He is 91 years old and investors are hanging on his every word, hungry for every word. Logically, because billionaire Warren Buffett rarely disappoints. For example, the commodity forecast he made eighteen months ago is now turning out to be very lucrative.
Warren Buffett is known as the ‘oracle of Omaha’, the place in Nebraska where he was born. And where he still lives, in the house he bought in 1958 for $31,500. There is no indication that this man, who hates extravagance, has a fortune of $114 billion, making it one of the richest people on Earth. One of the rare indulgences of the billionaire next door was the private jet he bought in 1989, which was christened “Indefensible” with a good dose of self-mockery. Not defendable.
Buffett is considered one of the most influential and successful investors of all time. His strategy has remained unchanged for sixty years: looking for bargains. For example, Buffett put billions of dollars into five Japanese listed commodity traders in August 2020 with his investment vehicle Berkshire Hathaway.
Their share price had fallen due to the corona crisis, which hit the prices of, among other things, oil, iron ore and copper. Buffett was therefore considered crazy by many. This time he was completely wrong, was the communis opinio. But the malaise proved short-lived; many commodities are now trading at historically high prices. As a result, the value of trading houses has also skyrocketed, Bloomberg news agency reported last week.
Woodstock of capitalism
It’s all about Buffett: acquiring undervalued but well-run companies. There are investors who, like the princess from the fairy tale, want to kiss as many frogs as possible in the hope that one of them will turn into a beautiful prince. But that is not for Buffett. “I’d rather buy great companies at a reasonable price than underperforming companies at a bargain price,” the master investor once wrote in one of his famous shareholder letters.
Before the outbreak of the corona crisis, those investors flocked to the Berkshire annual meeting in Omaha every year to listen to the oracle. That ‘Woodstock of capitalism’ lasted three days, a festival with drink, food and music. If you were lucky, you could hear Buffett strum his ukulele as one of the 40 thousand participants.
But the highlight was the meeting itself, where Buffett humorously answered questions from the audience for six hours, invariably flanked by his best friend and vice-chairman, Charlie Munger, who is now 98. After two online editions, Omaha can expect another invasion in April.
Aversion to hypes
At age 11, Buffett bragged to a boyfriend that he would be a millionaire by age 35, according to his authorized Alice Schroeder biography. In any case, he was already busy working on the road, busy with stock market tables and price charts. Knowledge gives power, Buffett soon learned. As a high school student, for example, he speculated on AT&T’s share price drop simply to anger his teachers. They knew he was well versed in investing, and he knew they had put some of their retirement money into shares of the telecom giant.
While that shock reaction was limited to a handful of investors at the time, Buffett now sometimes has the entire market in its grip. It is precisely because of his focus on value and aversion to hypes that he has many followers. He learned the trade of stock analysis over half a century ago from the ‘father of modern investing’, Benjamin Graham. American writer Walter Lippmann spoke of people planting trees that other people will sit under, Buffett recalled. “Ben Graham was such a man.”
Remembering Graham’s lessons, Buffett turned his nose up at technology stocks in the 1990s. He was no longer with the times, critics scoffed, even though he was such a good friend of Microsoft founder Bill Gates. When the dotcom bubble burst at the turn of the century, he was proved right after all. Nevertheless, he would later turn towards technology. Apple has been Berkshire’s largest publicly traded holding for several years now.
Donate 99 percent of assets
Buffett may have a huge fortune, but he isn’t afraid to part with it. In 2010, he made the Giving Pledge, a promise to donate 99 percent of his wealth to charities during his lifetime or after his death. He has now donated 40 billion euros, the majority of which to the Bill & Melinda Gates Foundation. Each of his children received their own charitable fund, with a sum of 1.7 billion euros.
Buffett also repeatedly called on American politicians to tax rich people like him more heavily. He finds it incomprehensible that his secretary pays relatively more taxes than he does. Even with that 1 percent left over, more than a billion will go to the three children of Buffett, whose wife died in 2004.
This ended a strange situation. Susie had deliberately pushed her husband into the arms of her younger friend Astrid Menks 26 years after their marriage in order to live her own life. They all remained friends, and after Susie’s death, Buffett remarried Menks. Buffett may not have eternal life, but he is eager to make a valiant effort. “If there’s one thing I want to be remembered for, it’s because of my advanced age,” he told his shareholders in 2011.
Buffett in Three Buffetisms
“We simply try to be fearful when the others are greedy and greedy when the others are afraid.” (1986)
‘If you have a case that suits us, give me a call. Like a longing teenage girl I’ll wait by the phone.’ (2005)
‘Take care of those who fall by the wayside, they often can’t help themselves. If I lived in a society where athleticism determines success, I would also hope for government support.’ (2019)