Warren Buffett is a canny investor, businessman and role model to many. His investment knowledge and skills secured him a number three spot on the Forbes World Billionaires list, with a net worth of $72.3 billion. He has obtained a cult-like status with professional and amateur investors following his every move.
With a cult-like status comes extensive media coverage. The internet is swamped with stories of Buffett’s life, investment decisions and more. With the overflow of information, you can easily miss out on interesting facts about the man behind the multi-billion dollar conglomerate. We have compiled a list of ten fascinating facts about Warren Buffett and the investment lessons we can learn from them.
Fact #1: You may attribute Buffett’s biggest win to salad dressing
In 1963, Allied Crude Vegetable Oil borrowed $175 million from lenders against its inventory of oil. One of the lenders was American Express. Unfortunately for American Express (AXP), the loans were fraudulent. Most of the collateral wasn't barrels filled with oil, but mostly water with a bit of oil floating on top. Allied Crude Vegetable Oil only had $6 million worth of oil, the rest was water.
This scandal caused American Express to lose millions and its stock fell 50%. Buffett capitalised on this opportunity by buying $13 million worth of AXP shares. Since then the company’s shares recovered and grew in value. Today AXP is one of Berkshire Hathaway’s largest holdings.
- Always buy fundamentally sound shares at a discounted price.
- Take a contrarian approach – do not follow market trends.
Fact #2: The worst deal Buffett has ever made was investing $443 million in Dexter Shoe Inc.
According to Buffett, the investment he made in Dexter Shoe Inc. in 1993 was his worst deal ever because the business lost its competitive edge soon after he acquired the company.
- Only invest in companies that have an economic moat.
- Do sufficient research before investing in any business.
Fact #3: Buffett bought Berkshire Hathaway so he could fire its CEO
Warren Buffett became a shareholder in Berkshire Hathaway in 1962. At the time, Berkshire Hathaway was merely a textile manufacturing company. The textile business was waning, and the company’s financial situation was not looking positive. Then CEO of Berkshire Hathaway, Seabury Stanton, offered Buffett an oral tender to buy back his shares at $11.50 per share. Buffett agreed to the deal but was furious when he received a tender offer in writing, offering 12.5 cents less than previously agreed. Instead of selling his shares, Buffett decided to buy more of Hathaway’s shares. In doing so, he took over the business as majority stakeholder and fired Stanton.
- Invest in companies with capable CEO's and management teams.
- In the financial industry it is every man for himself.
- By taking control of your financial situation, you will reap the most rewards.
Fact #4: In 1941 at the age of 11, Buffett made his first stock purchase
The first shares he ever bought was from a company called Cities Service. He bought six shares for him and his sister, Doris. Soon after buying, the share price started tumbling, then rose again to slightly more per share than what he initially paid. Falling victim to the emotional pressure of market fluctuation, Buffet sold his shares. After selling, the shares jumped 500%, $40 per share to $200 per share.
- Have a long-term horizon.
- Patience is the key to long-term investment success.
- Time is the most valuable asset any investor will have – the sooner you invest, the better.
- Invest over the long-term. Markets fluctuate, but know that the results will be good over the long-term.
Fact #5: 99% of Warren Buffett’s wealth was earned after his 50th birthday
According to The Motley Fool, he was worth $300 million on his 50th birthday. Today, Buffett is worth $72.3 billion. Which means, he earned $72 billion of his wealth after the age of 50.
- Compounding interest is the secret to investment success.
- Adopt a long-term approach.
Fact #6: In 2013, Buffett raked in, on average, $37 million per day
To put that into perspective, Leonardo DiCaprio who received an Oscar nomination for his role in the highly popular film, “The Wolf of Wall Street”, earned $39 million for the entire 2014.
Buffett earned $13.5 billion in a year, which totals to $37 million per day, just over $1.5 million per hour and slightly above $25,600 per minute. To try fathom Buffett’s wealth, view this comparison of the average American household’s income of 2013 with Warren Buffett’s salary of the same year.
- This is proof that value investing combined with the right temperament is bound to deliver financial success.
Fact #7: Buffett owns relatively few stocks, but those he owns, he tries to hold "forever"
Buffett follows a simple investing rule of only investing in companies and industries he understands well and holds them for as long as possible. Berkshire Hathaway's portfolio consists of stock from roughly 30 companies, including Coca-Cola, Wells Fargo, American Express, Procter & Gamble, Kraft, Johnson & Johnson and Walmart.
- Invest in companies or industries that you carry knowledge of.
- Try to hold your shares "forever".
Fact #8: Warren Buffett spends 80% of his days reading
Buffett and his right-hand man, Charlie Munger agree that constantly reading and learning led to their success with Berkshire Hathaway. “I just sit in my office and read all day,” Buffett told The Week. “Look, my job is essentially just corralling more and more and more facts and information, and occasionally seeing whether that leads to some action.”
Fact #9: Buffett’s favourite meal is a cheeseburger with a Cherry Coke
Warren Buffett loves junk food and eats 2,500 calories a day. He is a true representative and supporter of the brands he owns.
Buffett loves drinking Cherry Coke and having a slice of cheese on his burger, but that wasn't his sole reason for investing in Coca-Cola or Kraft.
- Don't invest in a company simply because you love its products.
- Buy equities of companies that have aligned fundamentals, economic moat, growth potential and that are trading below intrinsic value.
The last fact doesn’t necessarily have a valuable lesson to draw from, but I wanted to include it for interest sake.
Fact #10: Warren Buffett is a fan of AMC’s crime drama series, Breaking Bad
Warren Buffett created a Twitter account and made his first Tweet on the second of May 2013, which reads: “Warren is in the house.” The first photo he ever tweeted confirmed he was in fact a Breaking Bad fan.
There are valuable lessons to learn from the Oracle of Omaha and his approach to life and investing. These Warren Buffett facts, I believe, prove that his success can mainly be attributed to his attitude towards life. If you'd like to read a few more tips from one of the value investing greats, dive into 20 of the best Benjamin Graham quotes.
Buffett's history reveals countless examples of how you should manage your investments. Advance your investing skills by learning from the guru's past triumphs and mistakes.