Warren Buffett: The Man Behind the Money

Warren Edward Buffett was the middle child and only boy born to Howard (stockbroker turned Congressman), and Leila Stahl Buffett on August 30, 1930 in Omaha, Nebraska. He demonstrated at a very early age a great business sense and affinity to make money.

When he was just six years of age, Warren would go to his grandfather’s grocery store and purchase six-packs of Coca-Cola for twenty-five cents, he would resell them door-to-door for a nickel each. Making a five cent profit on each six-pack of drinks sold.

Five years later, he bought his first three shares of stock in Cities, now known as CITGO for thirty-eight dollars per share. Soon after his purchase, the stocks fell to twenty-seven dollars per share; however, he held them until they reached forty dollars and promptly sold them.

Warren filed is first income-tax return at the mere age of thirteen from his paper route earnings and claimed his two deductions:  his bicycle and watch. He created turmoil in his life at this time by receiving poor grades at school, hanging with the wrong crowd, running away from home and repeatedly stealing sporting goods from Sears. His father gave him an ultimatum – to straighten out or lose his paper route.

That stuck a major cord with him and he decided to listen to his father. The following year he purchased a forty-acre farm in Nebraska, hired a tenant farmer to work the land – all while attending his sophomore year of high school in Washington D.C.

After graduating high school, Warren had not planned to attend college. However, he conceded to his father’s pressings and enrolled in Wharton Business School at the University of Pennsylvania. He left two years complaining that he knew more than his professors did. When his father was defeated in the 1948 Congressional race, Warren transferred to the University of Nebraska-Lincoln. He managed to graduate in three years, while working full-time.

His father urged him to attend graduate school although he was again disinterested in furthering his education. He applied to Harvard where he was denied acceptance for “being too young.” Warren then applied to Columbia, where his investment idol Ben Graham taught. He began school there in 1950 and became lifelong friends with Graham.

At twenty-one, Warren began working as a stockbroker during the day at the same time attended a public speaking course at Dale Carnagie to get over his fear of public speaking. He felt confident enough to begin teaching a night class at the Universiy of Nebraska-Lincoln, "Investment Principles," where most of the students he taught was more than twice his own.

In 1953 he married Susan "Susie" Thompson and had thier first child the following year, Susan Alice Buffett.

Three years later, Ben Graham offered a job to Warren at his partnership with a starting salary of $12,000 per year. He was finally given the opportunity that he waited for for a long time. The couple then moved to New York and bought a home in the suburbs.

In 1956 after working for Graham for two years, Graham retired and closed his partnership. At this time Warren had a personal savings of over $140,000. The couple then returned to Omaha where he created Buffett Partnership Ltd.

The next year Warren now twenty-seven had started two new partnerships and purchased a modest five-bedroom home in Omaha, where he still resides, for $31,500.

In 1962 Warren became a millionaire because of his partnerships having an excess of $7,178,500 of which just over one million belonged to him. He then merged all of his partnerships into one and discovered then purchased Berkshire Hathaway, a textile manufacturer.

He then distributed shares of Berkshire Hathaway that was losing money at the time. Warren began changing the direction of the capital of the company away from operations to banking and insurance and has profited up until this present day. Berkshire Hathaway now owns over 65 companies and has generated a twenty-two percent compounded annual growth, skyrocketing a $7 per share stock into a $110,000 per share that has never split.

Warren and his wife were married for over fifty years. However, it was not a conventional marriage, they separated in 1977 although they still attended social functions as husband and wife.

He claims her leaving was "totally his fault and shouldn't have happened." Warren's drive cost him his marriage and blames no one but himself.

He lived in Omaha with his paramour Astrid Menks, whom his wife introduced him to. Although Susan lived in San Francisco, she sat on the Board of Directors of Berkshire Hathoway as a major stockolder until her death in 2004.

He believes that the rich in the US pay too little taxes and the poor and middle class pay too much in taxes. He is the richest man in the world and has no tax advisors, attorneys, etc. and pays 17.7% from his payroll and net worth in taxes. His staff members from receptionist on up pay an average of 33.9% in taxes.

It is no secret that the majority of his wealth will be given to charity when he dies. His children will not inherit the mass fortune he has built according to Warren. Just because they happen to have been born into the right family does not give them the privilege.

What is next for this stockbroker, frugal mogul, philanthropist...a seat somewhere in politics? You can almost bet that the next page he turns of his life will be a success.