Claire Obusan, 03.16.10, 06:00 PM EDT
How the Oracle of Omaha went from being a stockbroker to one of the world’s richest people.
Warren Buffett is the third-richest man in the world with a net worth of $47 billion.
Origins
Warren Edward Buffett was born in Omaha, Neb., on Aug. 30, 1930, the second of three children of Leila Stahl Buffett and Nebraskan politician and businessman Howard Buffett.
Even as a child, Buffett was already devising ways to make money. He delivered newspapers as a boy, worked at his grandfather’s store and sold gum, Coca-Cola and weeklies door-to-door. At age 10 his father took him to New York as a birthday gift; the young investor asked to visit the New York Stock Exchange. He filed his first tax return at age 13, claiming a $35 deduction for his bicycle.
Buffett earned his bachelor’s degree from University of Nebraska-Lincoln, and later went to Columbia Business School to study under value investing guru Benjamin Graham, the father of modern securities analysis. Buffett learned to hunt for undervalued stocks using Graham’s three principles, which he has applied throughout his career: buying a business not a stock; ignoring the fluctuations of the stock market; and maintaining a margin of safety. Buffett originally wanted to work in Wall Street after graduation, but his father and Graham convinced him not to.
How He Made His Billions
The Oracle of Omaha became the world’s richest man in 2008, eclipsing fellow billionaire and friend, Bill Gates, who had held the top spot on the Forbes list of the World’s Billionaires for more than a decade. These days Buffett holds the No. 3 spot on the list, commanding a $47 billion net worth.
Buffett began purchasing shares in textile firm Berkshire Hathaway ( BRK – news – people ) in 1962 before buying a controlling stake in 1965. Over the next 45 years he used Berkshire Hathaway as a vehicle to invest in insurance (GEICO), food (Dairy Queen), utilities (MidAmerican Energy ( MDPWL.PK – news – people )), green tech (electric-car maker BYD).
Today Berkshire Hathaway also owns non-controlling stakes in companies like Coca-Cola ( KO – news – people ), Kraft and Wells Fargo ( WFC – news – people ). Buffett shrewdly invested $5 billion in Goldman Sachs ( GS – news – people ) and $3 billion in General Electric ( GE – news – people ) amid the 2008 market collapse and recently acquired railroad giant Burlington Northern Santa Fe ( BNI – news – people ) for $26 billion, Berkshire’s largest acquisition to date.
Buffett’s Billionaire Network
Buffett met friend and occasional bridge partner Bill Gates at a Fourth of July party in 1991, where they were introduced by a mutual friend. Both men were initially reluctant about the meeting, concerned that they would not have anything in common. But they immediately hit it off. They have since made numerous public appearances together, including town halls at Buffett’s alma maters. Buffett has also irrevocably pledged the majority of his fortune to Gates’ philanthropic foundation.
Buffett met his right-hand man and Berkshire Hathaway vice-chairman, Charlie Munger, at a dinner party in 1959. Though Munger’s gruff personality contrasts with Buffett’s folksy manner, he is Buffett’s sounding board: “If we ask Charlie something and he says ‘no,’ then we put all of our money in it. If he says, “that’s the stupidest thing I’ve ever heard,” then we make a more modest investment.” A few years ago Munger convinced Buffett to invest in Chinese electric carmaker BYD. Their original $232 million investment is now worth close to $2 billion.
Philanthropy
In 2006 Buffett announced he had irrevocably earmarked the majority of his Berkshire Hathaway shares to charity, with most of the money to the Bill & Melinda Gates Foundation. The gift was valued at $31 billion on the day of the announcement and remains one of the largest charitable donations in history.
Passions And Hobbies
Despite his extraordinary wealth, Buffett is well-known for his frugality. He has lived in the same five-bedroom stucco house in Omaha since 1958, when he purchased the property for $31,500. He reportedly carries no cellphone, does not have a computer on his desk, does not have a chauffeur (he drives a 2006 Cadillac DTS) and does not travel with an entourage. The most legendary investor of all time also has a fondness for hamburgers, fries and Cherry Coke. Buffett is also an avid bridge player.
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