properly.
Who is Warren Buffet?
Warren Edward Buffet is a business tycoon, philanthropist, and investor from the United States of America. He is currently the CEO and chairman of the Berkshire Hathaway group. With a net worth of about $88.9 billion as of December 2019, he is widely regarded as one of the best investors in the world, and as I stated earlier, he is the fourth richest man in the world.
Some even call him “The expert of experts” because of his ability to make intelligent investment and business deals that earned him the billions over the years. Before becoming a billionaire, he once used to sell Coca-Cola bottles, chewing gums, and selling weekly magazines from door to door. Growing up, he worked in his father’s shop and even started a pinball machine business, which he put in his local barbers’ shop. So, he kept on saving until he was able to buy his first stock.
At the young age of eleven, he asked his dad to buy him 3 shares of the preferred stock of City service, and that was the first step in the journey to becoming a billionaire investor. By the age of twenty-six, he already set up his investment firm called Buffet Partnership Limited. He ran this for more than thirteen years, achieving an annual average return of 29.5%.
This was the long walk he took, sketching his name into stone as one of the all-time investment greats. Buffet Partnership Limited was worth over $60 million after thirteen years, and Buffet was already a millionaire.
Warren Buffet’s journey to success?
This was just the beginning because, by the age of thirty-four, Buffet was already rolling out the big guns. He purchased an old textile business called Berkshire Hathaway, which he converted into an investment firm. Now, he was growing influence and power, and a company where he would be able to invest money for millions of investors the world over. This became a match made in heaven, of the most significant investment mind and the thousands of people around the world who wanted their monies invested. With a lot of investors affiliated with him, he started writing shareholders’ letters.
These shareholders’ letters gave other investors an insight into how his mind works and how he decided to choose stocks and run his business. Through these letters, many have learned how to become better investors. We have learned things like “Price is what you pay, and value is what you get” and also learned to “Be greedy when others are fearful and to be fearful when others are greedy.” I could go on with what I have learned from Warren Buffet, but time is of the essence. I owe a lot of what I know in investing today to this great investor.
But I do not think Warren Buffet learned all these principles so he can teach other investors and be their inspiration. He learned it so he could comfortably apply it to his investment processes and achieve the same results we are getting from it. Through his little company, Berkshire Hathaway, he began to buy some of the USA’s best shares.
In 1965, Buffet bought four million dollars’ worth of Disney shares after meeting with Walt Disney himself. Now, we know Disney for all the amazing things they offer our kids, but Buffet saw and bought shares in this company over 50 years ago. He also bought shares in the Washington Post at the age of forty-three and became friends with the company’s owners.
In 1976, at forty-six years old, he bought shares at Geico, an emerging insurance company. He kept investing in this company up until 1996 when he had acquired so many shares that he owned the whole business. But arguably one of Warren Buffet’s purchases was in 1988 when he started investing in the beverage company, Coca-Cola. He knew this company inside out, having sold their cans and bottles to survive at one point in his life. He eventually gained a seven percent stake in the company for a little over 1.7 billion dollars. Gradually, he was beginning to build an empire of some of the most significant companies in the world.
When people began to notice just how successful he was becoming, they all wanted to own a share in his empire, so he was getting more and more money to work with. He was also using this money to buy more and more quality shares and do more quality businesses. He was doing this in the most exceptional capitalist economy, the US. Warren Buffet was destined for greatness, and those who were lucky enough to find him early made it big. This is an idea of success. If any investor that invested in Berkshire Hathaway kept a $10,000 investment till now, it would be worth over 500 million dollars.
Berkshire Hathaway is still run by Warren Buffet, even at 89 years of age, and he owns some of the most significant companies in the world. The total valuation of these companies is around 500 billion USD.
Conclusion:
All these achievements Warren Buffet made were just over a while and through prudent investments. So why not start making your investments today? Who knows if you are the next Warren Buffet in the making? No matter how little it is, put that money into investments, and with patience, you will be surprised at how much you will get over the years.
Recommended for further reading:
