Warren Buffett, chairman and CEO of Omaha, Nebraska-based holding company Berkshire Hathaway, is one among the world’s best-known investors Net value over $145 billion.
Image source: Eric Francis | Getty Images. Warren Buffett.
But like all successful investors, Buffett had to begin somewhere.
In his biography The Snowball: Warren Buffett and the Business of LifeAuthor Alice Schroeder recounts Buffett’s early fascination with money – and a crucial lesson he learned from his first investment.
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Buffett got his first taste of entrepreneurship on the age of six when he began selling packs of gum. “I bought packs of gum from my grandfather and went door to door in the neighborhood selling the stuff,” Buffett tells Schroeder. “I used to do this mainly in the evenings.”
Eventually, the young entrepreneur moved on to selling Coca-Cola, a more profitable enterprise that earned him a nickel every six bottles. This was followed by the sale of golf balls on the Elmwood Park golf course and the sale of peanuts and popcorn at University of Omaha football games.
One day, Buffett was visiting the library and got here across a book titled Thousands of Ways to Earn $1,000 which opened his eyes to the facility of compound interest. Buffett desired to try it himself.
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The following yr, 1942, 11 yr old Buffett had saved $120 to purchase his first stock: Cities Service Preferred. He took his sister Doris on as a partner and purchased three shares for every of them for $114.75.
Unfortunately, the market bottomed out in June and Cities Service Preferred plummeted from $38.25 to $27 per share, a undeniable fact that Buffett’s sister “reminded” him on daily basis, Schroeder writes. So when the stock recovered enough to make a small profit of $5 per share, Buffett sold.
Then Cities Service Preferred’s price jumped to $202 per share.
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Buffett tells Schroeder that the experience was one of the crucial essential of his life since it taught him three lessons about investing:
- Don’t focus an excessive amount of on what you paid for a stock.
- Don’t rush to sell for a small profit.
- Don’t invest other people’s money unless you understand you’ll be able to succeed.
The lesson has served Buffett, now 94, well over time. In August, Berkshire Hathaway surpassed $1 trillion in market value for the primary time.
