Warren Buffett’s Trading Strategy That Made Him This Rich





American investor and business magnate, Warren Buffett, is the fourth richest man on the planet. Forbes has estimated Mr Buffett’s overall wealth to be $63.2 billion in 2014.

He turned a loss making textile mill into one of the most successful holding companies that the world has ever witnessed. He is the CEO, President and Chairman of Berkshire Hathaway which is by far one of the most respected and valuable American companies listed on the New York Stock Exchange. Berkshire Hathaway has over 288,500 people employed with revenue more than $166 billion.

Besides being a great businessman, Warren Buffett has also got a remarkable sense for generosity. He has pledged 99% of his fortune to the Gates Foundation.

His reputation got him couple of nicknames. Some call him the “Oracle of Omaha” or the “Wizard of Omaha”. He will always be a role model for the younger generation and everybody who tries to understand his business strategy in order to be as successful as he is.

Warren Buffett’s Trading History

All stated trades are related to buying substantial share stakes of companies while they were at the lowest trading value. He had a vision that these companies will change their course and bring him substantial gains.

  • In 1941, when he was 11, Warren Buffett purchases his first 12 shares of Cities Service for $38 each. When he was selling the shares, they had a trading value of $200 per share.
  • In 1951 Buffett purchases Geico Insurance, which remains a 100% owned by Berkshire Hathaway.
  • Purchasing Berkshire Hathaway, an ailing textile mill and converting it into profitable company, was the biggest success that Warren Buffett achieved as a businessman. Even though the company is no longer in the textile business, it continues to hold the old name as his principal holding company.
  • In 1972 Buffett purchased Sees candy from Sees family for $25 million. Today that very investment is valued at $1.35 billion.
  • Scott Fetzer was purchased in 1985 for $315 million; this investment got him market control over products like Kirby vacuums and World Book Encyclopaedia.
  • Buffett purchased 11% of the retail manufacturer Gillett for $600 million in 1989; 24 months later, his investment was valued at $800 million in addition to a $52.5 million dividend he would receive annually.
  • Buffett also invested $600 million in S&P 500. Value of that investment stands at $2.2 billion minus dividends received.
  • Warren Buffett purchases American Express, which was selling at $35 per share on huge investor sell on charges of fraud. Just a year later, the share price more than doubles. Berkshire Hathaway owns 13.5% of American Express today.
  • Berkshire Hathaway purchased 7% of Coca-Cola for $1.02 billion. This remains Warren Buffett’s most lucrative purchase till date.

A part of his famous trades include gaining a stake in some of the most successful companies in the world.

Today Berkshire Hathaway has significant holdings in the following companies:

  • American Express – 13.5%
  • Anheuser-Busch – 9.8%
  • Goldman Sachs – 2.8%
  • IBM – 6%
  • M&T Bank – 4.2%
  • Munich RE – 10.2%
  • P&G – 1.93%
  • Coca-Cola – 8.92%

Warren Buffett’s Trading Strategy

Warren Buffett’s trading style and strategy is based on one simple principle. He believes in patience and understanding of the market in order to gain returns in the long-term. Buffett believes the world consists of a number of small opportunities which are worth the investment. He believes that, on most occasions, businesses are not worth their selling value. But very rarely some businesses are just given away. His investment strategy is based on identifying these rare opportunities and then buying it big.

Buffett’s investment vision has been the most successful investment story till date.