Executive Summary

In the world of investing, it is nearly impossible to make a name for yourself.  Heroes come and go.  Money is made and lost every second.  But in the mix of the Wall Street buzz, a man emerged as an icon of investment prestige.  This man turned a mere $105,000 in 1957 into an excess of $20 billion and has become the second richest man in the world.  The man we speak of is Warren Buffett.  In order to understand the genius of his success, it is important to understand the background of his life and the basis of his thinking.  He is an amazing individual with impressive wisdom and an eccentric lifestyle and a knack for business sense has been with him since an early age.

Warren has showed a gift of business genius since an early age.  He excelled through school at an amazing rate and began his investment career by creating Buffett Associates, Ltd. in 1956.  Through this partnership, Warren turned $105,000 into $300,000 in one year, and had a return of 1,156% after 10 years.  Warren liquidated his partnership with the coming of the Vietnam War, and maintained holdings in Berkshire Hathaway, a position that he still holds today.  Warren has had many triumphs in the business world, which include leading Berkshire Hathaway to a stock price high of $80,000 a share, saving Solomon Brothers from bankruptcy, and becoming the second richest man in the world.

Warren’s style of investing is called value investing, also known as investing from a business perspective.  With this lie of thinking, Warren believes that “investment is most intelligent when it is most business like.”  Warren looks to identify the intrinsic value of a target business and then looks for a bargain price for that business.  The real secret lies in determining where to find a target business.

In the following paper, we look to inform our audience on the history of Warren Buffett as well as educate on how his investment strategy works.  We begin our explanations with a qualitative look at Warren’s wisdom, describing the tenets behind his strategy.  We then introduce the quantitative end of his approach to finance, giving real life examples of his work.

In the world of investing, it is nearly impossible to make a name for yourself.  Heroes come and go.  Money is made and lost every second.  But in the mix of the Wall Street buzz, a man emerged as an icon of investment prestige.  This man turned a mere $105,000 in 1957 into an excess of $20 billion and has become the second richest man in the world.  The man we speak of is Warren Buffett.  In order to understand the genius of his success, it is important to understand the background of his life and the basis of his thinking.  He is an amazing individual with impressive wisdom and an eccentric lifestyle and a knack for business sense has been with him since an early age.

Warren has showed a gift of business genius since an early age.  He excelled through school at an amazing rate and began his investment career by creating Buffett Associates, Ltd. in 1956.  Through this partnership, Warren turned $105,000 into $300,000 in one year, and had a return of 1,156% after 10 years.  Warren liquidated his partnership with the coming of the Vietnam War, and maintained holdings in Berkshire Hathaway, a position that he still holds today.  Warren has had many triumphs in the business world, which include leading Berkshire Hathaway to a stock price high of $80,000 a share, saving Solomon Brothers from bankruptcy, and becoming the second richest man in the world.

Warren’s style of investing is called value investing, also known as investing from a business perspective.  With this lie of thinking, Warren believes that “investment is most intelligent when it is most business like.”  Warren looks to identify the intrinsic value of a target business and then looks for a bargain price for that business.  The real secret lies in determining where to find a target business.

In the following paper, we look to inform our audience on the history of Warren Buffett as well as educate on how his investment strategy works.  We begin our explanations with a qualitative look at Warren’s wisdom, describing the tenets behind his strategy.  We then introduce the quantitative end of his approach to finance, giving real life examples of his work.