CH - 1 INTRODUCTION

 Warren Edward Buffett is an American business magnate, investor and philanthropist.

He is widely considered the most successful investor of the 20th century. Buffett is the primary
shareholder, chairman and CEO of BERKESHIRE HATHWAY and consistently ranked among
the world's wealthiest people.

He was ranked as the world's wealthiest person in 2008 and as the third wealthiest person in
2011.

In 2012, American magazine Time named Buffett one of the most influential people in the
world.
Buffett is called the "Wizard of Omaha", "Oracle of Omaha", or the "Sage of Omaha and is
noted for his adherence to the value investing philosophy .
Buffett is also a notable philanthropist, having pledged to give away 99 percent of his fortune
to philanthropic causes, primarily via the Gates Foundation.
On April 11, 2012, he was diagnosed with prostate cancer for which he completed treatment in
September 2012.
Buffett was born in 1930 in Omaha, Buffett began his education at Rose Hill Elementary
School in Omaha.
In 1942, his father was elected to the first of four terms in the United States Congress, and
after moving with his family to Washington, D.C., Warren finished elementary school, attended
Alice Deal Junior High School, and graduated from Woodrow Wilson High School in 1947
Even as a child, Buffett displayed an interest in making and saving money. He went door to
door selling chewing gum, Coca-Cola, or weekly magazines.
For a while, he worked in his grandfather's grocery store. While still in high school he was
successful in making money by delivering newspapers, selling golf balls and stamps, and
detailing cars, among other means..

 In 1945, in his sophomore year of high school, Buffett and a friend spent $25 to purchase a
used pinball machine, which they placed in the local barber shop. Within months, they owned
several machines in different barber shops.
Buffett entered college as a freshman in 1947 at the Wharton Business School of
the University of Pennsylvania and studied there for two year.
The age of nineteen, he graduated with a Bachelor of Science in business administration. After
the completion of his undergraduate studies, Buffett enrolled at Columbia Business
School after learning that Benjamin Graham and David Dodd, two well-known securities
analysts, taught there. He earned a Master of Science in economics from Columbia in 1951.

CH-2 MAIN DISCUSSIONS

 In 1957, Buffett had three partnerships operating the entire year. He purchased a five-bedroom
stucco house in Omaha.
In 1958 the Buffett's third child, Peter Andrew Buffett, was born. Buffett operated five partnerships
the entire year.
In 1959, the company grew to six partnerships operating the entire year and Buffett was
introduced to Charlie Munger.

By 1960, Buffett had seven partnerships operating: Buffett Associates, Buffett Fund, Dacee,
Emdee, Glenoff, Mo-Buff and Underwood.

He asked one of his partners, a doctor, to find ten other doctors willing to invest $10,000 each in
his partnership. Eventually eleven agreed, and Buffett pooled their money with a mere $100
original investment of his own.
In 1961, Buffett revealed that Sanborn Map Company accounted for 35% of the partnership's
assets.
In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an
excess of $7,178,500, of which over $1,025,000 belonged to Buffett.
Buffett merged all partnerships into one partnership. Buffett invested in and eventually took control
of a textile manufacturing firm, Berkshire Hathaway.
In 1962, Warren Buffett began buying shares in Berkshire from Seabury Stanton. Buffett's
partnerships began purchasing shares at $7.60 per share.
In 1965, when Buffett's partnerships began purchasing Berkshire aggressively, they paid $14.86
per share while the company had working capital of $19 per share.

In 1966, Buffett closed the partnership to new money. He would go on to claim that the textile
business had been his worst trade. He then moved the business into the insurance sector, and in
1985 the last of the mills that had been the core business of Berkshire Hathaway was sold.

In 1967, Berkshire paid out its first and only dividend of 10 cents.

 In 1969, following his most successful year, Buffett liquidated the partnership and transferred their
assets to his partners. Among the assets paid out were shares of Berkshire Hathaway.
In 1970, as chairman of Berkshire Hathaway, Buffett began writing his now-famous annual letters
to shareholders. However, he lived solely on his salary of $50,000 per year, and his outside
investment income.
In 1979, Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net
worth reached $620 million, placing him on the Forbes 400 for the first time.
In 1973, Berkshire began to acquire stock in the Washington Post Company

In 1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's acquisition of
WESCO, due to possible conflict of interest. No charges were brought.

In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million.
In 1979, Berkshire began to acquire stock in ABC. Capital Cities announced $3.5 billion purchase
of ABC on March 18, 1985 surprised the media industry, as ABC was four times bigger than
Capital Cities at the time. Berkshire Hathaway chairman Warren Buffett helped finance the deal in
return for a 25% stake in the combined company.
In 1987, Berkshire Hathaway purchased a 12% stake in Salomon Inc., making it the largest
shareholder and Buffett the director.

In 1990, a scandal involving John Gutfreund surfaced. A rogue trader, Paul Mozer, was
submitting bids in excess of what was allowed by the Treasury rules. When this was discovered
and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader.
Gutfreund left the company in August 1991.

Buffett became Chairman of Salomon until the crisis passed on September 4, 1991, he testified
before Congress.
Buffett became a billionaire on paper when Berkshire Hathaway began selling class A shares on
May 29, 1990, when the market closed at $7,175 a share. ]
In 1998, in an unusual move, he acquired General Re for stock.
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 In 2002, Buffett became involved with Maurice R. Greenberg at AIG, with General Re
providing reinsurance.
On March 15, 2005, AIG's board forced Greenberg to resign from his post as Chairman and CEO
under the shadow of criticism from Eliot Spitzer.

On February 9, 2006, AIG and the New York State Attorney General's office agreed to a
settlement in which AIG would pay a fine of $1.6 billion.

In 2010, the federal government settled with Berkshire Hathaway for $92 million in return for the
firm avoiding prosecution in an AIG fraud scheme, and undergoing 'corporate governance
concessions'.

2.1. EARLY LIFE AND CAREER

Warren Buffett graduated from the University of Nebraska in 1950 with a Bachelor of Science
degree. After reading "The Intelligent Investor" by Benjamin Graham, he wanted to study under
Graham, and did so at Columbia University, obtaining his Master of Science Degree in
business in 1951.
He then returned to Omaha and formed the investment firm of Buffett-Falk & Company, and
worked as an investment salesman from 1951 to 1954. During this time, Buffett developed a
close relationship with Graham, who was generous with his time and thoughts.
This interaction between the former professor and student eventually landed Buffett a job with
Graham's New York firm, Graham-Newman Corporation, where he worked as a security
analyst from 1954 to 1956
Wanting to work independently, Buffett returned home once again to Omaha and started a
family investment partnership at age 25 with a starting capital base of $100,000. From 1956 to
1969, when the Buffett partnership was dissolved, investors, including Buffett, experienced a
thirty-fold gain in their value per share. Prior to the final decision to liquidate the partnership,
Buffett had acquired the unprofitable Berkshire Hathaway textile company in New
Bedford, Massachusetts, in 1965.
After acquiring Berkshire, Buffett effected a successful turnaround of the company, which
focused on changing the company's financial framework.

 Berkshire kept its textile business, even in the face of mounting pressures, but also used the
company as a holding company for Other investments.
It was in the 1973-74 market collapse that Berkshire got the opportunity to purchase other
companies at bargain prices. Buffett went on a buying spree, which included an investment
in The Washington Post.

2.2. PERSONAL LIFE

Buffett married Susan Buffett in 1952. They had three children Susie, Howard and peter.
The couple began living separately in 1977, although they remained married until her death in
July 2004. Their daughter, Susie, lives in Omaha and does charitable work through the Susan
A.

Buffett Foundation and is a national board member of Girls, Inc. In 2006, on his seventy-sixth
birthday, Warren married his longtime companion, Astrid Menks, who was then 60 years old.

She had lived with him since his wife's departure to San Francisco in 1977.
It was Susan Buffett who arranged for the two to meet before she left Omaha to pursue her
singing career. All three were close and Christmas cards to friends were signed "Warren, Susie
and Astrid".
Susan Buffett briefly discussed this relationship in an interview on the Charlie Rose
Show shortly before her death, in a rare glimpse into Buffett's personal life.
Warren Buffett disowned his son Peter's adopted daughter, Nicole,
In 2006 after she participated in the Jamie Johnson documentary,The One Percent. Although
his first wife had referred to Nicole as one of her "adored grandchildren"
Buffett wrote her a letter stating, "I have not emotionally or legally adopted you as a
grandchild, nor have the rest of my family adopted you as a niece or a cousin.
His 2006 annual salary was about $100,000, which is small compared to senior executive
remuneration in comparable companies.

In 2007 and 2008, he earned a total compensation of $175,000, which included a base salary
of just $100,00. He lives in the same house in the central Dundee neighborhood of Omaha that
he bought in 1958 for $31,500, today valued at around $700,000

In 1989, after having spent nearly $6.7 million of Berkshire's funds on aprivate jet, Buffett
sheepishly named it "The Indefensible". This act was a break from his past condemnation of
extravagant purchases by other CEOs and his history of using more public transportation.
Warren Buffett worked with Christopher Webber on an animated series with Chief Andy
Heyward, of DiC Entertainment, and then A Squared Entertainment.
The series features Buffett and Munger, and teaches children healthy financial habits for
life. Buffett was raised Presbyterian but has since described himself as agnostic.
In December 2006 it was reported that Buffett does not carry a cell phone, does not have a
computer at his desk, and drives his own automobile, a Cadillac DTS. Buffett reads five
newspapers every day, beginning with the Omaha World Herald, which his company bought in
2011.

2.3. BUSINESS CAREER

Warren Buffett was employed from 195154 at Buffett-Falk & Co., Omaha as an investment
salesman, from 19541956 at Graham-Newman Corp., New York as a securities analyst, from
19561969 at Buffett Partnership, Ltd., Omaha as a general partner and from 1970 Present
at Berkshire Hathaway Inc, Omaha as its Chairman, CEO.
In 1950, at the age of 20, Buffett had made and saved $9,800 (nearly $94,000 inflation
adjusted for the 2012 USD. In April 1952, Buffett discovered Graham was on the board
of GEICO insurance.
Taking a train to Washington, D.C. on a Saturday, he knocked on the door of GEICO's
headquarters until a janitor allowed him in. There he met Lorimer Davidson, Geico's Vice
President, and the two discussed the insurance business for hours.
Davidson would eventually become Buffett's lifelong friend and a lasting influence and later
recall that he found Buffett to be an "extraordinary man" after only fifteen minutes. Buffett
graduated from Columbia and wanted to work on Wall Street, however, both his father and Ben
Graham urged him not to. He offered to work for Graham for free, but Graham refused
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 Buffett returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public

speaking course. Using what he learned, he felt confident enough to teach an "Investment
Principles" night class at the University of Nebraska-Omaha. The average age of his students
was more than twice his own. During this time he also purchased a Sinclair Texaco gas station
as a side investment. However, this did not turn out to be a successful business venture.
In 1952 Buffett married Susan Thompson at Dundee Presbyterian Church and the next year
they had their first child, Susan Alice Buffett. In 1954, Buffett accepted a job at Benjamin
Graham's partnership. His starting salary was $12,000 a year (approximately
$105,000 inflation adjusted for the 2012 USD. There he worked closely with Walter Schloss
Graham was a tough man to work for.
He was adamant that stocks provide a wide margin of safety after weighting the trade-off
between their price and their intrinsic value. The argument made sense to Buffett but he
questioned whether the criteria were too stringent and caused the company to miss out on big
winners that had more qualitative values.
That same year the Buffetts had their second child, Howard Graham Buffett. In 1956, Benjamin
Graham retired and closed his partnership. At this time Buffett's personal savings were over
$174,000 ($1.47 million inflation adjusted to 2012 USD and he started Buffett Partnership Ltd.,
an investment partnership in Omaha.

Buffett and President Obama at Oval of office, July 14, 2010

In addition to other political contributions over the years, Buffett has formally endorsed and
made campaign contributions to Barack Obama's presidential campaign.

On July 2, 2008, Buffett attended a $28,500 per plate fundraiser for Obama's campaign in
Chicago hosted by Obama's National Finance Chair, Penny Pritzker and her husband, as well
as Obama advisor Valerie Jarrett. Buffett backed Obama for president, and intimated that John
McCain's views on social justice were so far from his own that McCain would need a
"lobotomy" for Buffett to change his endorsement.
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 During the second 2008 U.S. presidential debate, candidates John McCain and Barack
Obama, after being asked first by presidential debate mediator Tom Brokaw, both mentioned
Buffett as a possible future Secretary of the Treasury. Later, in the third and final presidential
debate, Obama mentioned Buffett as a potential economic advisor

2.4. QUOTES

"Rule No.1 is never lose money.

Rule No.2 is never forget rule number one."
"Shares are not mere pieces of paper. They represent part ownership of a business. So, when
contemplating an investment, think like a prospective owner."
"All there is to investing is picking good stocks at good times and staying with them as long as
they remain good companies."
"Look at market fluctuations as your friend rather than your enemy. Profit from folly rather than
participate in it."
"If, when making a stock investment, you're not considering holding it at least ten years, don't
waste more than ten minutes considering it."

2.5. VALUES & ETHICS

Smart and Hard working

Equality (Treat everyone equally)
Achievement oriented
Walking in his own path

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2.6. ACHIVEMENT

In 1999, Buffett was named the top money manager of the Twentieth Century ina survey by the
Carson Group, ahead of Peter Lynch and John Templeton. In 2007, he was listed
among Time's100 Most Influential People in the world.
In 2011, President Barack Obama awarded him the Presidential Medal of Freedom. Most
recently, Buffett, along with Bill Gates, was named the most influential global thinker in Foreign
Policy's 2010 report.
Buffett has not, as yet, authored any books. However, his annual letters to the shareholders in
Berkshire Hathaway's annual report are a suitable substitute. Back copies of these 20-page
masterpieces of investing wisdom are available from 1977 through 2006 (updated annually)
from Berkshire's Website.
"Buffett: The Making of an American Capitalist" by Roger Lowenstein (1996).
"Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor" (1997)
"The Warren Buffett Way" by Robert G. Hagstrom (2005)

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CH-3 EVALUATION

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 Forget Coke. Forget McDonalds. And you can even forget the queen of talk Oprah Winfrey.
That's because when it comes right down to it the best brand in the business belongs to
Warren Buffett, that grandfatherly billionaire from Omaha, Nebraska.
That's true now more than ever up on Wall Street, where the investing classes hang on his
every word these days as they continue to come to grips with the dangers of a subprime
contagion that was never contained.
Of course, to the set of value investors that have been following Warren Buffet's investment
principles for years, all of this renewed attention probably comes as no surprise at all. There is
a reason after all that he's called the Oracle of Omaha.
But with the mortgage related mess now threatening to take the markets even lower, and
investors of every stripe looking for a savior, Warren Buffett's billions, and his stellar reputation,
may be just the answer that the markets are looking for.
And while Saint Warren certainly isn't going to save the market from all of its excesses, (not
even he has that much money) he may just be able to bailout the only portion of the bond
insurance market that is worth saving. That alone would be likely be enough to bring the
markets back from the current abyss.
Warren Buffetts investing style of discipline and value has consistently outperformed in market
for decades
John Train, author of "The Money Masters"(1980), provides us with a succinct description of
Buffett's investment approach: "The essence of Warren's thinking is that the business world is
divided into a tiny number of wonderful businesses well worth investing in at a price and a
large number of bad or mediocre businesses that are not attractive as long-term investments.
Most of the time, most businesses are not worth what they are selling for, but on rare
occasions the wonderful businesses are almost given away. When that happens, buy boldly,
paying no attention to current gloomy economic and stock market forecasts."
Buffett's criteria for "wonderful businesses" include, among others, the following:
They have a good return on capital without a lot of debt.
They are understandable.
They see their profits in cash flow.
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 They have strong franchises and, therefore, freedom to price.

They don't take a genius to run.
Their earnings are predictable.
The management is owner-oriented.

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CH-4 LEARNING

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4.1. Things we can learn from Warren Buffett

Identify and nurture your competitive advantage. Buffett is famous for finding businesses
with a competitive moat to allow them runway to grow fast for a long time and protect them
from competition.

Building and motivating your team is a top priority.

Buffett clearly takes the time to get to know his team well and views the prospects for his
various businesses as a function of the strength of these managers. The current breed of top
entrepreneurs in technology, regardless of focus area, all seem to echo this sentiment build a
top quality team and great things can happen. Successful public companies like Google, and
private ones like Palantir, are well known for their incredibly selective screening processes, and
the correlation between great people and value creation is clear.

Measure your performance consistently and dont be afraid to admit mistakes. Buffett
starts this years letter with a bunch of good news, but he quickly offers counter-examples and
mistakes. He exclaims that his purchase of bonds in a Texas utility a few years earlier was a
big mistake where he committed a major unforced error. He also tells us that he was dead
wrong when he predicted a year earlier that a housing recovery was set to begin.
Its human nature to sugar coat mistakes, but like Buffett, the best entrepreneurs are quick
to point out challenges and decisively address them.
Play the long game and stick to your vision, even if its out of style. Buffett reminds us
that the key to his success has been to focus on investments in productive assets, those
companies that can grow without the need for significant additional capital. These companies
efficiently deliver goods and services that are consistently in demand, through good times and
bad.

Great entrepreneurs dont look for validation from the outside world too often; rather
they trust their own instincts and dont stray from their ultimate vision.

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4.2. 10 financial lessons we can learn from warren buffet

1. Spend wisely
2. No one cares about your money as much as u do
3. Do your home work- Scan thousands of stocks
4. overcome your fear of risk
5. focus on the long term
6. invest in quality business
7. hunt for exceptional bargains for solid companies
8. make decision to invest based on how well money is used by company management
9. be patient wait until everything is in your favor to interest
10. Sell losing stocks when the market is up; buy winning stock during a crash.

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