Oxstones Investment Club™By Jeff Desjardins, Visual Capitalist,
For most people, the “Oracle of Omaha” needs no introduction. With a self-made net worth of $84 billion, some experts consider the 87-year-old to be the greatest investor of all-time.
Despite his incredible achievements and decades in the public eye, the modest Midwesterner is frugal, relatable, and full of humility – and his life story is an endless source of lessons to aspiring business professionals around the world.
THE WARREN BUFFETT SERIES
PART 1: THE EARLY YEARS
Today’s infographic, which is done in partnership with finder.com, is Part 1 of the Warren Buffett Series, a five-part biographical series about the legendary investor.
The young Warren Buffett was clearly a special kid. He ran his first “business” when he was five years old, and he invested in his first stock when he was 11. Buffett even managed to emerge from high school richer than his teachers.
But what lessons can we learn from Buffett’s prolific childhood – and how did his experiences as a young man shape him into the magnate we know today?
FROM NUMBERS TO DOLLAR SIGNS
Even for someone as gifted and focused as Buffett, a serendipitous insight played a crucial role in charting his future course.
During a visit to the New York Stock Exchange when he was 10 years old, the sight of a young man rolling custom, handmade cigars on the floor made an outsized impact on him. In particular, Buffett realized that such a job couldn’t exist without massive amounts of money flowing through the stock market.
This unexpected epiphany planted the seed for stocks in his brain, and Warren’s long fascination with numbers soon shifted towards dollars.
THE BUFFETT GROWTH MINDSET
Warren Buffett famously spends 80% of his day reading – and the written word was just as important to his younger self. As a lad, one book that caught Buffett’s eye was One Thousand Ways to Make $1,000 by F.C. Minaker
Specifically, the book showed Buffett how $1,000 could compound over time – and that the earlier you had money working for you, the better.
An important lesson from the book? There’s a massive difference in returns between 60 and 70 year compound interest scenarios. In other words, annualized returns are just one part of the equation – but how long the money compounds is the other crucial part. This is a big part of the reason why Warren Buffett got started early.
WARREN BUFFETT’S FIRST STOCK
Through his various activities, Buffett had $120 saved by age 11. Naturally, he invested it in a stock, co-investing his sister’s money. They each bought three shares of Cities Service Preferred for $38.25 each.
The share price promptly dropped to $27, but Buffett waited it out. When it got to $40, he sold to net a small profit – however, the stock soon after went all the way to $202!
Warren calls this one of the most important moments in his life, and he learned three lessons:
- Don’t overly fixate on what he paid for the stock
- Don’t rush unthinkingly to grab a small profit. He could have made $492 if he was more patient
- He didn’t want to have responsibility for anyone else’s money unless he was sure he could succeed
These important lessons would eventually tie in well to his value investing philosophy.
ODD JOBS
The young Buffett wasn’t afraid to try new things to build up his capital. He collected golf balls, sold peanuts and popcorn, sold gum and Coca-Cola, and even created tipsheets for horse races on a typewriter.
Some of his stranger endeavors? He launched Buffett’s Approval Service and sold stamps to collectors around the country, and he also launched Buffett’s Showroom Shine – a car shining business that didn’t last too long.
WARREN’S WORK ETHIC
By the end of high school, Buffett had launched multiple businesses, sold thousands of golf balls, read at least 100 books on business, and hawked 600,000 newspapers.
This hard work led to him having a fortune of $5,000 by high school graduation time, the equivalent of $55,000 in today’s currency. He even owned land at this point, after buying 40 acres of Nebraska farmland with his newspaper profits.
KNOCKED OFF COURSE
After high school, Buffett decided he was a shoe-in for Harvard. He knew it would be stimulating for him intellectually, and that the famed business school would allow him to develop a strong network.
The only problem? He got rejected.
Instead of letting this get to him, he discovered Benjamin Graham’s book The Intelligent Investor and fell in love. It was the methodical investing framework he needed, and he would later call it the “best book about investing ever written”.
Buffett would soon be accepted at Columbia Business School, where Benjamin Graham and David Dodd taught finance. Graham became Buffett’s idol, and his second-biggest influence behind his own father.
OTHER NOTES
Credits: This infographic would not be possible without the great biographies done by Roger Lowenstein (Buffett: The Making of an American Capitalist) and Alice Schroeder (The Snowball), as well as numerous other sources cataloging Buffett’s life online.
Tags: Benjamin Graham, building businesses, entrepreneurship, learning from business failures, life long learning and education, long term investing, Personal Finance, self improvement, start-ups, value investing, warren buffett and the american entrepreneurial spirit, warren buffett bio, warren buffett early years, young warren buffett