[Music] my name is Warren Buffett the year I turned 89 I made $9 billion which really pissed me off because it was three shy of a billion a month price is what you pay value is what you get these words belong to the man whose name has become synonymous with wise investing and financial success Warren Buffett known as the Oracle of Omaha is not just one of the richest people in the world he is a living legend whose story inspires Millions today we will embark Mar on an incredible journey through the life of a man who turned $100 into a fortune exceeding $100 billion we will learn how a boy from Nebraska who started his business at the age of six selling chewing gum became one of the most influential investors of all time and uncover the secrets of his unique investment strategy which allowed him to achieve phenomenal success we will share not just well-known facts from the life of Warren Buffett but will reveal details and little known aspects of his path to financial success prepare for unexpected stories that will allow you to see the legendary investor in a completely new light and at the end we will summarize and understand what qualities helped Warren Buffett become who he is now not just a billionaire but a true symbol of the American [Music] dream Warren Edward Buffett was born on August 30th 1930 in Omaha Nebraska to stock broker and Congressman Howard Buffett and his wife Laya Warren was the second of three children and the only son in the family from Early Childhood young Warren showed an extraordinary interest in numbers and finance he could spend hours mentally adding multi-digit numbers and memorizing statistical data from various directories Warren's childhood coincided with the Great Depression which undoubtedly influenced his worldview and attitude towards money despite the fact that the Buffett family did not experien serious financial difficulties thanks to his father's work Warren realized the value of every dollar and the importance of financial stability from an early age already at the age of six Warren showed the first signs of entrepreneurial Talent he started buying packs of Wrigley's chewing gum for 25 cents and selling each stick for a penny Little Warren quickly grasped the basics of business Buy Low sell high this simple principle became the foundation of his future investment philosophy at the age of 11 Warren made his first investment buying three shares of City service for $38 each when the share price dropped to2 $7 he got scared so when the price returned to $40 he immediately sold them this early mistake became an important lesson for Buffett he realized that one must be patient and not succumb to panic in the market later the price of these shares Rose to $200 which once again confirmed the importance of a long-term approach to investing as a teenager Warren continued to develop his entrepreneurial skills he delivered newspapers sold used golf balls and also opened a pinball machine rental and maintenance business by the time he graduated from high school in 1947 Buffett had accumulated more than $5,000 a significant sum for that time despite his obvious talent for business Warren did not immediately decide on his life path after graduating from high school he entered the University of Pennsylvania but studied there for only 2 years he then transferred to the University of Nebraska Lincoln where he received a bachelor's degree in Business Administration at the age of 19 wanting to continue his education Buffett applied to Harvard Business School but was rejected this rejection could have been a serious blow to many but not to Warren instead he enrolled at Columbia University where he met people who had a huge impact on his future career at Columbia University Buffett studied under Benjamin Graham A renowned Economist and author of the book The intelligent investor which became a Bible for many investors Graham developed the concept of value investing which involves finding undervalued companies with strong fundamentals this philosophy deeply influenced Buffett and became the foundation of his own approach to investment in addition to Graham Buffett met David Dodd at Columbia University Graham's co-author on the book security analysis these two men became true mentors for Warren and had a huge impact on the formation of his investment philosophy after graduating from Columbia University in 1951 with a master's degree in economics Buffett returned to Omaha and started working at his father's company Buffett faul and Company here he continued to hone his skills in Securities analysis and investing gradually accumulating ating capital and experience that would allow him to become one of the most successful investors in [Music] history Warren Buffett's real breakthrough came in 1956 when he founded his first partnership Buffet Associates limited starting with a capital of $115,000 of which only $100 was his own money Buffett demonstrated his talent for investment management in its first year of operation the partnership generated a return of 41. 1% while the Dow Jones index grew by only 26. 9% the success of the first partnership led to the creation of several more similar structures Buffett merged them in 1962 into one partnership Buffett partnership limited during this period he began acquiring shares of the textile company birkshire Hathaway which later became the foundation of his investment Empire Buffett's strategy was to find undervalued companies with strong fundamentals he carefully studied financial statements analyzed business models and assessed the quality of company management this approach allowed Buffett to find gems in the market companies whose real value significantly exceeded their market price one of Buffett's key principles was investing in businesses he understood he avoided technology companies and complex financial instruments preferring simple and profitable businesses with sustainable competitive advantages this strategy helped him avoid many market bubbles and crises in 1965 Buffett gained control of Burkshire Hathaway and and began transforming it from A Loss making textile company into an investment holding company he used the cash flow from the textile business to acquire other companies and securities among Buffett's most successful Investments during this period were the purchases of insurance companies including National Indemnity Company in 1967 the insurance business became an important element of Buffett's strategy it allowed him to use the so-called Insurance float money received in the form of insurance premiums that could be invested until the time of payment of possible insurance claims this gave Buffett access to a significant amount of capital for further investments in the 1970s and 1980s Buffett continued to build up his Investments acquiring large stakes in companies such as the Washington Post company Geico and Coca-Cola his reputation as a successful investor grew and people began calling him the Oracle of Omaha for his ability to anticipate market trends and choose winning Investments one of the key factors in Buffett's success was his ability to learn from his mistakes for example the acquisition of Burkshire Hathaway was initially not the best decision Buffett spent years trying to make the textile business profitable before finally closing it in 1985 this experience taught him to more carefully evaluate the long-term prospects of a business before investing by the end of the 1980s birkshire Hathaway had become one of the largest companies in the United States and Buffett one of the richest people in the world his annual shareholder meetings became real events attracting thousands of investors from around the world who wanted to hear the wisdom of the Oracle of Omaha Warren Buffett's investment philosophy known as value investing became the foundation of his phenomenal success the key principle of this philosophy is to find companies whose intrinsic value significantly exceeds their market price Buffett often said price is what you pay value is what you get one of the main aspects of Buffett's approach is long-term investing he does not seek quick profits but prefers to hold shares of companies for years or even decades his famous phrase our favorite holding period is forever reflects this philosophy Buffett believes that if a company is truly good there is no reason to sell it Buffett also pays great attention to the quality of company management he looks for businesses with competent and honest leadership that acts in the interests of shareholders when we own portions of outstanding businesses with outstanding managements our favorite holding period is forever says Buffett another important principle of Buffett's investment philosophy is the concept of the economic moat he looks for companies with sustainable competitive advantages that protect them from competitors just as a moat protects a castle these can be strong Brands patents economies of scale or network effects Buffett is also known for his conservative approach to risk he follows the number one rule of investing never lose money rule number two never forget rule number one this approach LED Buffett to miss many technology booms but also helped him avoid many crashes interestingly Buffett does not seek to diversify his portfolio in the way that many Financial experts recommend he prefers concentrated investments in companies that he understands well diversification is protection against ignorance it makes little sense if you know what you are doing Buffett argues another important aspect of Buffett's philosophy is his approach to Market fluctuations he views Market volatility not as a risk but as an opportunity when the market Falls Buffett sees it as a chance to buy good companies at discounted prices his famous phrase be fearful when others are greedy and greedy when others are fearful reflects this strategy Buffett is also known for his skepticism about complex financial instruments he prefers to invest in simple understandable businesses never invest in a business you cannot understand he advises it is important to note that Buffett's philosophy is not limited to financial aspects he attaches great importance to ethical principles in business it takes 20 years to build a reputation and 5 minutes to ruin it if you think about that you'll do things differently Buffett says these principles helped Buffett become one of the most successful investors in history but how exactly did he apply them in practice in the next part we will look at some of Warren Buffett's most iconic Investments including the deal that eventually earned him over $20 billion stay with us to learn how the Oracle of Omaha turns his philosophy into billions during his long career Warren Buffett has made many successful Investments that have brought him and birkshire hathway shareholders huge profits let's consider some of his most iconic deals one of Buffett's most famous Investments was the purchase of Coca-Cola shares in 1988 Burkshire Hathaway acquired 6.
2% of the company for 1. 2 billion this investment proved to be incredibly Successful by 2020 the value of this stake had grown to more than 22 billion another outstanding investment was the purchase of the insurance company Geico Buffett started buying Geico shares back in 1951 and in 1996 barkshire Hathaway fully acquired the company under Buffett's leadership Geico has become one of the largest auto insurance companies in the United States in 2009 during the financial crisis Buffett made one of his boldest deals acquiring railroad operator Burlington Northern Santa Fe for $44 billion this purchase was the largest in Burkshire Hathaway's history and demonstrated Buffett's faith in the long-term prospects of the American economy in 2011 Buffett's surprised many by investing $5 billion in Bank of America at the height of the financial crisis this investment brought barkshire hathway a huge profit by 2017 its value had grown to $1 billion one of Buffett's most unexpected Investments was the purchase of Apple shares in 2016 despite his traditional distrust of technology companies Buffett saw a strong brand and loyal customer base in apple by 2020 Berkshire Hathaway owned more than 5% of Apple shares worth more than 100 billion not all of Buffett's Investments were successful for example in 2015 Burkshire Hathaway acquired Aerospace component manufacturer Precision cast parts for $37 billion however in 2020 Buffett admitted that he overpaid for the company and Burkshire Hathaway had to write off $9. 8 billion in losses despite some setbacks Buffett's overall investment record remains impressive from 1965 to 2020 the average annual return on Burkshire hathway shares was 20.
3% significantly exceeding the S&P 500 index for the same period [Music] 10.
