The Master: Warren Buffett 1

Warren Buffett was born on September 30, 1930. He has turned his steady devotion to value investing principles into some $52 billion in net worth. He is the second wealthiest person in the world (depending on the price of Microsoft stock). His on-court record cannot be touched. His off-court demeanor, where his candor, clairvoyance and wit combine with his own enviably humble lifestyle, creates a model for investors to emulate.

In the beginning

The early stages of Buffett's career and lifestyle suggested investing success, although hardly on the scale he actually went on to achieve. Warren grew up in an investing environment. His father, Howard, ran an Omaha brokerage house in the 1930s that was known as Buffett, Sklenicka, & Co. In his late teens, Warren worked in the house posting stock quotes and doing odd jobs providing exposure to the trade. He learned about business through this experience and through a series of small business ventures in his high school days.

Like many other financial prodigies, Warren's aptitude did not go unnoticed by his parents, who urged him to atteend the revered Wharton School at the University of Pennsylvania. This didn't work out well. Warren soon became bored and dissatisfied, feeling that he knew as much or more than Penn's vaunted faculty. Perhaps he was homesick; perhaps he had a more practical view of matters than the pages and pages of portfolio theory he has no doubt exposed to. in any case, he retreated to more familiar territory at age 19 to finish his degree at the University of Nebraska.

Benjamin Graham's Intelligent Investor hit the shelves, and legent has it that Warren, with a newly rekindled interest in investing and the business world, decided to put the finishing touches on his business education by attending Harvard Business School. Again, a poor match. Warren was rejected, as the story goes, after a 10-minute interview. Perhaps the admissions department had already reached its quota of Nebraskans.

Warren bounced back quickly from this setback and applied to Columbia Business School. Then and there, Buffett hooked up with Benjamin Graham. The rest, as they say, is history.

Warren took to Graham's preachings. The two bantered in engaging dialogue from the opening bell to the end of class. Warren graduated in a year with a Master's in Economics. More important, he left with a philosophy of investing based on valuing companies and finding undervaluation in the market-place.

Buffett returned to work in his father's brokerage firm and later went to work for Ben at Graham's brokerage firm, Graham Newman. There, he learned to manage investment portfolios and use insurance assets as an effective investing vehicle.

From these beginnings Buffett started his own investment fund (with contributed capital from neighbours, relatives, coworkers, and the like) and later built the Taj Mahal of investment companies, Berkshire Hathaway.

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