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Warren Buffett

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Warren Buffett
Born
(1930-08-30) August 30, 1930 (age 94)
Omaha, Nebraska
NationalityAmerican
Alma materUniversity of Pennsylvania
University of Nebraska–Lincoln
Columbia University
Occupation(s)Chairman & CEO, Berkshire Hathaway
Spouse(s)Susan Buffett (1952–2004) (her death),
Astrid Menks (2006–)[1]
ChildrenSusie Buffett,
Howard Graham Buffett,
Peter Buffett

Warren Edward Buffett (born August 30, 1930 in Omaha, Nebraska, United States) is an American investor, businessman, and philanthropist. He is one of the world's most successful investors, the largest shareholder and CEO of Berkshire Hathaway,[4] and is consistently ranked by Forbes as the second richest person in the world after Bill Gates with an estimated net worth of approximately $37.0 billion.[5]

Buffett is often called the "Oracle of Omaha"[6] or the "Sage of Omaha"[7]and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.[8]

Buffett is also a notable philanthropist, having pledged to give away 85% of his fortune to the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College.[9]

In 1999, Buffett was named the top money manager of the twentieth century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton,[10] and in 2007, he was listed among Time's 100 Most Influential People in the world.[11]

Biography

Early life

Warren Buffett was born in Omaha, Nebraska on August 30, 1930, the son of Howard Buffett. He worked at his grandfather's grocery store. In 1943, Buffett filed his first income tax return, deducting his bicycle and watch as a work expense for $35 for his work as newspaper delivery boy.[12] After his father was elected to Congress, Buffett was educated at Woodrow Wilson High School, Washington, D.C., where he graduated in 1947.[13] In 1945, in his freshman year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in a barber shop. Within months, they owned three machines in different locations.

Buffett first enrolled at The Wharton School, University of Pennsylvania, (1947–1949) where he joined the Alpha Sigma Phi Fraternity. His father and uncles were Alpha Sigma Phi brothers from the chapter in Nebraska. In 1950 he transferred to the University of Nebraska where he received a B.S. in Economics.[14]

Buffett then enrolled at Columbia Business School after learning that Benjamin Graham, (the author of The Intelligent Investor), and David Dodd, two well-known securities analysts, taught there. He then received a M.S. in Economics, Columbia University, in 1951.

In Buffett’s own words:

I’m 15 percent Fisher and 85 percent Benjamin Graham.[15]

The basic ideas of investing are to look at stocks as business, use the market's fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.[16]

Career

Buffett was employed from 1951–1954 at Buffett-Falk & Co., Omaha as an Investment Salesman, from 1954–1956 at Graham-Newman Corp., New York as a Securities Analyst, from 1956–1969 at Buffett Partnership, Ltd., Omaha as a General Partner and from 1970–Present at Berkshire Hathaway Inc, Omaha as its Chairman, CEO.

In 1951, Buffett discovered Graham was on the board of GEICO insurance. Taking a train to Washington, D.C. on a Saturday, he knocked on the door of GEICO's headquarters until a janitor allowed him in. There he met Lorimer Davidson, Geico's Vice President, and the two discussed the insurance business for hours. Davidson would eventually become Buffett's life-long friend and a lasting influence [17] and later recall that he found Buffett to be an “extraordinary man” after only fifteen minutes. Buffett graduated from Columbia and wanted to work on Wall Street however both his father and Ben Graham urged him not to. He offered to work for Graham for free, but Graham refused.[18]

Buffett returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public speaking course. Using what he learned, he felt confident enough to teach an "Investment Principles" night class at the University of Nebraska. The average age of his students was more than twice his own. During this time he also purchased a Sinclair Texaco gas station as a side investment however it did not turn out to be a successful business venture.

In 1952 Buffett married Susan Thompson and the next year they had their first child, Susan Alice Buffett. In 1954, Buffett accepted a job at Benjamin Graham's partnership. His starting salary was $12,000 a year. Here, he worked closely with Walter Schloss. Graham was a tough man to work for. He was adamant that stocks provide a wide margin of safety after weighting the trade-off between their price and their intrinsic value. The argument made sense to Buffett but he questioned whether the criteria were too stringent and caused the company to miss out on big winners that had more qualitative values.[18] This same year the Buffetts had their second child, Howard Graham Buffett. In 1956, Benjamin Graham retired and closed his partnership. At this time Buffett's personal savings were over $140,000 and he started Buffett Partnership Ltd., an investment partnership in Omaha.

In 1957, Buffett had three partnerships operating the entire year. He purchased a five-bedroom stucco house in Omaha, where he still lives, for $31,500. In 1958 the Buffett's third child, Peter Andrew Buffett, was born. Buffett operated five partnerships the entire year. In 1959, the company grew to six partnerships operating the entire year and Buffett was introduced to Charlie Munger. By 1960, Buffett had seven partnerships operating: Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff and Underwood. He asked one of his partners, a doctor, to find ten other doctors willing to invest $10,000 each in his partnership. Eventually eleven agreed. In 1961, Buffett revealed that Sanborn Map Company accounted for 35% of the partnership's assets. He explained that in 1958 Sanborn stock sold at only $45 per share when the value of the Sanborn investment portfolio was $65 per share. This meant that buyers valued Sanborn stock at "minus $20" per share and were unwilling to pay more than 70 cents on the dollar for an investment portfolio with a map business thrown in for nothing. This earned him a spot on the board of Sanborn.

Becoming a millionaire

In 1962, Buffett became a millionaire, because of Buffett's partnerships, which in January 1962, had in excess of $7,178,500, of which over $1,025,000 belonged to Buffett. Buffett merged all partnerships into one partnership. 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 (current assets minus current liabilities) of $19 per share. This did not include the value of fixed assets (factory and equipment). Buffett took control of Berkshire Hathaway at the board meeting and named a new president, Ken Chace, to run the company. In 1966, Buffett closed the partnership to new money. Buffett wrote in his letter:

unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL.

In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn and Co, a privately owned Baltimore department store. In 1967, Berkshire paid out its first and only dividend of 10 cents. In 1969, following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway. In 1970, as chairman of Berkshire Hathaway, Buffett began writing his now-famous annual letters to shareholders.

However, he lived solely on his salary of $50,000 per year, and his outside investment income. In 1979, 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 2006, Buffett announced in June that he gradually would give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006. The largest contribution would go to the Bill and Melinda Gates Foundation.[19]

In 2007, in a letter to shareholders, Buffett announced that he was looking for a younger successor, or perhaps successors, to run his investment business.[20] Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.

In 2008, Buffett became the richest man in the world dethroning Bill Gates, worth $62 billion according to Forbes,[21] and $58 billion according to Yahoo.[22] Bill Gates had been number 1 on the Forbes list for 13 consecutive years.[23]

Business

Acquisitions

See also: List of assets owned by Berkshire Hathaway

In 1973, Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors.

In 1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's acquisition of WESCO, due to possible conflict of interest. No charges were brought.

In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million. Antitrust charges started, instigated by its rival, the Buffalo Courier-Express. Both papers lost money, until the Courier-Express folded in 1982.

In 1979, Berkshire began to acquire stock in ABC. Capital Cities' announced $3.5 billion purchase of ABC on March 18, 1985, surprising the media industry, as ABC was some four times bigger than Capital Cities was at the time. Berkshire Hathaway chairman Warren Buffett helped financed the deal in return for a 25 percent stake in the combined company.[24] The newly merged company, known as Capital Cities/ABC (or CapCities/ABC), was forced to sell off some stations due to FCC ownership rules. Also, the two companies owned several radio stations in the same markets. [25]

In 1987, Berkshire Hathaway purchased 12% stake in Salomon Inc., making it the largest shareholder and Buffett the director. In 1990, a scandal involving John Gutfreund (former CEO of Salomon Brothers) surfaced. A rogue trader, Paul Mozer, was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader. Gutfreund left the company in August 1991.[26] Buffett became CEO of Salomon until the crisis passed; on September 4 1991, he testified before Congress.[27]

In 1988, Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7 percent of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which it still holds. In 2002, Buffett entered in $11 billion worth of forward contracts to deliver U.S. dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion.

In 1998, he acquired General Re, (in a rare move, for stock). In 2002, Buffett became involved with Maurice R. Greenberg at AIG, with General Re providing reinsurance. On March 15, 2005, AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism from Eliot Spitzer, attorney general of the state of New York. On February 9, 2006, AIG and the New York State Attorney General's office agreed to a settlement in which AIG would pay a fine of $1.6 billion.[28]

In 2009, Warren Buffett invested $2.6 billion as a part of Swiss Re's raising equity captal.[29][30] Berkshire Hathaway already owns a 3% stake, with rights to own more than 20%.[31]

Late 2000s recession

Buffett ran into criticism[32] during the subprime crisis of 2007–2008, part of the late 2000s recession, that he has allocated capital too early resulting in suboptimal deals.

Buffett has called the 2007—present downturn in the financial sector "poetic justice".[33]

Buffett's Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008 and several of his recent deals appear to be running into large mark-to-market losses.[34]

Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs[35]. Some of Buffett's Index put options (European exercise at expiry only) that he wrote (sold) are currently running around $6.73 billion mark-to-market losses.[36] The scale of the potential loss prompted the SEC to demand that Berkshire produce, "a more robust disclosure" of factors used to value the contracts.[36]

Buffett also helped Dow Chemical pay for its $18.8 billion takeover of Rohm & Haas. He thus became the single largest shareholder in the enlarged group with his Berkshire Hathaway, which provided $3 billion, underlining his instrumental role during the current crisis in debt and equity markets.[37]

In October 2008, the media reported that Warren Buffett had agreed to buy General Electric (GE) preferred stock.[38] The operation included extra special incentives: he received an option to buy 3 billion GE at $22.25 in the next five years, and also received a 10% dividend (callable within three years). In February 2009, Warren Buffett sold part of Procter & Gamble Co, and Johnson & Johnson shares from his portfolio.[39]

Some have claimed that there is a financial incentive for Berkshire Hathaway to keep the myth that Buffett is an “oracle” alive and that the company is dependent on the Warren Buffett myth: that exaggerated sense of comfort investors share when it comes to Buffett’s beliefs and recommendations.[40] In addition to suggestions of mistiming, questions have been raised as to the wisdom in keeping some of Berkshire's major holdings, including The Coca-Cola Company (NYSE:KO) which in 1998 peaked at $86. Buffett discussed the difficulties of knowing when to sell in the company's 2004 annual report: "That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it’s the windshield through which investors must peer, and that glass is invariably fogged."[41] In March 2009, Buffett stated in a cable television interview that the economy had "fallen off a cliff... Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen." Additionally, Buffett fears we may revisit a 1970s level of inflation, which led to a painful stagflation that lasted many years.[42][43]

Personal life

Buffett married Susan Thompson in 1952. They had three children, Susie, Howard, and Peter. The couple began living separately in 1977, although they remained married until her death in July 2004. Their daughter Susie lives in Omaha and does charitable work through the Susan A. Buffett Foundation and is a national board member of Girls, Inc. In 2006, on his seventy-sixth birthday, he married his never-married longtime-companion, Astrid Menks, who was then sixty years old. She had lived with him since his wife's departure in 1977 to San Francisco.[44] It was Susan Buffett who arranged for the two to meet before she left Omaha to pursue her singing career. All three were close and holiday cards to friends were signed "Warren, Susie and Astrid".[45] Susan Buffett briefly discussed this relationship in an interview on the Charlie Rose Show shortly before her death, in a rare glimpse into Buffett's personal life.[46]

His 2006 annual salary was about $100,000, which is small compared to senior executive remuneration in comparable companies.[47] In 2007, he earned a total compensation of $175,000, which included a base salary of just $100,000.[48] In 2008, he again earned a total compensation of just $175,000, which included a base salary of $100,000.[49] He lives in the same house in the central Dundee neighborhood of Omaha that he bought in 1958 for $31,500, today valued at around $700,000 (although he also does have a $4 million home in Laguna Beach, California).[50] In 1989 after having spent nearly 10 million dollars[51] of Berkshire's funds on a private jet, Buffet sheepishly named it "The Indefensible." This act was a break from his past condemnation of extravagant purchases by other CEOs and his history of using more public transportation.[52]

He remains an avid player of the card game bridge, which he learned from Sharon Osberg, and plays with her and Bill Gates.[53] He spends twelve hours a week playing the game.[54] In 2006, he sponsored a bridge match for the Buffett Cup. Modeled on the Ryder Cup in golf, held immediately before it, and in the same city, a team of twelve bridge players from the United States took on twelve Europeans in the event.

Warren Buffett works with Christopher Webber on an animated series with DiC Entertainment chief Andy Heyward. According to information presented by Buffett at the Berkshire Hathaway annual meeting on May 6, 2006, the series will feature Buffett and Munger in roles and the series will teach children healthy financial habits for life. Cartoon drawings of Buffett and Munger were displayed throughout the events during the weekend as well as in a special animated movie from Heyward, displayed before the meeting.

Buffett has described himself as agnostic when it comes to religious beliefs. In December 2006 it was reported that Buffett does not carry a cell phone, does not have a computer at his desk, and drives his own automobile,[55] a Cadillac DTS.[56]

Buffett's DNA report revealed that his paternal ancestors hail from northern Scandinavia, while his maternal ancestors most likely have roots in Iberia or Estonia.[57] Despite widespread suggestions to the contrary, and the casual friendship which has developed between their families, Warren Buffett has no clear relation to the well-known singer Jimmy Buffett.

Politics

In addition to other political contributions over the years, Buffett has formally endorsed and made campaign contributions to Barack Obama's presidential campaign. On July 2, 2008, Buffett attended a $28,500 per plate fundraiser for Mr. Obama's campaign in Chicago hosted by Mr. Obama's National Finance Chair, Penny Pritzker and her husband, as well as Obama advisor Valerie Jarrett.[58] Buffett backed Obama for president, and intimated that John McCain's views on social justice were so far from his own that McCain would need a "lobotomy" for Buffett to change his endorsement.[59] During the second 2008 U.S. presidential debate, candidates John McCain and Barack Obama, after being asked first by presidential debate mediator Tom Brokaw, both mentioned Buffett as a possible future Secretary of the Treasury.[60] Later, in the third and final presidential debate, Obama mentioned Buffett as a potential economic advisor.[61] Buffett was also finance advisor to California Republican Governor Arnold Schwarzenegger during his 2003 election campaign.[62]

Writings

Warren Buffett's writings include his annual reports and various articles.

He warned about the pernicious effects of inflation:

The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation.[63]

In his article The Superinvestors of Graham-and-Doddsville, Buffett refuted the academic Efficient-market hypothesis, that beating the S&P 500 was "pure chance", by highlighting a number of students of the Graham and Dodd value investing school of thought. In addition to himself, Buffett named Walter J. Schloss, Tom Knapp, Ed Anderson (Tweedy, Brown Inc.), Bill Ruane (Sequoia Fund, Inc.), Charles Munger (Buffett's own business partner at Berkshire), Rick Guerin (Pacific Partners, Ltd.), and Stan Perlmeter (Perlmeter Investments).[64]

In his November, 1999 Fortune article, he warned of investors' unrealistic expectations:

Let me summarize what I've been saying about the stock market: I think it's very hard to come up with a persuasive case that equities will over the next 17 years perform anything like--anything like--they've performed in the past 17. If I had to pick the most probable return, from appreciation and dividends combined, that investors in aggregate--repeat, aggregate--would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%.[65]

Philanthropy

The following quotation from 1988, respectively, highlights Warren Buffett's thoughts on his wealth and why he long planned to re-allocate it:

I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die. (Lowe 1997:165–166)

From a NY Times article: "I don't believe in dynastic wealth," Warren Buffett said, calling those who grow up in wealthy circumstances "members of the lucky sperm club."[66] Buffett has written several times of his belief that, in a market economy, the rich earn outsized rewards for their talents:

A market economy creates some lopsided payoffs to participants. The right endowment of vocal chords, anatomical structure, physical strength, or mental powers can produce enormous piles of claim checks (stocks, bonds, and other forms of capital) on future national output. Proper selection of ancestors similarly can result in lifetime supplies of such tickets upon birth. If zero real investment returns diverted a bit greater portion of the national output from such stockholders to equally worthy and hardworking citizens lacking jackpot-producing talents, it would seem unlikely to pose such an insult to an equitable world as to risk Divine Intervention.[67]

His children will not inherit a significant proportion of his wealth. These actions are consistent with statements he has made in the past indicating his opposition to the transfer of great fortunes from one generation to the next.[68] Buffett once commented, "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing".[69]

In 2006, he auctioned his 2001 Lincoln Town Car[70] on eBay to raise money for Girls, Inc.[71]

In 2007, he auctioned a luncheon with himself that raised a final bid of $650,100 for a charity.[72]

In 2006, he announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation.[73] In June 2006, Buffett gave approximately 10 million Berkshire Hathaway Class B shares to the Bill & Melinda Gates Foundation (worth approximately USD 30.7 billion as of 23 June 2006)[74] making it the largest charitable donation in history and Buffett one of the leaders in the philanthrocapitalism revolution.[75] The foundation will receive 5% of the total donation on an annualised basis each July, beginning in 2006. Buffett also will join the board of directors of the Gates Foundation, although he does not plan to be actively involved in the foundation's investments.[76][citation needed]

He also announced plans to contribute additional Berkshire stock valued at approximately $6.7 billion to the Susan Thompson Buffett Foundation and to other foundations headed by his three children. This is a significant shift from previous statements Buffett has made, having stated that most of his fortune would pass to his Buffett Foundation.[77] The bulk of the estate of his wife, valued at $2.6 billion, went to that foundation when she died in 2004.[78]

He also pledged $50-million to the Nuclear Threat Initiative, in Washington, where he has served as an adviser since 2002.[79]

On 27 June 2008, Zhao Danyang, a general manager at Pure Heart China Growth Investment Fund, won the 2008 5-day online "Power Lunch with Warren Buffett" charity auction with a bid of $2,110,100. Auction proceeds benefit the San Francisco Glide Foundation.[80][81]

Public positions

Buffett's speeches are known for mixing business discussions with humor. Each year, Buffett presides over Berkshire Hathaway's annual shareholder meeting in the Qwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname "Woodstock of Capitalism".[82] Berkshire's annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media. Buffett's writings are known for containing literary quotes ranging from the Bible to Mae West,[83] as well as Midwestern advice, and numerous jokes. Various websites extol Buffett's virtues while others decry Buffett’s business models or dismiss his investment advice and decisions.

Buffett and tobacco

During the RJR Nabisco, Inc. hostile takeover fight in 1987, Buffett was quoted as telling John Gutfreund:

I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.[84]

However, by 1994, Buffett had changed his stance on tobacco. Speaking at Berkshire Hathaway Inc.'s 1994 annual meeting, Buffett said investments in tobacco are:

fraught with questions that relate to societal attitudes and those of the present administration. I would not like to have a significant percentage of my net worth invested in tobacco businesses. The economy of the business may be fine, but that doesn't mean it has a bright future.[85]

Buffett and coal

In 2007, Buffett's PacifiCorp, a subsidiary of his MidAmerican Energy Company, cancelled six proposed coal-fired power plants. These included Utah's Intermountain Power Project Unit 3, Jim Bridger Unit 5, and four proposed plants previously included in PacifiCorp's Integrated Resource Plan. The cancellations came in the wake of pressure from regulators and citizen groups, including a petition drive organized by Salt Lake City commercial real estate broker Alexander Lofft and directed at Buffett personally. The 1,600 petitioners, who described themselves in a letter to Buffett as "a collection of citizens, business owners and managers, service professionals, public servants, and organization representatives ... your friends and new customers here in Utah," explained that, in their view, any further expansion of coal generation in Utah would "compromise our health, obscure our viewsheds, shrink and contaminate our watersheds, and thin out our most beloved snowpack," concluding that "our attractiveness as a place to live and work is also threatened, and so is our economic competitiveness as a major metro area and a state, compromising our recent gains in income and property values."[86]

Klamath river

American Indian tribes, and salmon fisherman sought to win support from Warren Buffett, for a proposal to remove four hydroelectric dams from the Klamath River. He had David Sokol respond that the FERC would decide the question.[87][88]

Trade deficit

Buffett views the United States' expanding trade deficit as an alarming trend that will devalue the U.S. dollar and U.S. assets. He believes that the U.S. dollar will lose value in the long run, as a result of putting a larger portion of ownership of U.S. assets, in the hands of foreigners.

In his letter to shareholders in March, 2005, Warren Buffett predicted that in another ten years’ time the net ownership of the U.S. by outsiders would amount to $11 trillion. “Americans … would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an ‘ownership society’ will not find happiness in—and I’ll use hyperbole here for emphasis—a 'sharecropping society’.” Author Ann Pettifor has adopted the image in her writings and has stated: "He is right. And so the thing we must fear most now, is not just the collapse of banks and investment funds, or of the international financial architecture, but of a 'sharecropper society, angry at its downfall."[89][90][91]

Dollar and gold

This induced Buffett to enter the foreign currency market for the first time in 2002. However, he substantially reduced his stake in 2005 as changing interest rates increased the costs of holding currency contracts. Buffett continues to be bearish on the dollar, and says he is looking to make acquisitions of companies which derive a substantial portion of their revenues from outside the United States.

Buffett emphasized the non-productive aspect of gold in 1998 at Harvard:

It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

In 1977 Buffett was also quoted as saying about stocks, gold, farmland, and inflation:

stocks are probably still the best of all the poor alternatives in an era of inflation—at least they are if you buy in at appropriate prices.[92]

Taxes

Buffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total federal taxes, while his employees paid 33% of theirs, despite making much less money.[93] Buffett favors the inheritance tax, saying that repealing it would be like "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics".[94] In 2007, Buffett testified before the Senate and urged them to preserve the estate tax so as to avoid a plutocracy.[95]

Buffett believes government should not be in the business of gambling, or legalize casinos, believing it to be a tax on ignorance.[96]

Expensing of stock options

He has been a strong proponent of stock option expensing, on the Income Statement. At the 2004 annual meeting, he compared the United States Congress, and the Securities and Exchange Commission’s decision to override FASB, who wanted to consider company-issued stock-option compensation as an expense, to a bill proposed in the Indiana House of Representatives to change Pi from 3.14159 to 3.2 .[97]

When a company gives something of value to its employees in return for their services, it is clearly a compensation expense. And if expenses don't belong in the earnings statement, where in the world do they belong?[98]

Investment in China

Buffett invested in PetroChina Company Limited and in a rare move, posted a commentary[99] on Berkshire Hathaway's website stating why he would not divest from the company despite calls from some activists to do so. (He did, however, sell this stake, apparently for purely financial reasons.) Buffett believes that the world is nearing its maximum capacity of oil production and that gradually depleted oil fields could reduce the amount produced.[100]

Books about Warren Buffett

Numerous books have been written about Warren Buffett and his investment strategies. In October 2008, USA Today reported that there were at least 47 books in print with Buffett's name in the title. The article quoted the CEO of Borders Books, George Jones, as saying that the only other living persons named in as many book titles were U.S. presidents, major world political figures, and the Dalai Lama.[101] Buffett said that his own personal favorite is a collection of his essays called The Essays of Warren Buffett,[102] which he described as "a coherent rearrangement of ideas from my annual report letters" as edited by Larry Cunningham.[101]

Best-selling or otherwise notable books about Buffett include the following:

References

  1. ^ "How Does Warren Buffett Get Married? Frugally, It Turns Out". New York Times. 2006-09-01. Retrieved 2008-05-20.
  2. ^ "Warren E Buffett, CEO Compensation". Forbes.com. 2006-03-30. Retrieved 2009-02-23.
  3. ^ Kroll, Luisa (March 11 2009). "The World's Billionaires". Forbes. Retrieved 2008-03-11. {{cite news}}: Check date values in: |date= (help)
  4. ^ "The Greatest Investors: Warren Buffett". Investopedia.com. Retrieved 2009-03-06.
  5. ^ http://www.forbes.com/lists/2009/10/billionaires-2009-richest-people_Warren-Buffett_C0R3.html
  6. ^ Markels, Alex (2007-07-29). "How to Make Money the Buffett Way". U.S. News & World Report.
  7. ^ Sullivan, Aline (1997-12-20). "Buffett, the Sage of Omaha, Makes Value Strategy Seem Simple: Secrets of a High Plains Investor". International Herald Tribune.
  8. ^ Gogoi, Pallavi (2007-05-08). "What Warren Buffett might buy". MSNBC. Retrieved 2007-05-09.
  9. ^ "Warren E. Buffett 1968; Life Trustee 1987". Grinnell College. Retrieved 2008-05-20.
  10. ^ "Warren Buffett and Peter Lynch Voted Top Money Managers of the Century". Business Wire. 1999-11-22. Retrieved 2008-05-20.
  11. ^ Cramer, James J. "Warren Buffett". Time. Retrieved 2008-05-20.
  12. ^ "Buffett 'becomes world's richest'". BBC. Retrieved 2008-05-20.
  13. ^ "Warren E. Buffett". Nuclear Threat Initiative. Retrieved 2008-05-20.
  14. ^ "UNL | Nebraska Notables | Alumni". Unl.edu. 1914-02-24. Retrieved 2009-02-23.
  15. ^ Hagstrom 2005, p. 27
  16. ^ Hagstrom 2005, p. 14 Warren Buffett is now the richest man in the world with $62 billion. GE Raises $15 Billion; Buffett Gets Preferred Stake (Update3)
  17. ^ Lowenstein, Roger. Buffett: The Making of an American Capitalist. p. 43.
  18. ^ a b "W. Buffett Bio « Sean's Investment Review". Investreview.wordpress.com. Retrieved 2009-02-23.
  19. ^ Loomis, Carol J. (2006-06-25). "Warren Buffett gives away his fortune". Fortune.
  20. ^ "HELP WANTED: Warren Buffett Replacement". ABC News. Retrieved 2008-05-20.
  21. ^ "#1 Warren Buffett". Forbes. 2008-03-05. Retrieved 2008-05-20.
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  30. ^ DAVID JOLLY (February 5, 2009). "Swiss Re Gets $2.6 Billion From Berkshire Hathaway". The New York Times.
  31. ^ Haig Simonian, Francesco Guerrera (February 5, 2009). "Swiss Re turns to Buffett for new funding". The Financial Times.
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  33. ^ Dabrowski, Wojtek (2008-02-07). "Buffett: Bank woes are "poetic justice"". Reuters. Retrieved 2008-05-20.
  34. ^ "Even Buffett Can't Escape Markets, Storms; Berkshire Profit Falls 77%". Insurance Journal. Retrieved 2008-11-14.
  35. ^ Press Release. "Berkshire Hathaway to Invest $5 Billion in Goldman Sachs". Goldman Sachs. Retrieved 2008-11-14.
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  38. ^ Warren Buffett to buy $3bn of General Electric preferred stock, The Guardian (1 October 2008)
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  47. ^ Smith, Rich (2005-06-29). "Stupid CEO Tricks". Motley Fool. Retrieved 2008-05-20.
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  49. ^ 2008 CEO Compensation for Warren E. Buffett, Equilar.com
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  58. ^ Michael Luo and Christopher Drew (3 July 2008). "Obama Picks Up Fund-Raising Pace". Washington Post. Retrieved 2008-09-24.
  59. ^ ""Squawk Box" Transcript: Becky Quick Sits Down with Billionaire Investor Warren Buffett". CNBC. Retrieved 2008-09-12.
  60. ^ "Transcript of second McCain, Obama debate". CNN. 10 October 2008. Retrieved 2008-10-10.
  61. ^ "Obama appoints Buffett as economic adviser". Reuters. 07 November 2008. {{cite web}}: Check date values in: |date= (help)
  62. ^ USA Today: Schwarzenegger taps Buffett as finance advisor 14 Aug 2003
  63. ^ How Inflation Swindles the Equity Investor, Warren Buffett, FORTUNE, May 1977
  64. ^ "Official Buffett Biography to Hit Shelves". New York Times. 2008-08-12. Retrieved 2008-08-15.
  65. ^ Warren Buffett; Carol Loomis (November 22, 1999). "Mr. Buffett on the Stock Market". Fortune Magazine.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  66. ^ Source: Greg Mankiw's Blog, On Lucky Sperm, July 01, 2006
  67. ^ "How Inflation Swindles the Equity Investor", Warren E. Buffett, Fortune May 1977 #
  68. ^ http://www.economist.com/books/displaystory.cfm?story_id=12414924 The Economist's Review of The Snowball
  69. ^ "An Exclusive Hour with Warren Buffett and Bill and Melinda Gates". Charlie Rose. Retrieved 2008-05-20.
  70. ^ Chapnick, Nate. "Warren Buffett". Forbes. Retrieved 2008-05-20.
  71. ^ "girls-inc". eBay. Retrieved 2008-05-20.
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  73. ^ Loomis, Carol J. (2006-06-25). "Warren Buffett gives away his fortune". Fortune. Retrieved 2008-05-20.
  74. ^ "Gates: Buffett gift may help cure worst diseases". MSNBC. 2006-06-26. Retrieved 2008-05-20.
  75. ^ "The birth of philanthrocapitalism". Economist.com. 2006-02-23. Retrieved 2009-02-23.
  76. ^ "Buffett to Give Bulk of His Fortune to Gates Charity". The New York Times. June 26, 2006. {{cite news}}: Unknown parameter |authors= ignored (help)
  77. ^ Carol J. Loomis (June 25 2006). "A conversation with Warren Buffett". Fortune Magazine. {{cite journal}}: Check date values in: |date= (help)
  78. ^ "Most of Susan Buffett Estate to Go to Foundation". The Foundation Center. 2004-08-11. Retrieved 2008-05-20.
  79. ^ America's Most-Generous Donors, Rank: 1 Warren E. Buffett, Chronicle of Philanthropy
  80. ^ "uk.reuters.com, Warren Buffett lunch sells for record $2.11 mln". Uk.reuters.com. 2008-06-28. Retrieved 2009-02-23.
  81. ^ "cnbc.com, Warren Buffett Charity Lunch Auction Ends with High Bid of $2,110,100". Cnbc.com. Retrieved 2009-02-23.
  82. ^ "Warren Buffett's Letters to Shareholders". Berkshire Hathaway. Archived from the original on 2007-03-22. Retrieved 2008-05-20.
  83. ^ "Chairman's Letter — 1993". Berkshire Hathaway. Retrieved 2008-05-20.
  84. ^ Burrough, Bryan; Helyar, John (1990). Barbarians at the Gate: The Fall of RJR Nabisco. New York: Harper & Row. ISBN 0-060-16172-8.{{cite book}}: CS1 maint: multiple names: authors list (link)
  85. ^ Warren Buffett Cools on His Attraction to Tobacco Business, Jenell Wallace, Bloomberg news, Apr/25/94, Legacy Tobacco Documents Library, University of California San Diego Library
  86. ^ "The Education of Warren Buffett: Why did the guru cancel six coal plants?" Ted Nace, Gristmill, April 15, 2008
  87. ^ Josh Funk (5/3/2008). "Buffett again rebuffs advocates who want Klamath dams out". USA Today. {{cite journal}}: Check date values in: |date= (help)
  88. ^ http://www.indybay.org/newsitems/2009/05/01/18592169.php
  89. ^ "Blog Archive » Lehman Brothers and the US as 'a sharecropper society'". Debtonation. Retrieved 2009-02-23.
  90. ^ "A Sharecropper's Society?". Washingtonpost.com. 2005-08-07. Retrieved 2009-02-23.
  91. ^ http://www.google.com/search?hl=en&q=sharecropper+society&btnG=Google+Search&aq=f&oq=
  92. ^ Buffett, Warren (1977–05), "How Inflation Swindles the Equity Investor", Fortune {{citation}}: Check date values in: |date= (help)
  93. ^ "Warren Buffet". Forbes: 24, 42–3. 2007-11-26. {{cite journal}}: Check date values in: |date= (help)
  94. ^ "Rich Americans back inheritance tax". BBC. 2001-02-14. Retrieved 2008-05-20.
  95. ^ Jim Snyder (11/15/07). "Buffett tells Senate Finance panel 'dynastic' wealth on the rise in U.S." The Hill. {{cite journal}}: Check date values in: |date= (help)
  96. ^ Ackman, Dan (2004-10-11). "America, The Casino Nation". Forbes. Retrieved 2008-05-20.
  97. ^ Warren Buffett, Fuzzy Math And Stock Options , The Washington Post, July 6, 2004, Page A19
  98. ^ Warren E. Buffett, Who Really Cooks the Books?, The New York Times, July 24, 2002
  99. ^ "Shareholder Proposal Regarding Berkshire's Investment In PetroChina" (PDF). Berkshire Hathaway. Retrieved 2008-05-20.
  100. ^ Jordon, Steve (2008-05-04). "Berkshire Hathaway: 31,000 show up at Qwest Center for annual meeting". Omaha World-Herald. Retrieved 2008-05-20.
  101. ^ a b c d e Del Jones, "Book titles like to play the Warren Buffett name game," USA Today, October 22, 2008.
  102. ^ Buffett, Warren; Cunningham, Lawrence. The Essays of Warren Buffett: Lessons for Corporate America, Second Edition. The Cunningham Group. ISBN 978-0-9664461-2-8. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)CS1 maint: multiple names: authors list (link)
  103. ^ Hagstrom, Robert G.; Miller, Bill R.; Fisher, Ken (2005). The Warren Buffett Way. Hoboken, N.J.: John Wiley. ISBN 0-471-74367-4. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)CS1 maint: multiple names: authors list (link)
  104. ^ Schroeder, Alice. The Snowball: Warren Buffett and the Business of Life. Bantam Dell Pub Group 2008. ISBN 978-0-553-80509-3. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  105. ^ Janet Maslin, "Books of The Times: The Richest Man and How He Grew (and Grew His Company, Too)," New York Times, September 28, 2008.
  106. ^ Buffett, Mary. Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett The World's Most Famous Investor. Scribner. ISBN 978-0-684-84821-1. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  107. ^ Lowe, Janet. Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor. Wiley. ISBN 978-0-470-15262-1. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  108. ^ Train, John (1987). The midas touch: the strategies that have made Warren Buffett America's pre-eminent investor. New York: Harper & Row. ISBN 978-0-06-015643-5. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  109. ^ Kilpatrick, Andrew. Of Permanent Value: The Story of Warren Buffett/2008 Cosmic Edition/2 volumes. Andy Kilpatrick Publishing Empire (AKPE). ISBN 978-1-57864-455-1. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  110. ^ Buffett, Warren (April 11, 2001). Lawrence Cunningham (ed.). The Essays of Warren Buffett. The Cunningham Group. p. 256. ISBN 978-0966446111.
  111. ^ Tavakoli, Janet (January 9, 2009). Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street. Wiley. p. 304. ISBN 978-0470406786. {{cite book}}: Check |authorlink= value (help); External link in |authorlink= (help)
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Honorary titles
Preceded by World's Richest Person
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Preceded by World's Richest Person
2008–2009 		Succeeded by

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