Warren Buffett, the 78 year old American businessman and philanthropist, who had received a master’s degree in economics at the Columbia University in 1951, is one of the worlds most successful investors, who became a straight up billionaire. He didn’t make his success by founding a company, making a massive invention, nor by investing a penny in technology companies, and yet, the billions of dollars that he’s made over his successful career, all were made on the stock market.
In 1962, Buffett discovered a textile manufacturing firm, Berkshire Hathaway. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships aggressively began purchasing Berkshire, they paid $14.86 per share while the company had working capital of $19 per share.
In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million and in 1979, Berkshire began to acquire stock in ABC. With the stock trading at $290 per share, Buffett's net worth neared $140 million. However, he lived solely on his salary of $50,000 per year. Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.
In 2008, Buffett became the richest man in the world, worth $62 billion according to Forbes and $58 billion according to Yahoo. Bill Gates had been number 1 on the Forbes list for 13 consecutive years.
Working at Berkshire Hathaway Inc., Warren Buffett had a rather disappointing year in 2008. The company Buffett built into a financial powerhouse since 1965, lost 9.6 percent of its book value in 2008, he reported. That's a paper loss of $11.5 billion, the most ever and only the second decline in book value in Berkshire history. The market price of Berkshire stock, partly a measure of investor confidence, is about half of what it was at its peak.
With his worst year behind him, Warren Buffett is looking unflinchingly at 2009 as another difficult year, but one offering rare opportunities to make profit. Although this crisis is definitely not over yet, their insurance and utility businesses prospered and shows "excellent prospects" for the upcoming year.
"Warren Buffett has positioned his company to take advantage," said Stephen Lococo, a principal in the Omaha investment company Footprints Asset Management. "It takes the hits like everyone else, but it also has the cash flow to reinvest. He's got the cash flow to buy these incredible bargains. I would not predict where his stock price will go."
Berkshire's recent investments totaling $14.5 billion in Goldman Sachs, General Electric and Wrigley should add about $1.5 billion, before taxes, to annual earnings and give Berkshire a chance to profit from stock in the companies, too.
Warren Buffett is such a successful billionaire, and realizes that a company can make it due to the huge amount of money that is daily exchanged on the stock markets. He knows exactly when to buy or to sell, and yet, even this stock market “guru” has suffered in 2008. It was a year with more down’s than up’s. His company, Berkshire Hathaway Inc., had failed in Buffett’s eyes last year, but he is planning on leaving that behind him.
He said that by putting his worst year in the rearview mirror, he can concentrate on the upcoming year, which he claims to be full of opportunities. Buffett often gives conferences and statements on investment and managing a company. His annual shareholders meeting is not only being attended by investors, but also by people who want to learn about investing and how they should manage their company.
He made his company so successful, it would take you a while to find out how many times he doubled the worth of his company’s share.
Sources:
· http://www.omaha.com/index.php?u_page=1208&u_sid=10575905
· http://en.wikipedia.org/wiki/Warren_Buffett
· http://www.warrenbuffett.nl/
Written by Tom Baeyens,
Student at Artevelde College
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