A Titan of Investing
At our meeting in Naperville last night, someone raised an interesting question about Berkshire Hathaway, and when it was that Warren Buffett bought the company. So I did some research today, and found these interesting details.
It's nearly impossible to avoid hyperbole when discussing Warren Buffett's success as an investor. He bought his first share of stock at age 11. By age 14, he had saved his paper-route money and purchased 40 acres of Nebraska farmland. In college, he discovered the concept of "value investing" (which is a method of seeking-out overlooked companies whose stock was undervalued) which he then developed into a precise science. In 1957, Buffett started his first investment partnership, whose goal was to beat the Dow-Jones Industrial Average by an average of 10 percent a year. By 1969, Buffett's investments had returned a compounded rate of 29.5 percent a year, compared to 7.4 percent for the Dow.
Berkshire Hathaway, Inc., the company Buffett now heads, began as a 19th century textile mill in Bedford, Massachusetts. Buffett began buying shares of Berkshire stock in 1962, at less than $8 per share. As of this writing, a single share of Berkshire Hathaway Class A stock trades for $89,500. And this stock has never split.
Buffett owes his success to a combination of simple, homespun wisdom (eg. "Never invest in a business you cannot understand.") and savvy, decisionmaking. Before investing in a company, he pores over annual reports, tirelessly reading columns of numbers until he is sure he knows exactly where the company stands financially. He prefers buying companies outright to owning shares, and Berkshire's subsidiaries include GEICO Direct, Fruit of the Loom and Dairy Queen.
Buffett's annual letter to Berkshire shareholders is a much-anticipated event. Past letters have addressed individual companies' strengths and weaknesses; more recently he has directed criticism at corporate governance and the scandals within the mutual fund industry.
Whatever his topic, Buffett writes with absolute clarity. His avoidance of technical jargon is commendable, and he discusses his company's performance with blunt honesty, in both good times and bad. As the world's most successful investor, Warren Buffett should be an inspiration to us all!
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It's nearly impossible to avoid hyperbole when discussing Warren Buffett's success as an investor. He bought his first share of stock at age 11. By age 14, he had saved his paper-route money and purchased 40 acres of Nebraska farmland. In college, he discovered the concept of "value investing" (which is a method of seeking-out overlooked companies whose stock was undervalued) which he then developed into a precise science. In 1957, Buffett started his first investment partnership, whose goal was to beat the Dow-Jones Industrial Average by an average of 10 percent a year. By 1969, Buffett's investments had returned a compounded rate of 29.5 percent a year, compared to 7.4 percent for the Dow.
Berkshire Hathaway, Inc., the company Buffett now heads, began as a 19th century textile mill in Bedford, Massachusetts. Buffett began buying shares of Berkshire stock in 1962, at less than $8 per share. As of this writing, a single share of Berkshire Hathaway Class A stock trades for $89,500. And this stock has never split.
Buffett owes his success to a combination of simple, homespun wisdom (eg. "Never invest in a business you cannot understand.") and savvy, decisionmaking. Before investing in a company, he pores over annual reports, tirelessly reading columns of numbers until he is sure he knows exactly where the company stands financially. He prefers buying companies outright to owning shares, and Berkshire's subsidiaries include GEICO Direct, Fruit of the Loom and Dairy Queen.
Buffett's annual letter to Berkshire shareholders is a much-anticipated event. Past letters have addressed individual companies' strengths and weaknesses; more recently he has directed criticism at corporate governance and the scandals within the mutual fund industry.
Whatever his topic, Buffett writes with absolute clarity. His avoidance of technical jargon is commendable, and he discusses his company's performance with blunt honesty, in both good times and bad. As the world's most successful investor, Warren Buffett should be an inspiration to us all!
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posted by Bob Moser at
5:26 PM
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