Biography: Warren Buffett has amassed a considerable fortune in his lifetime and an almost impeccable reputation as an honest investor with great integrity. He is a modest tycoon who likes the fun of making money more than the money itself.
The short biography of Warren Buffett that follows charts the life of Warren Buffett and marks some of its defining moments.
Buffett studying with Graham at Columbia
Studying under investment guru Benjamin Graham while Warren Buffett was at Columbia Business School was a defining moment. It helped Warren consolidate his raw knowledge and develop his own investment philosophy based on Graham’s teachings. Graham was a pioneer of value investment. Buffett later worked for Graham after graduating from Columbia, and dubbed Benjamin Graham the second most influential person in his life, after his father.
Acquisition of Berkshire Hathaway
Warren Buffett acquired textile firm Berkshire Hathaway in 1965. This would become one of his worst investments, as the textile industry faded away. It would serve as an important lesson for Warren – ‘cigarette butt investing’ is dangerous, for the seemingly undervalued company may be forever in secular decline and thus never be able to recover. This lesson led Buffett to shift away from the strict value investing discipline taught by his teacher Graham, and instead adopt a slightly different approach that emphasized buying great businesses at reasonable prices. Buying only average businesses at cheap prices appears doomed to failure.
Any Warren Buffett bio will be remiss if it did not include Salomon, arguably one of the most important moments in Warren’s life. The Salomon bond-trading scandal received national television coverage and led to the near collapse of Salomon Brothers. Under the guise of one of its top traders, Solomon had been illegally manipulating the bid process for the purchase of U.S. government debt. As Berkshire was a major investor in Salomon, Warren Buffett stepped in as interim chairman and had to appease investors, clients and federal investigators. Despite the chaos, his handling of the situation and testimony before Congress affirmed his reputation as a business person who does first-class business in a first-class way.
Warren Buffett Apr 2011: Sokolgate
April 2011 marked an embarrassing moment for Berkshire Hathaway and Warren Buffett. Long seen as the top candidate to become Buffett’s successor, David Sokol was involved in an insider trading scandal involving Berkshire Hathaway’s acquisition of chemicals company Lubrizol. Sokol resigned from Berkshire Hathaway thereafter.