Warren Buffest - a billionaire who enjoys the simplicity of who has $ 58.6 billion on his account, but still buys things in ordinary stores, and those in which he is comfortable, after his words, I began to look differently at things and at everything, it's just that people who have money, they don't care what to wear, what to wear. And those who do not have them are chasing brands in order to show among the rich that they are wealthy.
A detailed article on life:
Warren Buffett was born on August 30, 1930 in Omaha, the largest city in Nebraska, the son of a stockbroker and politician Howard Buffett. He developed beyond his years: he learned to read early, already by school age knew the basics of mathematics, and grasped information on the fly, having a reputation in the city as a unique erudite boy. From childhood, he surprised his parents with the ability to multiply multi-digit numbers in his mind, and Buffett began to comprehend the ABC of financial art at the age of six. In 1936, for 25 cents, he bought a pack of Coca-Cola from his grandfather's store, and then sold each of the six bottles for 5 cents. Thus, the total revenue was 30 cents, and Buffett's profit was 5 cents: this is how the small businessman made his first profit.
Just five years later, young Warren Buffett began to take his first steps in the stock market. Thanks to his father, a broker, he had access to exchange information, which he decided to use. At 11, he acquired two shares of Cities Service, himself and his older sister, at $ 38 per share. Soon their price dropped to $ 27. The young speculator got nervous, but did not fix the shares. Warren Buffett waited until they began to grow and sold for $ 40 apiece. But that was a mistake: over the next few days, the price soared to $ 200. This, as Warren Buffett recalls, taught him patience, he realized that he needed to wait for the moment, and became a supporter of long-term investments.
Warren Buffest System Video:
After leaving the stock market for a while, Warren Buffett became the most successful press delivery man in his city by the age of 13. Having developed his own strategy, he improved the route, which allowed him to bypass many more addresses, and therefore, to make more money. Soon, his monthly income was equal to the salary of the director of the post office, and then doubled it. A year later, according to Buffett's recollections, his savings amounted to almost 1.5 thousand dollars, which he did not hesitate to invest by buying a land plot to be leased to local farmers.
After that, his attention shifted towards the gambling business. Buying broken and broken slot machines cheaply, Warren repaired them and then installed them in the most visited places - in shops, hairdressers, etc. He honestly shared the profits with the owners of these establishments, and $ 600 was added to his piggy bank every month.
When the time came for higher education, Warren Buffett, influenced by his parents, went to the University of Pennsylvania. However, he quickly got bored with his studies: the enterprising young man knew much more theoretical professors about business. A year later, he left his studies and returned to Nebraska, where he again took up the newspaper business, only now with the rank of head of the delivery department, and then co-owner of the office. The business made a profit, and gradually the eyes of the young entrepreneur turned to the stock market again. In addition to the fact that Buffett had his own funds, by that time he had already received his father's money at his disposal and immediately began to increase the family capital. In parallel with this, he graduated from the University of Nebraska. Investor's first steps
Nevertheless, after graduating from university, Buffett decided to study further. “I understood that I knew a lot and that I could at the level of personal abilities, but I also understood that additional knowledge would make me a superhuman, ” he recalls. In 1950, he tried to go to Harvard, but the university's admissions committee rejected his candidacy for being "too young." Then Buffett decided to go to Columbia University in Washington, where he was lectured by Benjamin Graham, who had a reputation as an investment business guru. He became a famous stock exchange player already in the 1920s, buying up undervalued stocks that no one else interested in, but suddenly, some time after Graham bought them, they began to dramatically increase in price. While the stock market was perceived by all traders as a game of luck, Graham considered it a science and diligently studied the balance sheets of the companies he was going to invest in.
Graham taught students to carefully analyze the financial statements of companies, not paying attention to their activities, and based on the information received, make decisions about investing money or selling shares. Graham, relying on his own experience, argued that funds should be invested not in those companies that are popular on the stock exchange today, but in those whose shares are sold cheaper than their real assets. Graham called them "cigar butts": the butt has already been thrown away, but a few puffs can still be taken.
But after listening to the entire course, young Buffett came to his own conclusion that it is necessary to do exactly the opposite: “What do I care about the company's reporting when I know that its assets are worth more than they are sold? You should not buy stocks, but the business behind them! " Using this principle, in the future, Warren was able to earn several times more than the entire fund of Mr. Graham.
Warren Buffett became the only person to receive the highest A grade from Graham. However, he did not recommend the student to work in the financial field. They did not agree on characters: upstart Buffett openly confronted Graham in lectures, and on the sidelines even ridiculed some of the teacher's ideas. However, after graduating from university, not wanting to part with his mentor, Warren told Graham that he was ready to work for him for free, but he refused. Buffett waved his hand, returned home, got married, started teaching at a local university, and then a miracle happened - Graham called himself. The financial guru changed his mind and invited Warren to work. In six years at his firm, Warren made a fortune of $ 140, 000 and decided to start his own business. Buffett realized that he was ready to "sail" on his own, and in 1957, returning to his native Omaha, he created his first investment partnership, Buffett Associates. He had to convince a number of entrepreneurs who believed in his talents, appointed Buffett general manager and handed over $ 25, 000 each. The initial capital of the company was 105 thousand dollars, after six months it tripled.
The main principle of Buffett's work is to invest money in the stocks of only those firms that are well-managed. Unlike Graham, he studied not only the balance sheets of enterprises, but also their corporate structure and the biographies of senior managers. Unlike another famous investor, George Soros, Buffett was leaning towards long-term investment. He invested only in those companies that, in his opinion, will remain on the market for a very, very long time. “Our favorite time to sell stocks is never, ” he often says. Such a simple strategy has brought and is still bringing amazing results. Over the five years that Buffett's company has existed, the firm's owned shares have risen 251%, while the Dow Jones has climbed only 74%. Five years later, Buffett's shares were already at 1156% more expensive, "Dow Jones" during this time was able to grow only by 122%. Climbing Buffett
This was Buffett's first success. The launch pad for the second, much larger, was laid in 1969, when the cost of Buffett Associates reached $ 102 million. Buffett unexpectedly dissolved the fund and sold all of its assets, but acquired a small textile company, The Berkshire Hathaway (BH), which was at that time in a prolonged crisis. Its shares were selling for $ 8 apiece, while the net asset value allowed them to be sold for $ 20. Only Buffett could assess this, who in three years bought out half of the shares. However, contrary to the expectations of other shareholders, he did not begin to develop textile production, and directed all the company's income to buying up securities. Just at this time, American insurance companies received huge tax breaks from legislators. Quickly assessing the future profitability of this business, Buffett gradually acquired the ownership of the five largest insurance firms in America and guessed right. As a result, when he was barely over forty, he became the owner of a 28 billion fortune.
Following his principle, he gradually acquired large stakes in "good companies." According to the Business Week magazine, the value of Coca-Cola shares, bought by Buffett for $ 1.3 billion, now stands at $ 13.4 billion, the Gillette stake owned by BH has risen in price from $ 600 million to $ 4.6 billion. And the $ 11 million spent on The Washington Post has now turned into $ 1 billion.
Nobody can explain how Buffett managed to guess in each specific case. But the main principle that underlies his success is well known - Buffett never speculated in shares. He, as analysts say, "invested firmly." Billionaire without manners
Buffett's name, like the names of all rich people, is shrouded in myths and legends. Countless magazine articles have been written about him, and many books have been devoted to the history of his success. He lives in an old house located in his native provincial town of Omaha. To all other vehicles, Buffett prefers an old Honda, which he bought for $ 700 on the secondary market 10 years ago. And the businessman himself does not look like a million dollars. His boots and suits are bought either from sales or from inexpensive middle-class stores. The only thing Buffett has in common with today's rich is his love of golf and a real passion for expensive sports jets. Buffett also doomed his descendants to a rather frugal life. According to the will, 99% of his fortune will pass into the ownership of various charitable foundations.
Buffett is eccentric, jokes a lot in public, and is known for his many sayings. The world press loves to publish his quotes. What is the only sarcastic phrase, thrown by him once after another deal criticized by the financial community: "If you are all so smart, then why am I so rich?" However, his speeches are not only food for journalists, but also a topic for reflection for stock speculators around the world. Each of his words and actions is carefully studied and analyzed. Even the slightest hint from an investment guru of someone's financial insolvency can bring down the stock market. For example, three years ago, speaking with a message to the shareholders of his company, Buffett mentioned the possible bankruptcy of a large organization operating in the reinsurance market. According to him, this company owed fabulous sums of billions of dollars to primary insurers, and practically stopped paying money under insurance contracts. Alarmed analysts quickly concluded that Buffett was referring to Germany's Gerling Global Re, the world's seventh-largest reinsurance company. Experts were seriously worried about its solvency, because after Buffett's announcement, the flow of clients to Gerling Global has dramatically dried up.
However, Buffett can not only bring down the shares of any company, but also significantly increase their value. To do this, he just needs to buy them. This happened with the advertising company Omnicom. The stock market reacted to the news that its shares were acquired by Warren Buffett himself with a significant increase in quotations of all American advertising giants.
Buffett's eccentricity is evident in his investment strategy. And this is a kind of conservative eccentricity. For example, Buffett invests only in those companies whose products he himself prefers. As noted, his portfolio includes large packages of Coca-Cola, Gillette, The Washington Post, American Express, McDonald’s and even Walt Disney. And this is no coincidence: according to journalists, the 75-year-old businessman starts his day with a glass of Coca-Cola, shaves with Gillette blades, reads The Washington Post at breakfast and pays for all this with an American Express card. His favorite cartoon is Disney's Duck Tales: their protagonist, millionaire Scrooge McDuck, likes to repeat the words attributed to Buffett himself: "A dollar saved is a dollar earned."
Buffett explains the absence of high-tech companies in the block of shares, which is strange for the present time, very simply: "I do not use their products, because I do not even have a computer." By the way, Buffett doesn't use a calculator either. He is able to calculate in his mind the most complex mathematical combinations and manipulate multi-digit numbers. Perhaps it is this ability of his that allows him to avoid the mistakes that stock market speculators “burn” on.
Five years ago, the business community of the planet was genuinely perplexed about Buffett's stubborn reluctance to invest in modern technology. Investors all over the world rubbed their hands gleefully, calculating multimillion-dollar profits, and laughed at the old-fashioned billionaire "who knows nothing about the new economy." Buffett just shrugged his shoulders and calmly repeated to his managers, “Everything is fine. Do your job. " After just two years, it was Buffett's turn to rejoice. The NASDAQ stock index, a key indicator of the development of the high-tech market, began to fall rapidly. Investors suffered colossal losses, and Buffett, who was contentedly watching the growth in the value of his own company, only shrugged his shoulders, repeating: "I warned you."
Warren Buffett's 10 Commandments:
Warren Buffett's first principle: Investing is to invest money today and get more money tomorrow.
Warren Buffett has always led a rather modest lifestyle: instead of living in expensive cottages and eating in restaurants, he invested every penny (that is, a cent) in stocks. For 35 years, he has increased the amount from 100 thousand dollars by 200, 000%.
Principle two: Only buy stocks of companies whose products you personally like.
For example, you like MTS cellular communications, the convenience of Sberbank ATMs or the service at the pharmacy 36, 6. At one time, Warren Buffett significantly increased his fortune by buying a 9% stake in the company that makes his favorite Gillette razor.
Principle three: Never invest in areas that you don't understand.
You can listen to the estimates and recommendations of analysts, as well as to the weather forecast, but you should not trust them 100%. That is why it is better to invest in the area that, in your personal opinion, is more understandable.
The fourth principle: Never stand on ceremony with unprofitable enterprises!
Or, more simply, with those that you don't like. If you bet on Mosenergo, but an energy crisis happened in winter and the company cannot cope with it, sell your shares and do not waste your nerves, and most importantly, money on an incomprehensible company.
Principle 5: Behind every rising stock is a successful business.
Which stocks have risen the most in the last 10 years in Russia? Oil and gas and gold mining. It's no secret that the word “oilman” in Russian is almost synonymous with the word “millionaire”. Commodities trading is undoubtedly a profitable and successful business, and therefore stocks are growing. In general, the price takes into account everything - says the well-known proverb of traders, and if everything is good in the company and incomes grow, then the shares are doomed to growth.
Sixth Principle: Invest in business with international networks.
Russian players have yet to test this principle in practice, since not all of them cooperate with foreign companies. Naturally, the top list includes the raw materials industry: oil, gas, metals.
Seventh Principle: There are winning stocks on the market and we need to find them.
As a rule, some companies always grow faster than others. For example, the shares of RAO UES of Russia have added more than 20% over the past month, while oil shares have stood still, because the world oil price has not grown. From which follows the following, the eighth rule of Warren Buffett.
Principle Eighth: If you use calculations, you will not necessarily reach the top, but do not go into madness.
Undoubtedly, there are special methods of market analysis, and it is necessary to use them: read news reports, watch company reports and charts of raw materials prices. Use analysis and you will break out of the general crowd of uneducated investors, and accordingly, your profits will increase.
Principle Nine: The most important thing is the history of companies.
Buffett likes to repeat this phrase a lot. From the master's point of view of finance, investors too often make the same mistake when looking in the rearview mirror. They try to assess the situation in the very short past, missing out on excellent opportunities. It is necessary to see the history of the development of the entire company, and not short-term events. Those who did not understand this principle burned out great on the memories of the 1998 crisis. While investors were crying about the lost profits, the market picked up speed on the rise in oil prices and the influx of foreign investment.
Tenth Principle: The ministry of the muses does not tolerate fuss.
I buy stocks and I don't care what happens to the market the next day, says Buffett. - However, it is not at all difficult to predict what will happen to the market in the long term. You can't argue with facts. Buffett is certainly right. For example, in recent years there have been ups and downs on the Russian market, but the market has grown 44 times from the 1998 lows.
The rules of doing business he formulated have become a kind of bible for the securities market. Several generations of traders have grown up with his books. Who is he? The richest investor in the world. In terms of his fortune, Warren Buffett is second only to Bill Gates.