Warren Buffet Doesn't Spend His Billions

[Music] can you imagine the feeling of losing 21 billion dollars in just a few months no the oracle of omaha himself warren buffett came face to face with that reality at the outset of 2020 and yet miraculously the investing icon is still worth more than the entire gdp of croatia bolivia and uruguay with a tear-jerking 81 billion dollars to his name the stock market guru puts the majority of so-called wealthy celebrities to shame as the saying goes you gotta spend money to make money and warren buffett's been spending money in all the right places for decades okay so 80 billion is a monumental figure and honestly it's almost too big to comprehend so let's put it in easy to understand terms warren buffett is almost 300 times richer than dwayne johnson one of the richest modern day actors he's almost 170 times richer than star baller lebron james and he makes the infamous wolf of wall street jordan belfort seem more like a mouse than a wolf for every dollar to belfort's name buffett has exactly 800 this guy is seriously loaded if we do the math in his nearly 80 years of investing warren buffett has made ready for this people two million seven hundred thirty nine thousand seven hundred twenty six dollars every single day that's insane with numbers like that you'd assume his salary would be in the stratosphere nope not quite reflecting the man's well-known modest personality the berkshire hathaway chairman annual salary is a comparatively low 100 000 and it's been like that for more than 25 years the majority of his cash actually comes from his stock even with that absurd wealth to his name warren buffett isn't the richest man in the world in fact he's not even in the top three each of elon musk bill gates jeff bezos and mark zuckerberg have deeper pockets the amazon founder has a net worth of 188 billion the facebook ceo is worth 97 billion the tesla visionary boasts 90 billion to his name and the iconic microsoft co-founder has 116 billion sitting in his bank as we circle back to the man of the hour before we discuss how warren buffett manages to distribute 80 billion bucks let's analyze how he made it there in the first place while other kids his age were playing hopscotch a young daring warren buffett was on a fast track to making money his entrepreneurial spirit was on display from the get-go at only six years old he bought six packs of cokes from his grandfather's grocery store for 25 cents and then resold them individually at five cents a pop pocketing a nickel in profit five years later at just 11 years old buffett made his first investment he bought three shares of a company called city service preferred for 38 each soon after the purchase their price took a dive hitting 27 while some would panic seeing their shares tumble warren remained resilient they spiked backed up to forty dollars each and he sold them for a small profit but before too long city service preferred exploded all the way up to two hundred dollars a share warren was kicking himself for selling out too early this early lesson proved crucial to the great investors long-standing philosophy be patient and never panic as a teenager warren would spend his days watching and listening to the investors at his father's small brokerage firm meanwhile he saved all his pennies from a number of odd jobs at one stage he was earning about 175 dollars a month as a paperboy for the washington post that was more than most of his teachers were making at the time warren was clearly obsessed with business he even bought used pinball machines and set them up in local shops by the time he'd finished college the business savvy youngster had accumulated 9 800 over 100 grand by today's standards but it was his transition into the world of stock marketing investing that paved the way for ultimate success with knowledge from the new york institute of finance under his belt buffett spent time as an investment salesman before becoming a securities analyst working alongside benjamin graham the man widely considered as the father of value investing when warren hit 30 years of age he surpassed the magical million-dollar mark but it didn't stop there since becoming chairman of berkshire hathaway in 1970 buffett's investing strategies have allowed him to continually find diamonds in the rough pushing him well up into billionaire territory what were those investing strategies and more importantly how did buffett manage to put them successfully into action time and time again to understand that we first need to understand the stock market at its most basic level the stock market is like any other marketplace partial ownership of companies otherwise known as shares are the product buyers and sellers negotiate prices and when they can agree on a price a trade is made so effectively every time warren buffett has purchased shares of a company be them in coca-cola or amazon or anyone else someone else needed to be on the other side of the transaction as a seller being a wise investor comes down to two things time in the market and timing the market the former is a simple concept the longer you hold shares of a company providing that their fundamentals are sound the greater opportunity for growth and compound interest just think of apple's little-known third co-founder ronald wayne when the tech giant was still in its infancy he sold his 10 stake in the company for just 800. had he sat tight that 10 percent would be worth more than 100 billion the latter concept timing the market is just as important in warren buffett's own words be fearful when others are greedy and to be greedy only when others are fearful that means taking advantage of market crashes looking at them as a time to buy not as a time to sell of course in order to be greedy warren needed to be willing to risk his money on the table as the old saying goes you've got to spend money to make money and in the case of the oracle of omaha he spent it on a number of incredibly successful companies buffett has made thousands of trades over his career but here's a few of the more notable ones for you via berkshire hathaway warren bought a 9.3 percent stake in bank of america after the gfc frankly it was a bargain his 5 billion investment gave him shares at a price of 7.14 each a huge dip from the high 20s that the bank was previously trading at two decades earlier in 1989 he purchased equity in wells fargo at a measly value of three dollars per share it got as high as 64 bucks back in 2017 in fact buffett's investment was so successful that he was forced to sell some of his shares in order to stay below 10 ownership of the company otherwise before he knew it he would have been running the joint around the same time he also invested heavily in coca-cola the 1.3 billion dollar worth of shares in 1987 is worth roughly 18 billion dollars today as for a couple recent highlights he notably bought nearly 1 billion dollars of amazon shares in 2019 and acquired equity in a cloud-based software company called snowflake in 2020. for all his winners the much beloved businessman has made his fair share of mistakes most recently being the choice to buy positions in the now destroyed airline industry a choice which cost him billions alas he still got more money in the bank than we could ever comprehend but you wouldn't know that by the way he spends his money as a notoriously frugal man one who spends just 18 bucks on haircuts warren buffett doesn't splurge on fast cars like your kanye west or floyd mayweathers of the world in fact to this day buffett drives a modest 2014 cadillac xts worth the touch over 23 000 its predecessor was a metallic beige 2006 cadillac dts which he sold for 122 500 at auction he also sold his lincoln town car for 70 000 with the proceeds going to charity of course while his car collection is far from vast he absolutely loves private jets he initially splurged on a bombardier challenger but sold it when he decided to become the owner of an entire fleet netjets planes aside the low-cost mentality with cars also extends to his real estate despite buffett's incomprehensible wealth his home is far from lavish he's lived in the same humble dwelling in omaha since 1958. back then the five bedroom two and a half bathroom nebraska property cost him thirty one thousand five hundred dollars these days it's estimated at over six hundred fifty thousand dollars and if you ask warren he'll tell you it's the third best investment he's ever made he also bought this vacation home in laguna beach california with the help of a 30-year mortgage for 150 000 in 1971. not too shabby right the ocean view six-bedroom house accumulated an enormous amount of value over the years finally being sold in october 2018 for 7.5 million dollars buffett's always said that he's never had any great desire to have multiple houses instead most of his cash has gone back into his business berkshire hathaway it's not easy for an investment company to outperform the average return of the s p 500 index but amazingly buffett's berkshire hathaway has done so year after year since 1965 berkshire's stock has averaged a compound annual return of 20.3 percent more than double the s p 500 but that doesn't mean his berkshire office is anything remarkable it's far from it take a look that desk is over 75 years old belonging originally to his father and that little train goes back to his childhood originally found by his older sister it's common knowledge that warren buffett doesn't even have a computer in his office in fact he doesn't spend much on technology at all still using a flip phone up until this year before 2017 he'd managed to send just one email in his entire life to jeff rakes of microsoft the oracle himself at times owned as many as 475 000 shares of berkshire hathaway however in recent years he's humbly been offloading a considerable amount of them to charity astonishingly through his shares buffett has already given away 37 billion dollars to the bill and melinda gates foundation and is further committed to donating 99 of his entire wealth to philanthropic causes why because he signed the giving pledge an initiative he and gates started in 2010 which has grown to 1.2 trillion dollars in total pledges since not only is buffett giving away everything plus the kitchen sink but he's also encouraging other celebrities to follow suit hoping to broadly improve health and education across the world other celebrities shell out for private islands solid gold cars manhattan penthouses billion dollar yachts and designer fashion but warren buffett doesn't have a bar of it at the end of the day he's a frugal saver and the fact that he spends no more than and 17 cents on his daily mcdonald's order doesn't prove that then nothing will have you ever invested in the stock market how'd it go let us know in the comments down below don't forget to like this video subscribe to the richest and have a great day catch you next time [Music] you

Channel: TheRichest

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Keywords: The Richest, warren buffett, stock market, berkshire hathaway, making money, spending money, buffett billions, buffett millions, rich celebs, billion dollars, net worth, buffett cars, buffett stock, buffett house omaha

Id: RLkYY6DIbSQ

Length: 10min 40sec (640 seconds)

Published: Fri Oct 30 2020