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in this section we will be delving into the lives of three famous investors all of whom shaped the world of finance and proved that it is possible to make money investing in the stock market if we plan on becoming good investors it's absolutely crucial we study all these man closely the first investor will take a look at is Warren Buffett who is likely the most renowned financier live Warren's career in the investment world has made him the second richest person in life with a net worth of over 60 billion dollars Warren Buffett was born in 1930 in a place called Omaha located in the state of Nebraska in the United States his father was a stockbroker and Warren has often credited his initial interest in the markets to his dad Warren began his career in finance at an incredibly young age when he bought three shares of a company called city service at the age of eleven this first movement to business led him to launch a newspaper route at 13 from there he attended the Wharton School at the University of Pennsylvania as well as the University of Nebraska where he obtained his undergraduate degree in Business Administration consequently he ended up pursuing a master's in economics at the prestigious Columbia University in New York it is there where he met a celebrated investor Benjamin Graham Graham soon became Warren's mentor and taught him the concept of value investing which is the investment strategy that mr.
Buffett continues to use to this day in 1954 Graham offered Buffett a job as an analyst at his firm Graham Newman Corporation and by 1956 Buffett was out on his own when he founded Buffett partnership limited a firm that was created with $100,000 in capital reserves a few years later he would end up acquiring the business he is most famous for owning these days berkshire hathaway funnily enough at the time berkshire hathaway was actually a textile business and severe financial distress buffett took it over and turned it completely around making it a platform to buy other companies this made berkshire a holding company through the years buffett would acquire and invest in other businesses which has led to berkshire becoming the eighth largest company in the world so how did warren buffett make such profitable investments as mentioned earlier benjamin graham taught warren the concept with value investing buying high-quality businesses at cheap prices essentially betting on stocks whose intrinsic price so whose fair value is higher than the current market price this of course is much easier said than done finding good investments takes a lot of time and very careful analysis one of the traits that separates warren from the average investor is that he is willing to ignore anything that goes on in the stock market and just focus on the business itself Buffett believes the markets can be emotional like a human one day the market is up the other day it's down the goal is not to worry when stocks drop and not be overly happy when stocks are up in the end as long as the business is good you will profit here are some of the traits that the companies he invests in possess the first is great management a company cannot perform well unless it is managed by experts who act with integrity and are honest with shareholders and many cases good management is what can turn a lousy business into a high-growth company at the same time management should be shareholder oriented and attempt to maximize shareholder value there are many ways a company can do so but these mainly take place in the form of dividends or share buybacks which is basically one company buys back its own shares which increases its stock price if management is shareholder oriented you can rest assured that it will always do whatever it can do to actually boost the stock price Warren looks for businesses he actually understands he constantly talks about staying within your circle of confidence if you do not understand what a company does and cannot speak about its operation with a certain level of confidence you shouldn't invest in it at all for example Warren does not invest in technology companies as he does not profoundly understand them the company should create a high quality product that entices consumers to keep on purchasing product this key if aiming for stable and high growth in some way shape or form a business should have an advantage relative to competitors if not any other rival can come in and snatch up market share last but not least a business should have a steady revenue stream with predictable and growing earnings earnings are vital if aiming for high returns one of the topics mr.
Buffett talks about most is his admiration of companies with wide economic moats an economic moat which is a word invented by a Warren himself represents a factor that protects a company from competitors whether it is a technology unique to the company of patents or even simply strong brand name one of my favorite Buffett quotes is in business I look for economic castles protected by unbreachable moats the purpose of a big moat is to really maintain demand for the businesses products over a very long period of time so now let's take a look at some of Buffett's most profitable investments one of Berkshire Hathaway's largest positions is in coca-cola the manufacturer of these popular soft drink the position itself is worth over 15 billion dollars think about that with so much money you could choose between buying American Airlines or the entirety of the NBA basketball league Buffett made his first investments in coca-cola in 1988 over 28 years ago back then people criticized his move and said that another competitor would enter and steal cokes market share well coke has continued to be very successful and has generated more than an eight hundred percent return for mr.
Buffett as we talked about just before coca-cola is a great example of a company with a wide economic moat Coca Cola's brand name is so strong that it continues to dominate the market for soft drinks in addition coke is a product that mr. Buffett can easily understand finding businesses whose operations you can actually comprehend helps tremendously in figuring out whether they will continue to thrive in the long run another one to Buffett's profitable positions is in Wells Fargo an American financial services company he began amassing his position in 1990 and has continued to accumulate his investment which now stands at over 16 billion dollars this means he owns roughly eight point five percent of the company whose market capitalization is around two hundred billion in the last twenty four years in which he has owned Wells Fargo the stock has moved up over 9,000 percent talk about a great return buffett initially got into the business during the savings and loan crisis which was a financial downturn that impacted large banks around 20 years ago as I mentioned earlier unless a crisis has a direct impact on how business performs Buffett disregards the movements of the market so while others were selling he was buying this is probably one of the best examples which shows why Warren Buffett is regarded as one of the greatest investors of all time to sum things up it's pretty obvious to see why Warren Buffett is such a legend his ability to focus on an underlying business instead of being caught up by all the fuss in the markets is admire bull and is something that countless investors attempt to replicate what's most fascinating about mr.
Buffett is his keenest to educate the next generation of investors a large portion of today's most successful fund managers relies on his conception of value investing which were initially talked to Buffett by Benjamin Graham so if we hope to become good investors and maybe even one day become the next Warren Buffett it is important for us to find high-quality businesses that trade at a lower price than their true value you
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