Warren Buffett (born 30 August 1930 in Omaha) is a businessman and investor. Nicknamed the " oracle of Omaha ", he is one of the richest men in the world since the beginning of the xxie century.
In march 2008, with a fortune estimated at 65 billion u.s. dollars, he was considered the richest man in the world, according to the annual ranking of the magazine Forbes. In 2016 Forbes estimated his fortune to be 66.2 billion us dollars , he is therefore in third place on the list of billionaires of the world by the magazine Forbes.
Warren Edward Buffett was born in Omaha, Nebraska. His father, Howard Buffett, is a stock broker and a member of the Congress. Buffett studied at theuniversity of Nebraska and obtained a master ofeconomics at theColumbia university. Returned to Omaha in 1958, he manages portfolios stock market, by pooling money from friends and acquaintances, his family as well as hers. As early as 1969, and its investment have made gains of almost 30 % on average per year, in a market where the average is between 7 and 11 %, and where the best performance was outstanding. Under the leadership of Buffett, the funds, Berkshire outperforms the reference markets such as the S&P 500 and the Dow Jones for more than forty years (outstanding performance when we know that over 80 % of investors do not beat their market index).
He married Susan Thompson in 1952. They split up in 1977, but without divorce. This important shareholder of Berkshire Hathaway and a member of the board of directors, died on Thursday, July 29, 2004 of a heart attack.
In 2009, Buffett lives with Astrid Menks, his last girlfriend since the separation from his wife.
He has three children, one of whom is a farmer in Nebraska and another music composer new age2. Warren Buffett has not yet named a clear successor at the head of his company, his children will not inherit his entire fortune, it has planned to pour a large majority to a charity, the Foundation Bill & Melinda Gates foundation, as did his friend Bill Gates.
In 2016 he became the advisor ofArnold Schwarzenegger in the tv show The Celebrity Apprentice.
Buffett has a habit of concentrating its investments in companies undervalued with good potential for growth in the long term. All the difficulty is to identify such companies. The actual value produced by these enterprises - which he owns - is superior to its stock market investments, although its share in companies such as Coca-Cola - whose Berkshire Hathaway is the largest shareholder - and Gillette attracts more attention. Buffett avoids businesses of high technology not because they are in themselves less interesting, but because it prefers to invest in sectors that he understands.
Through Berkshire Hathaway, Warren Buffett also owns insurance companies and reinsurance as GEICO and General Re that generate substantial assets (float)- derived their insurance premiums. These companies are sources of funds that he then allocates to subsidiaries of Berkshire Hathaway, and that it uses to acquire new companies. In November 2009, Berkshire Hathaway made an offer at $100 per share for BNSF in cash and share of category B. We are talking here about a transaction of $ 44 billion $.
Unlike other investors, Buffett is involved in the management of the companies of which he is a shareholder, it is in particular the case of the Washington Post. This is in part why he gets higher yields than the average.
Warren Buffett continues to live in a home ofOmaha, Nebraska, which he paid 31 us $ 500 in 1957.
Glad to be a major investor in Coca-Cola, it is also a great fan of its products. In his letter to the shareholders of 1991, Buffett says he drinks five cans of Cherry Coke per day.
On September 23, 2008, it has decided to acquire us $ 5 billion of perpetual preferred shares of the american bank Goldman Sachs.
His trading strategy is based on a number of principles, among which :
buy shares when prices are low. He has invested a lot since the price declines in the fall/winter of 2008/2009 and took care never to buy shares in start-ups of high technology in the late 1990s when prices were at the highest (those with market capitalizations of more than 600 times the profits, when there were profits). Buffett was inspired in this area of Benjamin Graham and his book The intelligent Investor. Graham has developed the concept of " margin of safety ", that is to say, the difference between the actual value of a company (capital, patents, etc) and its value on the stock exchange. Buffet prefers to buy when the stock exchange value is significantly lower than the actual value of the company. For this, he is able to wait long, because " the profession of an investor is assumed to stay sometimes idle ". And in 1969 he sold his first stock portfolio because it did not find nothing more to buy at correct prices."Graham always said that there are periods where there is no business to buy it at a good price. At these times, it is better to go for a ride to the beach ". Often Buffett expects that the company will experience a passing challenge or the grant to go wrong ;
play in the long term over periods of 5 years or more. And he said that we must ask the question, " if the stock market closes for 5 years, is what I would buy now, such actions ". He considers that" in the short term, the stock market is a voting machine, long term it is a machine to weigh ". In fact, in the short term, stock prices fluctuate in a more or less random, this is only at the end of a certain period that they reflect the true value of the company, although it is difficult to predict the long-term future.
In addition to play in the long-term strongly reduces the transaction costs and the amount of the tax on capital gains. "I'm looking for companies which it is possible for me to predict the activity in 15 or 20 years."
Buffett is not a fan of the strategy is to 'take profits' as soon as the price of a stock rises a few tens of %. It keeps for years shares the value of which can a five-fold increase, tenfold or even more. And he still owns the shares of the Washington Post it was bought in 1973 (their value was multiplied by 100) and the shares of GEICO purchased in 1976. Shares of Coca-cola, bought in 1988/89, have seen their value multiplied by 7 ;
don't invest in companies of high technology, where technological developments are numerous and unpredictable. He invests only in businesses that he understands the activity. He stated in 2001, " I can already tell you that we took of the xxie century, to arm-the-body by investing in the businesses of the avant-garde such as brick, carpet, insulation, and paint "14. It is thus immune to the technology revolution. For Buffett, buying stocks is like buying a trade or business. It is important to understand the business of the company ;
invest in a company that makes regular profits. Buffett has never invested in a company that loses money even if it has brilliant prospects. At the time of the crash in internet stocks in 2000/2001, Buffett explained that" it is better to have a bride on his couch, that 10 on its address book " ;
limited diversification. The fortune of Warren Buffet is invested in a limited number of companies. Limited diversification reduces the cost of transactions and mostly used to get a portfolio that does not reflect the performance too medium-sized market, with potentially higher returns but at the cost of a stronger risk. Finally, when investing in few companies it is more easy to know each one of them thoroughly ;
buy shares of companies that have a relative rent-that puts them away from the competition. Newspapers such as the Washington Post, (it is difficult to launch a new journal), companies that have a reputation for exceptional, such as Coca-Cola. Its definition of business where he likes to invest is the following : "A wonderful castle, surrounded by deep ditches, and very dangerous. The castle derives its value from the genius that is inside. Its moat function as a powerful counter-example to those who would be tempted to attack it.Inside, the leader, a person of integrity and honesty, manufactures of gold but don't keep it all for himself. In other words, less poetic, we love the superb companies that occupy dominant positions, whose know-how is difficult to copy, and the business sustainable.
keep the leaders of the companies he buys, even if they are very elderly. "We do not learn to Michael Jordan to put a ball in the basket ". "We don't invest in companies with the idea to change everything. This does not work any better in business than in marriage " ;
an in-depth study of the companies listed in the stock exchange. Before you purchase Buffett examines in depth the accounts of the company.
From April 2011 to November 2011, Warren Buffet has agreed to acquire, through his company Berkshire Hathaway, of 64 million shares of IBM (5.5% of the capital), to about 10.7 billion dollars.
Since the 1960s, it has thus achieved an average annual return of over 20 % per year, a record over such a long period of time. However, the big difference of the other investors, Buffett control often, as we have said, the management of the companies of which he is a significant shareholder. This is not a "small carrier" who has no control over the companies in which it has purchased the shares.
Positions on the economy and Society
In regards to his personal life, Warren Buffett is known to be frugal and a little extravagant. He is paid $ 100 000 americans each year by Berkshire Hathaway, according to his own choice. The volume of net disposable income comes from his other personal investments outside of Berkshire, even though they constitute less than 1 % of its overall net value (Berkshire has not paid dividends for decades).
He made the donations through the Buffett Foundation, usually around 12 million us dollars per year. It has indicated its intention to distribute 85 % of his fortune, after his death, to charity.
Warren Buffett announced on Sunday, 25 June 2006 its intention to give $ 37 billion of us dollars17, 24.7 billion euros, the Fondation Bill-et-Melinda-Gates foundation and to members of his own family. This decision, which covers over 85 % of his fortune, which is the largest one-time donation ever made to the United States.
Weaknesses of the strategy and mistakes of Warren Buffett[edit | edit the code]
The strategy of Buffett has risks. And his fortune is concentrated in the companies of which he is the owner. It does not take into account a principle of asset management is diversification between investments volatile (shares), investment, which are less so (gold, government bonds), property and cash.
In the event of a collapse of the stock market he would lose a lot. As his fortune increased from us $ 65 billion at the beginning of the year 2008 to $ 37 billion in early 2009 according to the magazine Forbes, it has lost its rank of the richest man in the world. In 2009, it is less rich than Bill Gates. However, the crashes are for him an opportunity to buy good companies at discounted prices.
Among some of his mistakes of management, the decision to invest in a business of air transport, US Airways, a sector where price competition is very strong, or the decision to invest in Salomon Brothers, a financial company. Despite all he remains " the best investor of all time ".
Case Lubrizol
Moreover, it would seem that Warren Buffet had made the mistake of trusting his former right hand man David Sokol. In fact, it would be advisable to Warren Buffet to invest $ 10 billion in a chemical company, Lubrizol and then would have acquired without the say of 100,000 units of the same company, just prior to the purchase of his boss. The company has obviously increased in value after the purchase of Warren Buffet, saving $ 3 million to David Sokol. Warren Buffet was surprised by this betrayal, as David Sokol was one day refused a fee of $ 50 million of its share and preferred share with a colleague. David Sokol has, thereafter, submitted his resignation to his boss.
His friendship with Bill Gates
In 1991, Bill Gates meets Warren Buffett : the two men become friends. Bill Gates was impressed by the intelligence of Buffett. "I've never met anyone who has a vision as clear in the world of business", Fortune, 5 February 1996. Buffett considers that " Bill Gates could do what I do... but I couldn't do what he's doing."
In 2000, Buffett testified in front of the judges in favour of Bill Gates during a trial brought against Microsoft by the us courts.
In 2004, after the death of his wife, Buffett appointed Gates to the board of directors of Berkshire Hathaway. Bill Gates has purchased shares of the company.
In 2006, Buffett announced his intent to have 83 % of his fortune to the foundation Bill-and-Melinda-Gates foundation, joining the board of directors of the foundation, but without participating in the investments of the foundation.
His succession at the head of Berkshire Hathaway
Warren Buffet has now 86 years old, and his main business partner is Charlie Munger, 6 years his elder.
The question of his succession is therefore of paramount importance. David Sokol, has often been seen as the contender most likely, but the scandal of the case of Lubrizol, followed by his resignation has changed the situation.
In his famous letter 2010 to the shareholders (published in 2011), Warren Buffet clearly refers to Todd Combs, manager of hedge fund, as one of his successors since he left a few billion to manage. However, this is not necessarily just one, but several successors that Warren Buffet would like to put in place. Ajit Jain, manager of the party Reinsurance from Berkshire, has received several accolades from Warren Buffet and Charlie Munger, and could thus become one of the successors.
Buffett wrote in the letter to shareholders included in the annual report of Berkshire Hathaway (available in English on the website of Berkshire Hathaway).
His statements
On 25 may 2005, Warren Buffett said on CNN : " there has been a war of classes, where my class is gaining more and more, so that it should not " (It's a class warfare, my class is winning, but they shouldn't be). In fact, Warren Buffet said on the occasion that the rich have never been as well-worn (" We never had it so good ") and it would be a good idea to raise taxes on18.
No comments:
Post a Comment