A holding company for a multitude of businesses, Berkshire Hathaway is one of the most successful companies in the world. As of March 2019, it has a market capitalization value of $500 billion! Measured by revenues, Berkshire Hathaway is the largest corporation in the USA. So, who is the man behind this massive success? Well, everyone knows him, Warren Buffet. Warren is a self-made billionaire and is one of the most respected men in the business world. The legendary investor is the current chairman and CEO of Berkshire Hathaway. Just walkthrough this Warren’s life story and you’ll find how he took Berkshire Hathaway to the next level!
Early Life of Warren Buffet
Warren Buffet was born in 1930 in Omaha. His father was a Congressman and a businessman too. He got his basic education from Rose Hill Elementary School and Alice Deal Junior High School. From his childhood, he loved business. From the beginning, he loved stock marketing and trading, which helped him save money. Like many other famous people, his childhood was pretty tough. He used to sell cold drinks and chewing gums from door to door. Warren Buffet also sold newspapers and worked in grocery stores.
Life before Berkshire Hathaway
In 1951, Warren Buffett got his Master’s degree in Economics from Columbia University. During this time, he studied under Benjamin Graham, the economist. In 1949, Graham wrote the book “The Intelligent Investor”. Warren Buffett was so influenced by this book and his interest in investment further increased. Therefore, he decided to work as a security analyst at Graham-Newman Corp from 1954 to 1956. He also worked at Buffett-Falk & Co as an investment salesman for two years.
Warren Buffet Joining Berkshire Hathaway
The time which Warren Buffett spent with Benjamin Graham proved to be quite fruitful for him. He knew a lot about business investment during this period and gained experience as well. Berkshire was initially a textile manufacturing company known as the Valley Falls Company. It was founded by Oliver Chase in 1839 and in 1929, it merged with Berkshire Cotton Manufacturing Company. In 1955, Hathaway Manufacturing Company also joined this company.
After noticing a pattern in the price direction of its stock, Warren Buffet decided to buy stock in Berkshire Hathaway in 1962. At that time, the company’s financial situation was not that good and the textile business was also waning. But Buffett still decided to invest, knowing that he can lift the company through his ideas.
Steps towards the Success of Berkshire Hathaway
Warren Buffett consistently worked hard and implemented his plans efficiently. Through his smart techniques, Berkshire Hathaway slowly gained momentum. Initially, Buffett maintained the textile business of Berkshire but in 1967, he expanded into the insurance industry and other investments. One reason for the success of Berkshire Hathaway is Buffett’s basic principle, elementary probability. This principle was the core of his investing philosophy. Even though the capital with which Buffett was working was growing at an average of 19.5%, he found new ways to earn that average 19.5% ROE. After taking control of Berkshire Hathaway, Buffett operated a property and casualty insurance operation. As this operation was unique and different from other insurance companies, it took Berkshire Hathaway to the next level. Due to Buffett’s smart plans, Berkshire Hathaway generated an annualized 20.5% from 1965 to 2019.
Berkshire Hathaway Today
Today, Berkshire is the 5th largest company in the S&P 500 Index by market capitalization. It has the most expensive share price in history with Class A shares, costing around $340,000 each. It is currently the largest publicly traded company in the world, having a market capitalization of $500 billion. Warren Buffett once said,
“To build a reputation, it takes 20 years while ruining it only takes 5 minutes. You’ll do things differently if you think about that.”
Warren Buffett’s story is a motivation for all of us. It teaches us that if you do hard work and maintain that passion, you can achieve your goals. Warren Buffet followed his passion from childhood, which was business and investment in the share market. He used to save money from childhood which helped him in the future to invest.