Who is Warren Buffett?
In fact, we used him as an example ourselves in our article ‘What is a value investor?’. It’s definitely worth reading that article before reading this one.
So who is he?
Short answer: he’s a really successful investor, chairman and CEO of Berkshire Hathaway. This company started as a textile manufacturing firm, which a young Warren Buffett took control of and turned into a fearsome conglomerate with business interests that span the globe.
Long, and more interesting answer: Consistently listed as one of the wealthiest people on the planet, Warren Buffett is an American investor. Stories of his childhood are rife with sepia-tinged images of paper rounds, pinball machines, school trips to Wall Street, penny-pinching saving and bold purchases with what must have been eye-popping wealth for a 1940s schoolboy in Nebraska. The only thing missing seems to be a lemonade stand.
He is a pure self-made billionaire in the classic sense, moving from tax band to tax band through shrewd investment and gutsy calls. In this sense he is surely the ultimate example of the ‘American Dream’, a role model not just for individuals, but for the values American media espouses to the world, too.
Whatever his personal character, his public image is one of humility and philanthropy, with him famously living in what looks like a rather standard house, drawing the kind of salary that most successful Wall Street traders would use as toilet paper and vowing to give away 99% of his wealth when he dies. He is also rather outspoken for what are seen in America as being radical political beliefs - he wants wealthy people to pay more tax and he is critical of the healthcare system. Bill Gates is his bridge partner.
Aside from his storybook rise and personal image, there are more practical reasons for his popularity: his value style of investing, in which he favours popular enduring consumer brands, and his pithy advice delivered in clever and memorable quotes, lend credence to the idea of investing as an activity that can lead to a meteoric rise. To succeed as he did and continues to do so, you need intelligence and time - not a plethora of expensive computing equipment, as some would have you believe, or follow the latest investing trends and fads. You don’t even need to make risky calls.
Of course, it’s not as easy as he makes it sound. And he has made mistakes - high profile ones. The most damaging mistakes were his involvement in the subprime crisis that so shook the world in 2008 and his belief in a quick recovery and his huge investments into energy just before prices fell so dramatically. However, his investor notes have always been honest and he is the first to admit to his mistakes.
But his appeal seems to be that he makes you believe that you can make it big by actively investing - and he has the credentials to support this.
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.