Oracle Of Omaha

DEFINITION of 'Oracle Of Omaha'

The Oracle of Omaha is a nickname for Warren Buffett, who is arguably one of the greatest investors of all time. He is called the "Oracle of Omaha" because his investment picks and comments on the market are very closely followed by the investment community, and he lives and works in Omaha, Nebraska. Buffett is the chairman and CEO of Berkshire Hathaway, a company that he became the controlling shareholder of in the mid-1960s.

BREAKING DOWN 'Oracle Of Omaha'

Warren Buffett is one of the richest men in the world. He built his fortune using a simple yet powerful investment strategy. His investments are long-term positions, accomplished by the purchase of fundamentally sound companies that are trading well below their intrinsic value. Some of his most publicized investments include Coca-Cola, Gillette and Dairy Queen. As of 2018, The Oracle of Omaha is estimated to have a net worth of $90 billion.

Oracle of Omaha’s Early Years

Warren Buffett was born in Omaha, Nebraska, in 1930 to parents Howard and Leila Buffett. The Oracle of Omaha’s father was a stockbroker, which gave him an introduction to the stock market. Buffett purchased his first stock at age 11; he bought three shares of Cities Service Preferred for $38 a share and sold them at $40 per share. After he sold the stock, it advanced to $200. On reflection, Buffet believes this taught him the virtue of patience. Buffett demonstrated business prowess from his early teens, running a paper delivery business and completing his own tax returns. The Oracle of Omaha started a pinball machine business while in high school and went on to sell the business for $1,300. He graduated from the University of Nebraska with a business degree.

Oracle of Omaha’s Investment Philosophy

Warren Buffet is a value investor; he looks to purchase companies that are below their intrinsic worth but have the potential to make money. Buffet attempts to do this by buying companies that are out of favor with the market. He values a company by assessing its fundamentals such as return on equity and profitability. For example, Buffett likes a company to have a low debt/equity ratio; he wants earnings growth generated from shareholder’s equity as opposed to debt. The Oracle of Omaha’s quote “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” sums up his investment philosophy. For more, see: Warren Buffet: How He Does It.)