Legendary investor Warren Buffett is 90 years old today … Here are some of the best quotes from his annual letters to Berkshire Hathaway shareholders

August 30, 2020

Warren Buffett turns 90 today.

Buffett was born in Omaha, Nebraska, the son of stockbroker who became a US Congressman. An early school teacher said he showed great potential in mathematics, and “could be a great stockbroker”.

He displayed an interest in business and investing from a young age. He was inspired by a book he borrowed from the Omaha public library at the age of seven, One Thousand Ways to Make $1000.

Much of his early childhood years were marked by  entrepreneurial ventures. In one of his first business ventures, Buffett sold chewing gum, Coca-Cola bottles, and weekly magazines door to door. He worked in his grandfather’s grocery store. While still in high school, he made money delivering newspapers, selling golf balls and stamps, and detailing cars, among other means.

On his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route. In 1945, while at high school, he and a friend spent $25 to purchase a used pinball machine, which they placed in the local barber shop. Within months, they owned several machines in three different barber shops across Omaha, selling the business a few months later for $1,200.

Buffett’s interest in the stock market and investing dated to schoolboy days he spent in the customers’ lounge of a regional stock brokerage near his father’s own brokerage office. On a trip to New York City at age ten, he made a point to visit the New York Stock Exchange. At 11, he bought three shares of Cities Service Preferred for himself, and three for his philanthropic sister Doris. At the age of 15, Warren made more than $175 monthly delivering Washington Post newspapers. In high school, he invested in a business owned by his father and bought a 40-acre farm worked by a tenant farmer. He bought the land when he was 14 years old with $1,200 of his savings. By the time he finished college, Buffett had accumulated $9,800 in savings (about $105,000 today).

He graduated from Wharton Business School as a 19 year old. He went on to study investment philosophy at Colombia around the concept of value investing that was pioneered by Benjamin Graham, which had a huge influence on him. He attended New York Institute of Finance to focus his economics background and soon after began various business partnerships, including one with Graham.

He created Buffett Partnership Ltd in 1956, and his firm eventually acquired a textile manufacturing firm called Berkshire Hathaway in 1965, assuming its name to create a diversified holding company. In 1978, Charlie Munger joined Buffett and became vice-chairman of the company.

 

The legendary investor and Berkshire Hathaway boss is the oldest and longest-serving CEO of a S&P 500 company, and has plenty to celebrate:

  • Over the last 55 years he has grown Berkshire Hathaway into a $500 billion conglomerate that owns a rich portfolio of businesses including See’s Candies, Geico, Dairy Queen, Duracell, NetJets, PacifiCorp, Precision Castparts, and the BNSF railroad.
  • Berkshire’s stock portfolio includes a 5.7% stake in Apple worth $123 billion at the last count, a 12% stake in Bank of America valued at $27 billion, and billion-dollar positions in Coca-Cola, Kraft Heinz, JPMorgan, and other blue-chip companies.
  • Buffett has taken part in dozens of high-profile deals such as bailing out Goldman Sachs, General Electric, and Harley-Davidson during the financial crisis, and helping to finance Mars’ takeover of Wrigley around the same time. He famously said he only invests in companies which he understands, so rarely in technology.
  • Known as the “Oracle of Omaha” investors flock to his AGM usually held in the town of his birth. He likes to create theatre, for example riding onto stage dressed in leather jacket on a Harley Davidson, and turning his keynote speech into a little ditty which he sang while strumming along on a ukulele.
  • He has gifted $37 billion to philanthropic organizations in the past 14 years. Through the Giving Pledge, which he launched with his great friends Bill and Melinda Gates in 2010, he has also secured commitments from dozens of the world’s wealthiest people to give at least half their fortunes to good causes.

His annual “Letter to Shareholders” is poured over by investors, commentators and business leaders around the world, looking for insights and ideas about strategy and investment. Here are some of the best quotes from over the years:

  • ‘Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years’
  • ‘Someone’s sitting in the shade today because someone planted a tree a long time ago’
  • “I insist on a lot of time being spent, almost every day, to just sit and think,”
  • ‘Risk comes from not knowing what you’re doing’
  • ‘You only have to do a very few things right in your life so long as you don’t do too many things wrong’
  • “I’ll give my children ‘enough money so that they would feel they could do anything, but not so much that they could do nothing’
  • ‘The light can at any time go from green to red without pausing at yellow’
  • ‘It takes 20 years to build a reputation and 5 minutes to ruin it’
  • ‘You cannot make a good deal with a bad person’
  • ‘Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down’
  • ‘Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1’
  • ‘The difference between successful people and really successful people is that really successful people say no to almost everything’
  • ‘In the business world, the rear-view mirror is always clearer than the windshield’
  • ‘It’s better to hang out with people better than you’
  • ‘Cryptocurrencies will come to bad endings. There’s nothing being produced in the way of value from the asset.’
  • ‘Price is what you pay. Value is what you get’
  • ‘Only when the tide goes out do you discover who is swimming naked’

Here are links to all of his letters to shareholders, published by Berkshire Hathaway Inc:

And finally, a short birthday wish from his friend and chess partner, Bill Gates, today: