KEY POINTS
- The sage of Omaha's insights on investing and business have gained legendary status
- The Berkshire Hathaway CEO earns a modest annual salary of $100,000
- Buffett's portfolio includes stakes in Apple, Coca-Cola, American Express, and Bank of America
Warren Buffett is considered one of the best investors of all time. The legendary businessman's clever investment decisions and his ability to turn modest creations into extraordinary wealth have solidified his position among the richest in the world.
The American philanthropist, who bought his first stock at the age of 11, was ending the year 2023 with a net worth of $118.2 billion, according to the latest data from Forbes.
Buffet has spent decades buying stocks and shareholdings via his conglomerate Berkshire Hathaway, a former struggling textile company he took over in his thirties. The 93-year-old's influence is such that his annual letters to shareholders and his insights on investing and business have gained legendary status in the world of investments.
Warren Buffett's 2023 net worth
Buffett, who is currently worth $118.2 billion, has consistently ranked among the wealthiest individuals globally, and has shared space on elite lists, including the Forbes Billionaires Index and the Bloomberg Billionaires Index.
For a person of his stature, the CEO of Berkshire Hathaway famously earns a modest salary. Buffett's annual salary of $100,000 per year is a pittance compared to many other corporate executives or CEOs of major companies, in which Berkshire Hathaway has investments.
Buffett proclaimed he doesn't believe in excessive executive compensation and that his wealth comes primarily from his holdings in Berkshire Hathaway and his successful investments rather than from a high salary. The exemplary focus of his investment journey has been on increasing the value of Berkshire Hathaway for shareholders rather than taking home a substantial salary.
Journey to glory
Buffett's journey to success is a testament to his exceptional investing prowess, disciplined approach, and lifelong commitment to learning. Buffett showed an early interest in business and investing, avidly studying finance and investment books.
As a protege of Benjamin Graham at Columbia Business School, he absorbed the principles of value investing. Graham's teachings profoundly influenced Buffett's investment philosophy.
In the 1950s, Buffett formed various investment partnerships and made successful investments. In 1962, he began accumulating shares in Berkshire Hathaway, eventually taking control of the struggling textile company. He then transformed the company into a diversified powerhouse with interests in insurance, utilities, railroads, manufacturing and retail.
Identifying undervalued companies with strong fundamentals and durable competitive advantages is Buffett's niche. He sought businesses with solid management and a competitive edge, while maintaining a long-term perspective.
Under Buffett's leadership and adept capital allocation skills, Berkshire Hathaway evolved from a textile company into a diverse conglomerate. He drove its expansion and success with patience and discipline in holding onto investments for the long term. His contrarian line of thought can be summed up from his famous advice: "be fearful when others are greedy and greedy when others are fearful".
Buffett's close bond with Charlie Munger, who passed away recently, has been pivotal in the transformation of Berkshire Hathaway.
Buffett also proclaimed his commitment to philanthropy, through the Giving Pledge, via which he donated the majority of his wealth to charity, showcasing his dedication to giving back.
Business ventures
Berkshire Hathaway: Buffett's primary investment vehicle, Berkshire Hathaway, is the conglomerate's holding company. The 93-year-old, often referred to as the sage of Omaha due to his roots in the Nebraskan city, boosted Berkshire Hathaway's prospects with substantial holdings in well-known companies, which offered prized returns on investments. Berkshire Hathaway has acquired and invested in numerous companies across diverse sectors, including insurance (Geico), utilities (MidAmerican Energy, PacifiCorp), consumer goods (Dairy Queen, See's Candies), and more.
Stock investments: Renowned for his stock market investment prowess, Buffett's portfolio includes stakes in Apple, Coca-Cola, American Express, Bank of America, and his investment choices often align with his principles of long-term value investing.
Acquisitions: Berkshire Hathaway has acquired significant stakes or complete ownership of various companies over the years. The list includes companies such as Precision Castparts, Lubrizol, and Burlington Northern Santa Fe Corporation, which have diversified the company's holdings and contributed to its growth.
Insurance: Berkshire Hathaway's insurance subsidiaries, including Geico and General Re, have been crucial contributors to its profitability. Buffett's focus on insurance businesses has been a key strategy for generating a consistent cash flow.
Media: His firm holds substantial stakes in media companies, including the Washington Post Company, and has made investments in a string of media ventures, reflecting Buffett's interest in the industry.
Energy and Utilities: Through Berkshire Hathaway Energy, Buffett has channeled investments in multiple utility companies and renewable energy projects, underscoring his interest in the energy sector and sustainable investments.
Buffett's investments also extend to philanthropy, which includes a close relationship with the Bill and Melinda Gates Foundation, and his pledge to donate a significant portion of his wealth to charitable causes.
Investment approach
Buffett basically spots undervalued companies with strong fundamentals. He seeks businesses that are trading below their intrinsic value, believing that the market can misprice companies in the short term, presenting opportunities for long-term investors.
He also prefers companies with durable competitive advantages or economic moats. These are businesses with strong brands, high barriers to entry, or unique products/services that allow them to maintain their market position over time.
Buffett's emphasis is on investing in companies with trustworthy and competent management teams. He looks out for leaders with a track record of good capital allocation who prioritizes shareholder interests.
With a long-term investment horizon, Buffett often holds onto investments for years or even decades, allowing the power of compounding to maximize returns.
Buffett seeks a margin of safety when investing by buying stocks at a price significantly below intrinsic value. This acts as a cushion against unforeseen risks and market fluctuations.
Buffett prefers businesses that have straightforward, predictable models, a philosophy that often leads him to avoid investing in industries or companies he cannot comprehend.
A patient and disciplined approach means Buffett is not swayed by short-term market fluctuations or fads. He remains confident in his investments, even during market downturns.
Buffett also remains a voracious reader and lifelong learner, as he consistently seeks to expand his knowledge, staying updated on market trends and economic changes.
