Warren Buffett doesn’t need an intro biography page, but I’ll write a quick summary anyhow. For more of my thoughts on Buffett, check out the posts I tagged him with. Here is a quick sample of a few of Buffett’s great results:
- Compounded his personal account at between 50-60% per year between 1950-1956
- Started private partnership open to mostly family and close friends in 1956 with $105,000 of capital
- Averaged a stunning 31% per year from 1956-1969 vs. the Dow’s 9% per year
- Closed his partnership in 1969 with over $100 Million AUM and returned capital to limited partners
- Took control of textile firm Berkshire Hathaway when BRK was selling for around $10-$12 per share
- Developed Berkshire into a unique business model, acquiring insurance companies and enabling him to invest the premiums received (the “float”) from those holdings
- Built his business on the foundation of investing in good companies/stocks with stable products and competitive advantages, capable and trustworthy management, with an attractive acquisition price
- Track Record:
- Over 20% compound annual returns from 1956-2011 (vs S&P average of 9%)
- Out of 55 total years of results, Buffett made money in 53 of those years, and beat the market in 47 of those years. His worst year was -9.6% in 2008/
Needless to say, Buffett is undeniably the greatest investor that ever lived. His track record and net worth rank among the best all time. Buffett was a student of Ben Graham, receiving the only A+ that Graham ever gave in his Security Analysis class at Columbia. Buffett started his career as a pure value investor who primarily bought baskets of cheap stocks, occasionally taking concentrated positions in securities that he really liked. He soon became much more qualitative in his analysis, preferring to buy companies with growth potential and wide competitive advantages. He said investment success could easily be had by sticking with quantitative numbers…. Numbers that “hit you over the head with a baseball bat”. This was an obvious, safe way to allocate capital. But he said what “really made the cash register ring” was pairing the quantitative analysis with the qualitative analysis. This synthesis is the genius that makes Buffett who he is, and is what made him so successful.
Here are some links to key articles and info on Buffett. I’ll add to this as I come across more worth while reads.
Must Read Buffett Masterpieces:
- Buffett Letters to Partners (1957-1969)–thanks to Pragmatic Capitalist for this link. These letters remain the greatest education I’ve ever received on investing.
- Buffett Berkshire Letters to Shareholders: Just as valuable as the Partnership Letters. Must read.
- The SuperInvestors of Graham and Doddsville: Famous talk given at Columbia in 1984 celebrating the 50th anniversary of Graham and Dodd’s Security Analysis: This piece was a life changer for me, making me realize that there is not only a blueprint for me to follow, but proof that it works in real life application.
Best Books on Buffett:
- Snowball by Alice Schroeder
- Buffett: The Making of an American Capitalist by Roger Lowenstein
- New Buffettology by Mary Buffett and David Clark
- The Warren Buffett Way by Robert Hagstrom
- The Essays of Warrent Buffett by Lawrence Cunningham
Other Key Links:
- You Pay a Very High Price in the Stock Market for a Cheery Consensus: Forbes piece written by Buffett in 1979 discussing why the best time to invest is when the general business and economic outlook is gloomy
- How Inflation Swindles the Equity Investor: Classic piece on how inflation affects stocks
- Yes, You Can Beat the Market: Fortune piece on Buffett, Munger, Schloss and Ruane
- NY Times Op-Ed: Buy American. I am. Buffett discussing why the fall of 2008 was a great time to invest.
- Collection of Forbes Articles on Buffett (very interesting pieces, many of them from years ago)