How Warren Buffett Became One of the Wealthiest People in America
A Chronological History of the Oracle of Omaha: 1930-2020
Warren Buffett is one of the wealthiest and most influential people in American business. He is the third-richest member of the Forbes 400 with a net worth of $72 billion in March 2020. Living and working in Omaha, Nebraska, Buffett was nicknamed the "Oracle of Omaha" due to his investment selections.
Warren Buffett's First Investments 1930–1949
1930: On August 30, Warren Edward Buffett is born to his parents, Howard and Leila Buffett, in Nebraska.
1941: At 11 years old, Warren buys his first stock. He purchases six shares of Cities Service preferred stock—three shares for himself, three for his sister, Doris—at a cost of $38 per share. The company falls to $27, but shortly climbs back to $40. Warren and Doris sell their stock. Almost immediately, it shoots up to more than $200 per share.
1943: Warren declares to a friend of the family that he will be a millionaire by the time he turns 30, or "(I'll) jump off the tallest building in Omaha."
1945: Warren is making $175 monthly delivering Washington Post newspapers. At 14 years old, he invests $1,200 of his savings into 40 acres of farmland.
1947: In his senior year of high school, Warren and a friend purchase a used pinball machine at a cost of $25. Buffett begins to think about the potential profit and places it in a nearby barbershop. Within months, he owns three machines in three different locations. The business is sold later in the year for $1,200 to a war veteran.
In the same year, Warren has earned over $5,000 delivering newspapers. His father presses him to attend college, a suggestion Warren does not take well. Nevertheless, that year, he enrolls as a freshman at the Wharton School of Finance and Commerce in Pennsylvania. Buffett hates it, complaining he knows more than the teachers.
1949: Classmates return to find that Warren is no longer enrolled at Wharton. He has transferred to the University of Nebraska. He is offered a job at J.C. Penney after college but turns it down. He graduates from college in only three years with a Bachelor of Science in business administration by taking his last three credits over the summer. His savings has reached $9,800.
How Buffett Got to $25 Million 1950–1969
1950: Buffett applies for admission to Harvard Business School and is turned down. He eventually enrolls at Columbia after learning that Ben Graham and David Dodd, two well-known security analysts, are professors.
1951: Warren discovers Graham is on the board of GEICO insurance. On a Saturday morning, he takes a train to Washington, D.C., and knocks on the door of its headquarters until a janitor lets him in. After asking if anyone is working, he finds Lorimer Davison, an executive at GEICO. They talk for four hours while Warren questions him on the business and insurance in general. After their discussion, Buffett is so excited about GEICO, that the following Monday he spends 65% of his $20,000 savings to purchase GEICO stock, which eventually grows into a huge fortune. Buffett now owns GEICO entirely.
Buffett graduates and wants to go to work on Wall Street in the same year. Both his father, Howard, and mentor, Graham, urge him not to. Warren offers to work for Ben Graham for free but Graham refuses.
He purchases a Texaco station as a side investment, but it doesn't work out as well as he hopes. Meanwhile, he is working as a stockbroker.
Buffett takes a Dale Carnegie public speaking course. Using what he learned, he begins teaching a night class at the University of Nebraska, "Investment Principles." The students are twice his age, as he is only 21.
Warren returns home and begins dating Susan Thompson. In April, Warren and Susie get married. They rent an apartment for $65 a month and have their first child, also named Susie.
1954: Ben Graham calls Warren and offers him a job at his partnership, the Graham-Newman Corporation, an investment firm. Buffett's starting salary is $12,000 a year.
1956: Graham retires and folds up his partnership. Since leaving college six years earlier, Warren's personal savings has grown from $9,800 to over $140,000.
The same year, the Buffett family returns home to Omaha. On May 1, Warren creates Buffett Associates, Ltd. Seven family members and friends contribute a total of $105,000, while Buffett invests only $100. He's now running his own partnership and will never again work for anyone else. Over the course of the year, he opens two additional partnerships, eventually bringing the number under his management to three. Years later, they will all be consolidated into one.
1957: Buffett adds two more partnerships to his collection. He is now managing five investment partnerships from his home.
With Susan about to have their third child, Warren purchases a five-bedroom, stucco house on Farnam Street for $31,500.
1958: The third year of the partnership completed, and Buffett has doubled the partners' money.
1959: Warren is introduced to Charlie Munger, who will eventually become the Vice-Chairman of Berkshire Hathaway and an integral part of the company's success. The two get along immediately.
1960: Warren asks one of his partners, a doctor, to find 10 other doctors who will be willing to invest $10,000 each in his partnership. Eventually, 11 doctors agree to invest.
1961: With the partnerships now worth millions, Buffett makes his first $1 million investment in a windmill manufacturing company.
1962: Buffett returns to New York with Susie for a few weeks to raise capital from his old acquaintances. During the trip, he picks up a few partners and several hundred thousand dollars.
The Buffett Partnership, which had begun with $105,000, is now worth $7.2 million. Warren and Susie personally own over one million of the assets. Buffett merges all of the partnerships into one entity known simply as Buffett Partnerships, Ltd. The operations are moved to Kiewit Plaza, a functional but less-than-grand office, where they remain to this day. The minimum investment is raised from $25,000 to $100,000.
In the same year, Buffett consults Munger on Dempster, the windmill manufacturing company. Munger recommends Harry Bottle to Warren, a move that would turn out to be very profitable. Bottle cuts costs, lays off workers, and causes the company to generate cash.
Warren discovers a textile manufacturing firm, Berkshire Hathaway, that is selling for under $8 per share. He begins to buy the stock.
1963: Buffett sells Dempster for three times the amount he invested. The nearly worthless company had built a portfolio of stocks worth over $2 million alone during the time of Buffett's investment.
The Buffett partnerships become the largest shareholder of Berkshire Hathaway.
Due to a fraud scandal, American Express shares fall to $35. While the world is selling the stock, Buffett begins to buy shares en masse.
1965: Warren's father Howard dies.
Buffett begins to purchase shares in Walt Disney Co. after meeting with Walt personally. Warren invests $4 million, which is approximately 5% of the company.
The American Express shares, which were purchased shortly before, are selling for more than double the price Warren paid for them.
Buffett arranges a business coup, taking control of Berkshire Hathaway at the board meeting, and naming new president Ken Chace to run the company.
1966: Warren's personal investment in the partnership reaches $6,849,936.
1967: Berkshire pays out its first and only dividend of 10 cents.
In October, Warren writes to his partners and tells them he finds no bargains in the roaring stock market of the '60s. His partnership is now worth $65 million.
Buffett is worth, personally, more than $10 million. He briefly considers leaving investing and pursuing other interests.
American Express hits over $180 per share, making the partnership $20 million in profit on a $13 million investment.
Berkshire Hathaway acquires National Indemnity Insurance at Buffett's direction. It pays $8.6 million.
1968: The Buffett Partnership earns more than $40 million, bringing the total value to $104 million.
1969: Following his most successful year, Buffett closes the partnership and liquidates its assets to his partners. Among the assets paid out are shares of Berkshire Hathaway. Warren's personal stake now stands at $25 million. He is only 39 years old.
The Berkshire Hathaway Years 1970–1989
1970: The Buffett Partnership is now completely dissolved and divested of its assets. Warren now owns 29% of the stock outstanding in Berkshire Hathaway. He names himself chairman and begins writing the annual letter to shareholders.
Berkshire makes $45,000 from textile operations, and $4.7 million in insurance, banking, and investments. Warren's side investments are making more than the actual company itself.
1971: Warren, at his wife's request, purchases a $150,000 summer home at Laguna Beach.
1973: Stock prices begin to drop and Warren is euphoric. At his direction, Berkshire issues notes at 8%. Berkshire also begins to acquire stock in the Washington Post Company.
1974: Due to falling stock prices, the value of Berkshire's stock portfolio begins to fall. Warren's personal wealth is cut by over 50%.
1977: Berkshire indirectly purchases the Buffalo Evening News for $32.5 million. He would later be brought up on antitrust charges by a competing paper.
Susie leaves Warren to pursue a singing career, although not officially divorcing him. Warren is crushed.
1978: Susie introduces Warren to Astrid Menks, a Latvian-American philanthropist and former cocktail waitress, who eventually moves in with him.
1979: Berkshire trades at $290 per share. Warren's personal fortune is approximately $140 million, but he was living solely on a salary of $50,000 per year. Berkshire begins to acquire stock in ABC.
1981: Munger and Buffett create the Berkshire Charitable Contribution plan, allowing each shareholder to donate some of the company's profits to their personal charities.
1983: Berkshire ends the year with $1.3 billion in its corporate stock portfolio.
Berkshire begins the year at $775 per share and ends at $1,310. Warren's personal net worth is $620 million. He makes the Forbes list for the first time.
Buffett purchases Nebraska Furniture Mart for $60 million. It turns out to be one of his best investments yet.
1985: Buffett finally shuts down the Berkshire textile mills after years of sustaining it. He refuses to allow it to drain capital from shareholders.
Warren helps orchestrate the merger between ABC and Cap Cities. He is forced to leave the board of the Washington Post. The federal legislation prohibits him from sitting on the boards of both Capital Cities and Kay Graham's Washington Post.
Buffett purchases Scott & Fetzer for Berkshire's collection of businesses. It costs around $315 million and boasts such products as Kirby vacuums and the World Book Encyclopedia.
1986: Berkshire breaks $3,000 per share.
1987: In the immediate crash and aftermath of October, Berkshire loses 25% of its value, dropping from $4,230 per share to around $3,170. The day of the crash, Buffett loses $342 million personally.
1988: Buffett begins buying stock in Coca-Cola, eventually purchasing up to 7% of the company for $1.02 billion. It will turn out to be one of Berkshire's most lucrative investments.
1989: Berkshire rises from $4,800 per share to over $8,000. Warren now has a personal fortune of $3.8 billion.
No Retirement in Sight for Buffett 1990–2015
1991: As interim chairman, Buffett drastically cuts Salomon Brothers' bonuses for the year-end and takes other actions to keep Salomon from a financial collapse.
2003: Berkshire terminates the charitable contributions program when subsidiary The Pampered Chef becomes targeted by anti-abortion foes protesting some of the program's contributions.
2004: Buffett's wife, Susan Thompson, dies after 52 years of marriage; they had been separated since the 70s, leaving behind their three children, Susan, Howard, and Peter.
2006: After Berkshire Hathaway's significant investment in Coca-Cola, Buffett serves as director of the company from 1989 to 2006. He is also director of Citigroup Global Markets Holdings, Graham Holdings Company, and The Gillette Company.
Buffett marries his longtime romantic companion Astrid Menks, at age 76.
Buffett announces he will give away his entire fortune to charitable causes, committing 85% of his wealth to the Bill and Melinda Gates Foundation.
2010: Bill Gates and Buffett work together, forming The Giving Pledge campaign to bring other wealthy individuals together to support philanthropic causes.
2011: Buffett is awarded the Presidential Medal of Freedom.
2012: Buffett announces that he has been diagnosed with cancer of the prostate. In July he starts treatment, and the treatment is declared successful in November.
2013: Buffett, along with private equity group 3G Capital, purchase H. J. Heinz for $28 billion. Over the next two years, Buffett also acquires Duracell and Kraft Foods Group.
2015: Buffett endorses Hillary Clinton as the Democratic presidential nominee.
The Final Chapter 2016–2020
2016: Buffett launches a website called Drive2Vote to encourage his fellow Nebraska inhabitants to come out and vote, offering assistance to get voters registered and provide rides to polling locations if needed.
2017: Buffett begins selling off some of his estimated 81 million shares of IBM stock, mentioning that he no longer assigned as high a value to the company as he did six years previously. His net remaining shares sit at about 37 million. He increased his investment in Apple, and it became Berkshire Hathaway's largest investment in one company's common stock. After exercising some warrants, Buffett also became Bank of America's largest shareholder, owning about 700 million shares.
2018: The "Oracle of Omaha" has an estimated net worth of $84.5 billion. Buffett adds JPMorgan Chase and Bank of New York Mellon to Berkshire Hathaway's investment portfolio.
2019: Buffett's annual letter to Berkshire Hathaway shareholders is released on Feb. 23. He mentions that Berkshire's success has been a product of what he calls "The American Tailwind." In an interview with CNBC on Feb. 25, Buffett admits to having overpaid for Kraft Heintz and is not planning to either buy or sell shares in the company.
2020: In his Feb. 22 Berkshire Hathaway shareholder letter, Buffett addresses the topic of succession and says the culture will live on beyond himself and Munger. He says the book "Margin of Trust" by Larry Cunningham and Stephanie Cuba will be released at the annual meeting in Omaha on May 2. In addition, Berkshire Hathaway executives Ajit Jain and Greg Abel will receive more visibility and field questions at the meeting.
That same letter outlines how Buffett intends for his shares to be handled after his death. Each year, a certain number of A shares will be converted to B shares, then distributed to various foundations to use promptly.
He estimates it will take 12 to 15 years for the shares he owns to move into the market.