The finance sector is a fast-paced, ever-changing industry dominated by influencers and thought leaders. While many people ‘make it’ on a small scale, others leave a much more lasting impression. This Medium series from content marketing agency Contentworks will look at the most influential people in finance including what they’ve achieved and why they’re at the top of their game.
This article focuses on Warren Buffett.
“Oracle of Omaha”
Known as the “Oracle of Omaha,” Warren Buffett is one of the most influential, publicised and successful value investors of all time with a net worth of $81.9 billion at the time of writing. As #16 on the World’s Most Powerful People 2019 listed by Forbes, Buffett runs Berkshire Hathaway, a holding company headquartered in Omaha which owns more than 60 businesses including insurer Geico, battery maker Duracell, Dairy Queen, Pampered Chef, Fruit of the Loom and more.
Buffett became controlling shareholder of Berkshire Hathaway in the mid-1960s and went on to develop an effective strategy which diverted cash flows from the core business into other investments. As of March 2019, the company had a market capitalisation of $500 billion. This makes it one of the largest publicly traded companies in the world. Indeed, the overall return of Berkshire Hathaway’s stock from 1965 to 2018 came in at 2,472,627% in comparison to the S&P 500 which returned just over 15,000%.
Buffet’s aptitude for business has played a huge role in the success of Berkshire Hathaway. He focused largely on choosing stock pick investments that could be held over a long period using a “float” from his insurance subsidies to invest elsewhere. Interestingly, Buffet is well-known for avoiding the ‘diverse portfolio’ approach in favour of a few trusted investments.
Business in his Blood
Warren Buffett was born with business in his blood purchasing his first stock when he was just 11 years old and working in his family’s Ohama-based grocery store. As the son of a small brokerage owner, he spent his early days watching the moves of investors and went on to pursue a fruitful education gaining a Degree in Business from the University of Nebraska.
After being rejected from Harvard, he then studied under renowned investor and well-known securities analyst Benjamin Graham. It was at this time he learnt the fundamental principles of value investing — buying stock considered undervalued by the market and selling it for profit. Discovering how to ferret out stocks that appeared to be trading less than their intrinsic or book value and using financial analysis to fuel long-term trading strategies helped Warren to dominate the finance sector.
Smart Moves During the Financial Crisis
Buffett is a smart investor. He also responded to economical developments and public sentiment in a way that has grown his fortune significantly. During the Great Recession — a sharp decline in economic activity in the late 2000s — Buffett tossed lifelines to numerous struggling companies with the payoff on those deals resulting in a huge profit. A loan to Mars Inc. for example, resulted in a $680 million profit.
Forbes Richest Americans
Buffett is #3 on the Forbes Richest Americans list behind Jeff Bezos and Bill Gates. Interestingly, he wasn’t added to the list until 1985 due to quiet living and not shouting about his achievements. By this time, he was already a billionaire.
Buffett/Gates Giving Pledge
Warren Buffett may be an incredibly rich man. But he’s pledged to give away 99% of his fortune. In 2019, he donated $3.6 billion, with a majority going to the foundation of friends Bill and Melinda Gates. What’s more, in 2010, Buffett and Gates launched the Giving Pledge initiative which encourages billionaires to donate half their wealth to charitable causes.
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