Warren Buffett

Warren Edward Buffett (born August 30, 1930, in Omaha, Nebraska) is an American investor, businessman and philanthropist. He is regarded as one of the world's greatest stock market investors, and is the largest shareholder and CEO of Berkshire Hathaway.[3] With an estimated net worth of around US$62 billion,[4] he was ranked by Forbes as the richest person in the world as of March 5, 2008.[5]
Often called the "Oracle of Omaha,"[6] Buffett is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.[7] His 2006 annual salary is about $100,000, which is on the low side of senior executive remuneration in other comparable companies,[8] and when he spent $9.7 million of Berkshire's funds on a business jet in 1989, he jokingly named it "The Indefensible" because of his past criticisms of such purchases by other CEOs.[9] He lives in the same house in the central Dundee neighborhood of Omaha that he bought in 1958 for $31,500, today valued at around $700,000.[10]
Buffett is also a noted philanthropist. In 2006, he announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation. In 2007, Buffett was listed among Time's 100 Most Influential People in The World.[11] He also serves as a member of the board of trustees at Grinnell College. Grinnell College has the second largest endowment of any liberal arts college in the United States.[12]
Contents
[hide]
1 Investment approach
2 Public stances
3 Historical timeline
4 Personal life
5 Philanthropy
6 Writings
7 See also
8 References
9 Further reading
10 External links
10.1 Videos
[edit] Investment approach

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Buffett's philosophy on business investing is a modification of the value investing approach of his mentor Benjamin Graham.[citation needed] Graham bought companies because they were cheap compared with their intrinsic value. He was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment.[citation needed] He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in. In addition he believed that the business has to have solid economics behind it.[citation needed] Buffett's investment style is also heavily influenced by Phil Fisher.
The following are some questions to determine what business to buy, based on the book Buffettology by Mary Buffett:
Is the company in an industry with good economics, i.e., not an industry competing on price. Does the company have a consumer monopoly or brand name that commands loyalty? Can any company with an abundance of resources compete successfully with the company?
Are the owner earnings on an upward trend with good and consistent margins?
Is the debt-to-equity ratio low or is the earnings-to-debt ratio high, i.e. can the company repay debt even in years when earnings are lower than average?
Does the company have high and consistent Returns on Invested Capital?
Does the company retain earnings for growth?
The business should not have high maintenance cost of operations, high capital expenditure or investment cash outflow. This is not the same as investing to expand capacity.
Does the company reinvest earnings in good business opportunities? Does management have a good track record of profiting from these investments?
Is the company free to adjust prices for inflation?
Buffett also concentrates on when to buy. He does not want to invest in businesses with indiscernible value. He will wait for market corrections or downturns to buy solid businesses at reasonable prices, since stock market downturns present buying opportunities.
He is known for being conservative when speculation is rampant in the market and being aggressive when others are fearing for their capital. This contrarian strategy is what led Buffett's company through the Internet boom and bust without significant damage, although critics[attribution needed] have also noted that it may have led Berkshire to miss out on potential opportunities during the same period.
He also asks at what price is the business a bargain, and his answer typically is when it provides a higher rate of compounded return relative to other available investment opportunities.
Warren Buffett's letters to shareholders detail his investment style and outlook.[13]
[edit] Public stances

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Buffett has repeatedly criticized the financial industry for what he considers to be a proliferation of advisors who add no value but are compensated based on the volume of business transactions which they facilitate. He has pointed to the growing volume of stock trades as evidence that an ever-greater proportion of investors' gains are going to brokers and other middlemen.
Buffett emphasized the non-productive aspect of gold in 1998 at Harvard: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
Buffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total federal taxes, while his employees paid 33% of theirs despite making far less money. [14]
Buffett believes that the U.S. dollar will lose value in the long run. He views the United States' expanding trade deficit as an alarming trend that will devalue the U.S. dollar and U.S. assets. As a result it is putting a larger portion of ownership of U.S. assets in the hands of foreigners. This induced Buffett to enter the foreign currency market for the first time in 2002. However, he substantially reduced his stake in 2005 as changing interest rates increased the costs of holding currency contracts. Buffett continues to be bearish on the dollar, and says he is looking to make acquisitions of companies which derive a substantial portion of their revenues from outside the United States. Buffett invests in PetroChina Company Limited and in a rare move, posted a commentary[15] on Berkshire Hathaway's website why he will not divest from the company despite calls from some activists to do so.
Buffett believes government should not be in the business of gambling. He believes it is a tax on ignorance.[16]
Buffett's speeches are known for mixing business discussions with humor. Each year, Buffett presides over Berkshire Hathaway's annual shareholders' meeting in the Qwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname "Woodstock of Capitalism".[citation needed]
Berkshire's annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media. Buffett's writings are known for containing literary quotes ranging from the Bible to Mae West, as well as Midwestern advice and numerous jokes. Various websites extol Buffett's virtues while others decry Buffett’s business models or dismiss his investment advice and decisions.
Buffett favors the inheritance tax, saying that repealing it would be like "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics".[17] In 2007, Buffett testified before the Senate and urged them to preserve the estate tax so as to avoid a plutocracy.[18]
Buffett has been recognized as most responsible for FASB 123 (r), or Stock Option Expensing on the GAAP Income Statement.[citation needed] When asked about the subject at Berkshire Hathaway's 2004 annual meeting, he compared the United States Congress and the Securities and Exchange Commission's decision to override FASB, who wanted to consider company-issued stock-option compensation as an expense, to a bill proposed in the Indiana house for Pi to be changed from 3.14... to 3.20.
Buffett has held fundraisers for both Hillary Clinton and Barack Obama for president. He has not indicated who he will vote for, but he has expressed that both would make "great Presidents". [19]
Buffett called the 2007-present downturn in the financial sector "poetic justice"[20]
Mr. Buffett was inducted into the Junior Achievement U.S. Business Hall of Fame in 1997.