Warren Buffet: a name synonymous with capitalism,
the American dream and financial success. But how did a poor boy growing up in the Great
Depression go on to become one of the richest men in the world? Hello, and welcome to The
Infographics Show- today we're taking a look at an American financial legend and how he
made his fortune. Warren Buffet was born August 30th, 1930 in
Omaha, Nebraska. Exposed to the brutal reality of the American Great Depression, Buffet learned
to respect the value of money early in life. In the grip of one of the worst financial
crisis in American history, his family lost all of their savings as the bank where they
kept their money closed just before his first birthday. Living in poverty, Buffet would
grow up watching his mother skip dinner so that his exhausted father, working any jobs
he could find, could eat a full portion. He would also endure the shame of his family
skipping church because of mandatory tithing they could not afford. Rather than languish
in hardship however, a young Warren boldly declared one night at the dinner table that
he would make his first million dollars by age 35, or he would throw himself off the
tallest building in Omaha. From a young age Warren Buffet showed an incredible
talent for math and numbers. He was specially interested in patterns, and would play games
where he recorded the license plate numbers of passing cars and then that night would
write them all down and figure out which number came up most often. This finely honed talent
for pattern recognition eventually drew him to a new game that would foreshadow the life
to come- one day as he watched men buying soda from a machine, he became curious and
started gathering up the discarded bottle caps. That evening he returned home and counted
up all the bottle caps he had collected, then repeated the process for an entire week, thus
learning which brand of soda had the best sales and which flavors were preferred. His
mind drawn to numbers, patterns and finances, Warren soon graduated to recording stock prices
from his father's newspaper, repeating his soda pop diligence to figure out high-performing
stocks. Feeling like he was watching the world of finance through a glass cage without being
allowed to participate, a young Warren dreamed of that first million dollars and the opportunity
to invest it. With the Great Depression ending, Warren watched
as his father, leery of rising inflation following the financial boom of a post-WWII America,
invested what little money he had into tangible assets such as gold coins, a crystal chandelier
and sterling silver dinnerware. This would go on to influence Warren's preference of
tangible over intangible assets, and an investment philosophy that preferred businesses with
tangible assets and proven earning power. At age 13, he would go on to his first job
as a paperboy where he realized he could maximize his earnings by diversifying his product line.
To that effect he began to sell magazine subscriptions to his paper route customers, preferring to
sell subscriptions just as they were about to expire to guarantee a quick second sale.
His paper route would go on to earn him $175 a month, or $3,000 in today's dollars. By the time he was 15, Warren used his earnings
to buy a 40-acre farm in Nebraska and hired a laborer to work on the land. After graduating
from high school, he used the profits from the farm to pay his way through earning a
Bachelor of science degree from the University of Nebraska. Rejected by the prestigious Harvard
Business School, Warren instead applied to and was accepted at Columbia Business School,
where he would study under legendary value investor Benjamin Graham. As he left home to New York for business school,
the ever-frugal Warren opted to stay at a local YMCA for free rather than pay for room
and boarding elsewhere. He picked up a paper route again, but invested his money into pinball
machines which he would place at local barbershops. Afraid that the mob owned the gaming industry
though, Warren purposefully kept his operation small. It would be his pinball days that would
teach Buffet more practical business lessons than school: convenience and service fetches
higher prices, location is everything, efficiency determines profit margins, and the practical
limitations of scalability for business. After graduating from Columbia Business School,
Warren briefly returned to Omaha and studied public speaking while teaching investing at
the University of Nebraska. In 1954, his old teacher and mentor, Benjamin Graham, offered
him a job as an investment salesman and securities analyst. By 1956, Buffet had bought a home
for his wife and young daughter, and had $174,000 in savings- or just over one and a half million
in today's dollars. Believing that he could live comfortably from his earnings on his
investments alone, Warren decided to retire at age 26. The young Warren however quickly
grew restless as his childhood dream of being a millionaire stirred in his head once more.
Deciding he would have to be far more active to meet his goal, Warren came out of retirement
in 1956 and started Buffet Partnership Limited. Building on the lessons of his youth, Warren
grew his wealth by sticking to investing in businesses with proven earning potential and
tangible assets. His most influential deal however would be the acquisition of Berkshire
Hathaway in 1964. Originally established in 1839 as the Valley Falls Company, Berkshire
Hathaway would go on to become a highly successful textile manufacturer. However with declining
sales following a drop in global textile sales after World War I, the financial future of
the company looked to be on the decline. Ever savvy, Warren Buffet noticed that its stock
prices would improve dramatically after closing down a mill, and thus in 1962 he invested
heavily hoping for short-term gain. In 1964, CEO Seabury Stanton offered to buy back Warren's
shares at $11.50 per share, to which Warren agreed. However when he received the offer
in writing he saw that the price had been surreptitiously dropped to $11.37. Furious
at this undercutting, Warren instead decided to buy more of the stock and took control
of the company, immediately firing Stanton. This however put him in a situation where
he owned a failing textile manufacturer, so while he initially maintained the core business
of textiles, by 1967 he began to invest company money into insurance and media. Eventually,
he would shut down the entire manufacturing side of the new Berkshire Hathaway, focusing
mainly on investments, insurance, utilities and energy. In just a few short years, Warren
Buffet had turned a failing business around and by the age of 30 had achieved his goal
of earning one million dollars- five years earlier than planned. Berkshire Hathaway would go on to become his
flagship for all business investments, and despite it being very successful, Warren decided
to dissolve his firm, Buffet Partnership, in order to focus all his efforts on developing
Berkshire Hathaway. After phasing out the textile business, Warren focused on buying
assets in media such as The Washington Post, oil and energy company Exxon, and the insurance
giant Geico. In 1979 Berkshire Hathaway began trading at $775 a share, reaching $1310 by
year's end- this would skyrocket Warren Buffet's net worth to a whopping $620 million. Not content to rest on his laurels however,
Warren had a new goal: $1 billion dollars. The same year his personal worth reached over
$600 million, he directed Berkshire Hathaway to acquire stock in the television network
ABC. Partnering with Capital Cities, a media company worth approximately ¼ of ABC's net
worth, Buffet helped finance a $3.5 billion dollar deal in exchange for a 25% stake in
the combined company. This deal would rock the media industry as the substantially smaller
Capital Cities purchased and then merged with the juggernaut ABC. Edging ever closer to his billion-dollar-goal,
Warren began buying Coca-Cola stock in 1988, eventually amassing 7% ownership in the company-
one of Berkshire Hathaway's longest and still-held investments. With Berkshire Hathaway's share
of Coca-Cola stock alone worth $1.02 billion, Warren Buffet at last reached his goal of
becoming a billionaire as Berkshire Hathaway stocks closed at $7,175 a share on May 29th,
1990. With careful investments built on his lessons
learned as a child: preference for businesses with tangible assets and proven earning power,
Berkshire Hathaway would go on to become one of the most powerful and profitable companies
in the world. With Warren Buffet at its head, he would grow his personal fortune 17 times
over just six years after earning his first billion, earning $17 billion by age 66. Reaching
an astonishing $84. 7 billion at age 87, his real value would be exponentially higher today
had he not given away more than $27 billion to charitable causes in the last decade alone,
and although he is one of the world's richest men, he remains an astonishingly frugal man
who prefers a mid-2000s style flip phone over a smart phone and often has McDonalds for
breakfast. From dirt-poor to one of the wealthiest men
on earth, Warren Buffet is a true capitalism success story and hero of the free market.
Yet with today's widening wealth gap, skyrocketing health care costs, and the difficulty for
lower-income families to find credit at affordable rates, is Warren Buffet's incredible success
story still possible today? Let us know your thoughts in the comments section below, and
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