Learn To Invest Like Warren Buffett

Warren Buffett & Berkshire Hathaway

Warren Buffett is the founder, CEO and Chairman of a company called Berkshire Hathaway. Berkshire Hathaway was once a struggling textile company that Buffett acquired in 1965. However, this company was in fact one of his few failures and he never managed to turn it around. Surprisingly, he elected not to sell it.

Thereafter, Berkshire Hathaway was transformed into a holding company. As a result, over the next 52 years it became a sprawling mass of assets worth hundreds of billions of dollars. In fact, the combined market cap of Berkshire Hathaway now exceeds 800 billion USD and they sell everything from locomotives to lollipops.

invest like warren buffettWarren Buffett Education

Mr Buffett was the son of a devoutly religious father who served 4 terms as a Republican congressman. Additionally, he was born in a rural farming community in the Corn Belt of the US. As a result, the investment legend was instilled with fundamental American values at an early age.

The Warren Buffett education in business started when he was very young. Therefore paper routes, pinball machines and golf ball refurbishing were all successful business projects for him as a preteen. Additionally, he even engaged in horse race handicapping and betting at the tender age of 12! As a young man he seemed destined to be very wealthy.

The formal Warren Buffett education included attending the University of Nebraska. However, it was after reading a “The Intelligent Investor” that he went to Columbia University to study under it’s author Benjamin Graham. After graduation the student and teacher kept in touch. Eventually, in 1954 Buffett was invited by Graham to complete a 2 year apprenticeship at his financial firm in New York. Thus, the foundation his formal education and practical experience was completed.

Warren Buffett Then vs. Warren Buffett Now

Warren Buffet’s paradoxical disdain for investment norms emerged after his wry farm boy wit was introduced to Wall Street.

Warren Buffett Quotes

“If 1,000 managers make a market prediction at the beginning of a year, it’s very likely that the calls of at least one will be correct for nine consecutive years. Of course, 1,000 monkeys would be just as likely to produce a seemingly all-wise prophet”. – Excerpt from 2016 Shareholder Letter

invest like warren buffett

As a result, in the most recent Shareholder Letter for 2016 Buffett dedicated much time and effort disparaging “hedge funds”. His main point seems to be that an average investor would be more successful buying a passive index fund rather than consulting with a Wall Street hot shot. Mr. Buffett concludes that the fees charged on Wall Street are highway robbery.

The monkey quote referenced above is very recent and shows that he still waves the flag of the “US middle class” values. But does he walk the righteous path that he preaches? Lets have a look at a list of investments that Berkshire held in publicly traded companies for 2016. This information is widely available online in their most recent Shareholder Letter.

For someone with the utmost moral disdain for Wall Street it is paradoxical that he would have Goldman Sachs Group Inc as Berkshire Hathaway’s 6th largest holding! In case you didn’t know Goldman Sachs is the largest and most successful firm on Wall Street!

Warren Buffett and American Values

Warren Buffett Quotes

“Our efforts to materially increase the normalized earnings of Berkshire will be aided – as they have been throughout our managerial tenure – by America’s economic dynamism.” – Excerpt from Shareholder Letter 2016

Mr Buffett seems to be referring to creative destruction which is the concept that inefficient businesses should be allowed to fail and not be propped up by the US government. Unfortunately, Mr. Buffett is again easily called out for not doing as he preaches. Case in point is that 3 of Berkshire’s largest holdings are in US Airlines.

  1. Delta Airlines is 5th Largest
  2. Southwest Airlines is 11th largest
  3. United Continental is 13th largest

I have been traveling worldwide for the last 7 years and visited over 33 countries. However, one of the things that I had figured out before I left was that US airlines were complete sleaze pits. The only reason they are still in business is because the US government gives them monopolistic access to US airways. As a result, there is no way they would survive in a real free market business environment.

Additionally, think of the boost the US economy would get if the US airlines were able to operate on time? Not to mention lost baggage and damaged cargo expenses passed on to customers. Plus, have you seen the truck stop hags who they try to pass off a stewardesses? It is pretty bleak….seriously! It would take a strong stomach to want to try and profit from a US airline.

Warren Buffett meet Mr President

Warren Buffett was an ardent supporter of Barack Obama during his presidential campaigns (Ironically, so was Goldman Sachs). In fact, Obama regularly stated during his campaign speeches that he would consult with Warren Buffet for economic advice. As a result, many times during his 8 years in office President Obama hosted Mr. Buffett at the White House for “economic consulting”. There was no mention of Mr. Buffett’s enormous private business interests and he certainly did not divest of them before becoming an economic advisor to the White House.

So I guess it is logical that Mr. Buffett would have opposed the campaign of President Trump? Correct! He certainly did oppose President Trump. But what is really behind it? Perhaps Mr. Buffett is a true believer in climate change dynamics? To reveal his true intent please read the 2016 shareholder letter.

Berkshire Hathaway owns the largest railroad company in the US. Therefore, their railroad business will be materially affected by the approval of the Keystone and Dakota Access pipelines. As a result, all of those oil tanker railcars will be empty because the oil is flowing in a pipeline instead of a over the US railways!

For the 2017 Berkshire Hathaway Shareholder Letter I have a special request.

Dear Mr. Buffett,

Please reveal what you and President Obama were really discussing while you were advising the White House about the US economy!

Thank You!


Additional sources:

The Money Masters by John Train