The snowball

Despite initially believing that a university education would hinder his progress, Warren Buffett eventually enrolled at the University of Pennsylvania's Wharton School, one of the most prestigious business schools in the U.S. His deep interest in business and exceptional memory, honed by a love for numbers and reading, allowed him to excel with ease. Buffett could effortlessly recall lecture content, which gave him ample time to focus on his burgeoning business ventures.

Despite his disinterest in alcohol, even as part of fraternity life, Buffett found ways to engage in the social scene on his own terms. After his father's political career led the family back to Omaha, Buffett transferred to the University of Nebraska at Lincoln, engaging in various jobs and entrepreneurial efforts.

Warren Buffett's journey back to Omaha in 1951 marked a significant turning point in his life. With his investment capital nearly doubled to $19,738, he joined his father's firm as a stockbroker. Despite his success, Buffett was disillusioned with the job, feeling like a "prescriptionist" in a market where few did their due diligence. His personal life, however, flourished as he married Susan Thompson in 1952.

Buffett's mentor, Ben Graham, offered him a position at Graham-Newman in New York, which Buffett eagerly accepted, starting work in August 1954. Under Graham's guidance, Buffett learned to identify undervalued "cigar butt" stocks and the importance of diversification, though he initially questioned the latter due to his confidence in his own judgment.

In 1957, Warren Buffett's investment partnerships significantly outperformed the market, earning him substantial fees which he reinvested, acquiring a 9.5 percent stake in the partnerships he managed. His success attracted more investors, and by 1959, he had amassed over a million dollars across seven partnerships, allowing him to pursue more ambitious investment strategies, such as acquiring significant shares in companies to influence their decisions directly. His meeting with Charlie Munger in 1959 marked the beginning of a powerful partnership. By 1960, the assets in Buffett's partnerships had grown to nearly $1.9 million, showcasing the compounding power of his investment approach. By the end of 1960, Buffett's reinvested fees had earned him $243,494, making up over thirteen percent of the partnerships' assets.

In January 1966, Warren Buffett faced a dilemma with his investment firm, Buffett Partnership Ltd. (BPL), which had amassed $44 million in capital. Despite the challenging market conditions, including urban riots, the Vietnam War, and a declining stock market, Buffett struggled to find worthwhile investments. He decided to close BPL to new funds, conserving some capital for future opportunities. This period marked a shift in Buffett's strategy towards acquiring entire businesses rather than just shares.

Buffett, along with Charlie Munger and other investors, purchased the Baltimore department store Hothschild-Kohn, forming Diversified Retailing Company, Inc. Despite challenges with Berkshire Hathaway and selling down his American Express shareholding to acquire National Indemnity, an insurance company, BPL saw a significant advance in 1967. By 1968, Buffett considered selling Berkshire Hathaway but found no takers among his circle, including Munger.

In the early part of 1975, the Securities and Exchange Commission initiated an investigation into a transaction by Blue Chip Stamps, scrutinizing the complex shareholdings involving Blue Chip Stamps, Berkshire Hathaway, and Diversified Retailing. Charlie Munger and Warren Buffett were particularly examined. The investigation concluded with Blue Chip entering a consent decree, not admitting guilt but agreeing to alter its acquisition strategies. This outcome was a relief for Buffett and Munger, preserving their reputations. Following the investigation,

Berkshire Hathaway and Diversified Retailing merged, and Blue Chip divested competing businesses. Around this time, GEICO faced management issues, leading Buffett to increase his investment in the company. By the late 1970s, Buffett and Munger controlled significant assets, making substantial investments despite a recession. In 1983, Berkshire acquired Blue Chip Stamps, and Munger became vice chairman of Berkshire Hathaway. Buffett and Munger emphasized a partnership approach in their 1983 annual report, prioritizing long-term ownership of good businesses. By the end of 1983, Buffett's net worth had significantly increased, and he began focusing on philanthropy through the Buffett Foundation.

In 1991, Berkshire Hathaway's stock soared, valuing the company at over $10,000 per share and Warren Buffett's net worth at approximately $4.4 billion, with his wife holding an additional $500 million. Around this time, Buffett, through a mutual acquaintance, met Bill Gates, the founder of Microsoft. Despite their contrasting views on technology, with Buffett once likening computers to brussels sprouts, the two struck up a friendship that was not hindered by their competition for the title of America's richest man. They discovered shared interests beyond their initial impressions.

Buffett's involvement in managing Salomon did not deter his investment ventures. By 1993, Berkshire's stock had nearly doubled to $18,000 a share, making Buffett the wealthiest man in the U.S. with a fortune of $8.5 billion, while his wife's wealth grew to $700 million. An initial investment of $1,000 in 1957 would have ballooned to $6 million. Buffett's charitable foundation became one of the world's top five, distributing over $3.5 million annually.

In March 2000, as the tech stock bubble burst, Warren Buffett's investment acumen shone through. He considered buying back Berkshire Hathaway shares, which led to a 24% overnight surge in their price. By the year's end, the shares had climbed 47% from their low point, reinforcing Buffett's "Oracle of Omaha" moniker. That year, he acquired seven more companies and had a substantial amount of capital in government bonds.

Buffett used his influence to champion various causes. He argued for the necessity of estate taxes to prevent a wealth-based ruling class in the U.S. He criticized the practice of not accounting for stock options when granted, influencing companies like Coca-Cola to change their approach. He also took a stand against accountants and auditors who overlooked significant accounting frauds. In 2002, Buffett warned about the risks of financial derivatives, calling them "financial weapons of mass destruction," years before they contributed to the 2008 financial crisis.