In 1952, Buffett marriedÂ Susan Buffett Thompson. They had three children,Â Susie,Â HowardÂ andÂ 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 theÂ Susan A. Buffett FoundationÂ and is a national board member ofÂ Girls, Inc.Â In Buffett's life, one of the most thoughtful and hurtful events took place shortly subsequently. At 45, Susan Buffett, his wife, left him. Warren got devastated; as throughout his life, Susan had been "the sunshine and rain in his garden". Both speaking daily, taking their New York trip annually, and meeting the kids at their California Beach house for Christmas get-togethers. As, they both was very close to each other. The changeover was unbreakable for the Warren, but he ultimately grew somewhat familiarized to the new arrangement. Susie (Susan Buffett) called a number of women in the Omaha area and persisted they go to dinner and a movie with her husband; sooner or later, she set Warren up with Astrid Menks, a waitress. In 2006, on his seventy-sixth birthday, Warren married his never-married longtime-companion, Astrid Menks, who was then sixty years old. She had lived with him since his wife's departure in 1977 to San Francisco.Â 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 holiday cards to friends were signed "Warren, Susie and Astrid".Â Susan Buffett briefly discussed this relationship in an interview on theÂ Charlie Rose ShowÂ shortly before her death, in a rare glimpse into Buffett's personal life.
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Warren Buffett disowned his son Peter's adopted daughter, Nicole, in 2006 after she participated in the Jamie Johnson documentary,Â The One Percent.Â Although his first wife had referred to Nicole as one of her "adored grandchildren",Â 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." He signed the letter "Warren."
Warren Buffett Wants Two Nickels to Rub Together
By the late '70s, the rumor had grown to that point to his reputation that Warren Buffett was buying a stock was enough to shoot its price up 10%. Buffett's personal wealth was almost $140 million and Berkshire Hathaway's stock was trading at more than $290 a share. The scorn was that Warren never sold a single share of his company, meaning his entire available cash was the $50,000 salary he received. During this time, he made a statement to a broker, "Everything I got is tied up in Berkshire. I'd like a few nickels outside."
This encouraged Warren to start investing for his personal life. According to Roger Lowenstein's, "Buffett", Warren was far more tentative with his own investments. At one point he bought copper futures which were unadulterated speculation. In a short span, he had earned $3 million dollars. When driven to invest in real estate by a friend, he countered, "Why should I buy real estate when the stock market is so easy?"
Berkshire Hathaway Announces Charity Giving Programs
Afterward, Buffett once again showed his propensity of bucking the fashionable trend. In 1981, the decade of voracity, Berkshire publicized a new charity plan which was thought up by Munger and agreed by Warren. The plan entitled for each shareholder to choose charities which would receive $2 for each Berkshire share the stockholder owned. On Wall Street of the CEO choosing who received the company's hand-outs, was in response to a common practice (often they would go to the executive's schools, churches, and organizations). The plan was an enormous triumph and over the years the amount was increased for each share. Ultimately, all to the Berkshire shareholder's own causes, they were giving millions of dollars away each year. The program was eventually ceased after associates at one of Berkshire's subsidiaries, The Pampered Chef, experienced discrimination because of the controversial pro-choice charities; Buffett chose to apportion his pro-rated portion of the charitable contribution pool. In 1982, the stock price hit $750 per share, which was an additional important affair around this time. Most of the gains could be attributed to Berkshire's stock portfolio which was now valued at over $1.3 billion dollars.
Warren Buffett Buys Nebraska Furniture Mart, Scott Fetzer and an Airplane for Berkshire Hathaway
Always on Time
Marked to Standard
For all the fine businesses, Berkshire had managed collect, one of the best was about to come under its stable. In 1983, Warren Buffett walked into Nebraska Furniture Mart, the multi-million dollar furniture retailer, built from scratch by Rose Blumpkin. Speaking to Mrs. B, as local residents called her, Buffett asked if she would be interested in selling the store to Berkshire Hathaway. Blumpkin's answer was a simple "yes", to which she responded she would part for "$60 million". The deal was sealed on a handshake and one page contract was drawn up. The Russian-born immigrant merely folded the check without looking at it when she received it days later.
Scott & Fetzer was another great addition to the Berkshire family. The company itself had been the target of a hostile takeover when an LPO was launched by Ralph Schey, the Chairman. The year was 1984 and Ivan Boesky soon launched a counter offer for $60 a share (the original tender offer stood at $50 a share - $5 above market value). The maker of Kirby vacuum cleaners and World Book encyclopedia, S&F was panicking. Buffett, who had owned a quarter of a million shares, dropped a message to the company asking them to call if they were interested in a merger. The phone rang almost immediately. Berkshire offered $60 per share in cold, hard, cash. When the deal was wrapped up less than a week later, Berkshire Hathaway had a new $315 million dollar cash-generating powerhouse to add to its collection. The small stream of cash that was taken out of the struggling textile mill had built one of the most powerful companies in the world. Far more impressive things were to be done in the next decade. Berkshire would see its share price climb from $2,600 to as high as $80,000 in the 1990's.
In 1986, Buffett bought a used Falcon aircraft for $850,000. As he had become increasingly recognizable, it was no longer comfortable for him to fly commercially. The idea of the luxury was hard for him to adjust to, but he loved the jet immensely. The passion for jets eventually, in part, led him to purchase Executive Jet in the 90's.
The 80's went on with Berkshire increasing in value as if on cue, the only bump in the road being the crash of 1987. Warren, who wasn't upset about the marketÂ correction, calmly checked the price of his company and went back to work. It was representative of how he viewed stocks and businesses in general. This was one of "Mr. MarketHYPERLINK "http://beginnersinvest.about.com/cs/investinglessons/l/blles2g.htm"'HYPERLINK "http://beginnersinvest.about.com/cs/investinglessons/l/blles2g.htm"s" temporary aberrations. It was quite a strong one; fully one-fourth of Berkshire'sÂ market capÂ was wiped out. Unfazed, Warren plowed on.
I'll Take a Coke
A year later, in 1988, he started buying up Coca-Cola stock like an addict. His old neighbor, now the President of Coca-Cola, noticed someone was loading up on shares and became concerned. After researching the transactions, he noticed the trades were being placed from the Midwest. He immediately thought of Buffett, whom he called. Warren confessed to being the culprit and requested they don't speak of it until he was legally required to disclose his holdings at the 5% threshold. Within a few months, Berkshire owned 7% of the company, or $1.02 billion dollars worth of the stock. Within three years, Buffett's Coca-Cola stock would be worth more than the entire value of Berkshire when he made the investment.
Warren Buffett & Politics
In addition to other political contributions over the years, Buffett has formally endorsed and made campaign contributions toÂ Barack Obama'sÂ 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 PritzkerÂ and her husband, as well as Obama advisorÂ Valerie Jarrett.Â Buffett backed Obama for president, and intimated thatÂ John McCain's views onsocial justiceÂ were so far from his own that McCain would need a "lobotomy" for Buffett to change his endorsement.Â During the secondÂ 2008 U.S. presidential debate, candidates John McCain and Barack Obama, after being asked first by presidential debate mediatorÂ Tom Brokaw, both mentioned Buffett as a possible futureÂ Secretary of the Treasury.Â Later, in the third and final presidential debate, Obama mentioned Buffett as a potential economic advisor.Â Buffett was also finance advisor toÂ CaliforniaÂ RepublicanÂ GovernorÂ Arnold SchwarzeneggerÂ during his 2003 election campaign.
Warren Buffett's Writings
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Warren Buffett's writings include his annual reports and various articles. Buffett is recognized by communicators as one of the great story-tellers, as evidenced by his annual letters to shareholders. He warned about the pernicious effects of inflation:
The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation.-Buffett,Â Fortune (1977)
In his articleÂ The Superinvestors of Graham-and-Doddsville, Buffett refuted the academicÂ Efficient-market hypothesis, that beating theÂ SHYPERLINK "http://en.wikipedia.org/wiki/S&P_500"&HYPERLINK "http://en.wikipedia.org/wiki/S&P_500"P 500Â was "pure chance", by highlighting a number of students of the Graham and Dodd value investing school of thought. In addition to himself, Buffett namedÂ Walter J. Schloss, Tom Knapp, Ed Anderson (Tweedy, Brown Inc.), Bill Ruane (Sequoia Fund, Inc.),Charles MungerÂ (Buffett's own business partner at Berkshire), Rick Guerin (Pacific Partners, Ltd.), and Stan Perlmeter (Perlmeter Investments).Â In his November, 1999Â FortuneÂ article, he warned of investors' unrealistic expectations:
Let me summarize what I've been saying about the stock market: I think it's very hard to come up with a persuasive case that equities will over the next 17 years perform anything like--anything like--they've performed in the past 17. If I had to pick the most probable return, from appreciation and dividends combined, that investors in aggregate--repeat, aggregate--would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%.
-Buffett,Â Fortune (1999)
Warren Buffett's Money and Reputation
Buffett's speeches are known for mixing business discussions with humor. Each year, Buffett presides over Berkshire Hathaway's annual shareholder meeting in theÂ Qwest CenterÂ inÂ Omaha,Â Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname "Woodstock of Capitalism". Berkshire's annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media. Buffett's writings are known for containing literary quotes ranging from theÂ BibleÂ toÂ Mae West, as well as Midwestern advice, and numerous jokes. By 1989, Berkshire Hathaway was trading at $8,000 a share. Buffett was now, personally, worth more than $3.8 billion dollars. Within the next ten years, he would be worth ten times that amount. Before that would happen, there were much darker times ahead.
Warren Buffet at the Turn of the Millennium
During the remainder of the 1990's, the stock catapulted as high as $80,000 per share. Even with this astronomical feat, as the dot-com frenzy began to take hold, Warren Buffett was accused of "losing his touch". In 1999, when Berkshire reported a net increase of 0.5% per share, several newspapers ran stories about the demise of the Oracle. Confident that the technology bubble would burst, Warren Buffett continued to do what he did best: allocate capital into great businesses that were selling below intrinsic value. His efforts did not go unrewarded. When the markets finally did come to their senses, Warren Buffett was once again a star. Berkshire's stock recovered to its previous levels after falling to around $45,000 per share, and the man from Omaha was once again seen as an investment icon.