How did Warren Buffett get started in business?

By Brent Radcliffe AAA
A:

Warren Buffett may have been born with business in his blood. He purchased his first stock when he was 11 years old, and worked in his family’s grocery store in Omaha. His father, Howard Buffett, owned a small brokerage, and Warren would spend his days watching what investors were doing and listening to what they said. As a teenager, he took odd jobs, from washing cars to delivering newspapers, using his savings to purchase several pinball machines that he placed in local businesses.

His entrepreneurial successes as a youth did not immediately translate into a desire to attend college. His father pressed him to continue his education, with Buffett reluctantly agreeing to attend the University of Pennsylvania. He then transferred to the University of Nebraska, where he graduated with a degree in business in three years.

After being rejected by the Harvard Business School, he enrolled in graduate studies at Columbia Business School. While there, he was taught by Benjamin Graham and David Dodd, both well-known securities analysts. Buffett was a fan of Graham’s book “The Intelligent Investor,” and it was under Graham that Buffett learned the fundamentals of value investing.

The Buffett that modern investors admire almost wasn’t. When he graduated from Columbia he intended to work on Wall Street, but Graham convinced him to make another career choice. Back in Omaha, Buffett worked as a stockbroker and opened several partnerships. The size of the investing partnerships grew substantially, and by the time he was 31 he was a millionaire.

It was at this point – in 1961 – that Buffett’s sights turned to directly investing in businesses. He made a $1 million investment in a windmill manufacturing company, and the next year in a bottling company. Buffett used the value investing techniques he learned in school, as well as his knack for understanding the general business environment, to find bargains on the stock market. Looking for new opportunities, he discovered a textile manufacturing firm called Berkshire Hathaway (BRK.A), and began buying shares in it. He later took control of the company in 1965. Like Berkshire Hathaway, he made some other good investments, like American Express (AXP), a company that doubled in price within two years of his initial.

Warren Buffett’s investments weren’t always successful, but they were well thought out and followed value principles. By keeping an eye out for new opportunities and sticking to a consistent strategy, Buffet and the textile company he acquired long ago are considered by many to be one of the most successful investing stories of all time. 

 

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