Warren Buffett : background, history and pinnacle of success of the Berkshire Hathaway Company

Warren Buffett : background, history and pinnacle of success of the Berkshire Hathaway Company


Warren Buffett's book review provides brief information about his family background, the company he owns, and his total wealth

A. Background

Warren Buffett is the richest person in the world according to Forbes version in 2008, which has a net worth of US $ 62 billion. Warren Buffett, who is engaged in investment, has become one of the drivers of economic growth in the United States.


Berkshire Hathaway Company is a company engaged in insurance and investment that stood for more than 1 century (100 years). And became the holding company of various companies owned by Warren Buffett. Previously this company was engaged in textiles, but unfortunately in the 1980s the textile business which was established for 100 years was officially closed. And switch to the insurance and investment sectors.

Companies Under Berkshire Hathaway

Insurance And Investment Sector
  • American Express
  • See's Candies
  • Washington Post
  • Government employees insurance company (GEICO)
  • Coca-Cola
  • wells fargo
Clothing Sector
  • Justin Industries
  • fruits of the london
  • guarantee
  • Russell Corporation
Building Sector
  • Amec brick
  • Benjamin Moore & Co
  • Johns Manville
  • Miteck Inc
  • Larson-juhl
Aviation Sector
  • international flight safety
  • netjets inc
Non Insurance Business
  • CTB International Corp
  • Dairy queen

Tips for Becoming an Investor Warren Buffett

  • Return on equity
  • Owner's profit
  • Price and value
  • Stepping at the right moment

Attitude of Warren Buffett as an Investor

Not drifting away, according to Warren, he only invests in companies that he recognizes, or he understands deeply about his field.
Buffett buys businesses, not stocks. He prefers long-term profit by helping the company to grow.

Mandatory Rules in Business

  • never lose in business
  • Good emotional control
  • React appropriately

B. Problem Formulation

  • What are the Companies Under Berkshire Hathaway ?
  • What are Warren Buffett's Tips for Becoming an Investor ?
  • What is Warren Buffett's Attitude as an Investor ?
  • What are the Mandatory Rules in Business ?

C. Purpose of Writing

  • Knowing the Companies Under Berkshire Hathaway ?
  • Knowing Warren Buffett's Tips to Become an Investor ?
  • Knowing Warren Buffett's Attitude as an Investor ?
  • Know the Mandatory Rules in Business ?

TABLE OF CONTENTS FOREWORD

Chapter 1

  • Background
  • Formulation of the problem
  • Writing purpose

chapter 2

  • Berkshire Hathaway
  • History of Berkshire Hathaway
  • The pinnacle of success for the Berkshire Hathaway Company
  • Companies Under Berkshire Hathaway
  • Tips to Become an Investor Like Warren Buffett
  • Warren Buffet's Attitude

Chapter 3

  • Conclusion
  • Suggestion
  • Bibliography

CHAPTER II DISCUSSION

Berkshire Hathaway's Founding History

Is a company owned by Warren Buffett which is engaged in Insurance and Investment which has been established for more than 1 century (100 years). And became one of the largest companies from the United States.

Previously this company was engaged in textiles, but unfortunately in the 1980s the textile business which was established for 100 years was officially closed. And change to the insurance and investment sector. Warren Buffett owns 30% of the Company which makes him the largest shareholder in the Company.

1. Company Success

By the time Warren Buffett bought this company, Berkshire Hathaway was on the verge of collapse. But thanks to Warren, the company is back to success, even though the total number of employees reaches 12000 people.

Companies Under Berkshire Hathaway

Insurance And Investment Sector
  • American express, a company working in the field of credit cards for travel and payments
  • See's Candies, a chocolate factory located in California, where each store uses the same theme namely a village style set in America
  • Washington Post, is a company engaged in insurance
  • Government employees insurance company (GEICO), a company that works in the insurance sector, he bought this company because he was interested in the figure that Warren idolized, namely Benjamin Graham who has the chairman position in the company
  • Coca Cola, is a beverage company located in atlanta, united states.and is now one of the largest beverage companies in the world
  • Wells Fargo, is a bank that was founded by two merchants, Henry & William, whose business is in the form of shipping valuables via land vehicles
Clothing Sector
  • Justin Industries, is a company engaged in cowboy shoes
  • Fruit of the London, is a company engaged in the production of basic garments
  • Garan, is a company engaged in clothing for children
  • Russell Corporation
Building Sector
  • Amec brick, a building company based in Texas, United States of America, is engaged in concrete blocks and marble.
  • Benjamin Moore & Co., is a building company that has the largest market in America and Canada.
  • Johns Manville, is a building company that focuses on fiber glass and pipe insulation for residential and office needs.
  • Miteck inc, a company engaged in the manufacture of building components.
  • Larson-juhl
Aviation Sector
  • Flight safety international, which is in New York.
  • Netjets inc, aircraft ownership program services company.
Non Insurance Business
  • CTB International Corp., Manufacturer and Distributor of Goods with Grain-Based Ingredients.
  • Dairy queen.

C. Tips to Become an Investor Like Warren Buffett

Return of Equity

To determine the company's performance, many businesses focus on net profit per share. However, Buffett does not use the same indicators. According to him, Net Profit Per Share is just a smoke barrier for opposing companies. This is because the possibility of the company withholding a portion of net profit last year to increase the company's equity.


To find out the company's performance, Buffett chooses the method of Returning Equity Based on the Ratio of Operating Profit to Shareholders' Equity. In this case, there are several things that must be considered. First, all securities that can be sold must be valued according to costs in the market.


Second, you must be able to control the effects that may appear out of the ordinary on the numerator of this ratio. The easy way is to remove all the capital gains and losses. It's The Right Way To Separate The Specific Annual Performance Of A Business. Later, Management Performance In Completing The Task Of Collecting Returns From Business Operations With The Capital Used Will Be Visible.

Owner's Profit

Buffett Emphasizes That Stock Net Profits Are Just A Picture Of The Economic Starting Point Of A Business. An Investor Shouldn't Take It As an End Point.


One important thing that should not be forgotten is that no net profit is the same. In addition, an investor should feel wary when meeting a company with a large asset ratio that creates high profits, because it is very likely that the profit is just made up. Buffett also reminds That Inflation As A Disaster In A Business Can Always Take Advantage Of Companies That Have Many Assets.


In a nutshell, Cash Flow Can't Be Used Accurately To Help Companies That Need Continuous Capital. One of the factors is that there is no capital expenditure calculation included, even though it is actually equivalent to the company's depreciation rate.

Price and Value

Investment is a business whose product is a stock exchange. It is important for investors to know the basic steps before buying shares from a company, which is to find out about its management and financial character.


Prices are volatile. Sometimes the price can be above the value of the company, not infrequently it is also below it. The best moment to buy shares is when the price is lower than the value per share. If the price is soaring high investors should ignore the offer.

Stepping in the Right Momentum

In buying stocks, the buffet always only moves when it finds the right momentum, namely when the difference between price and value shows a certain margin of safety. In this way, buffett can get two advantages.

First, the principle of margin will protect it from the risk of falling prices. when the value of a business has a slightly higher level than the price, then investors should not take the business in anticipation if the value of a company decreases.

If so, then the price will fall to a very low level. On the other hand, if the margin between price and value is large enough, then the risk of falling prices will be small.

The Other Side of Buffett, Securities

Actually buffett has other skills that not many people know about. Buffett often buys short-term and long-term fixed income securities.

Examples are Bonds, and Preferred Stocks. This is what is often referred to as Fixed Income Investment.

D. Attitude of Warren Buffett as an Investor

Don't get carried away by the current.
The business characteristic of a warren is not being carried away by the current. no matter when or what year, Warren only bought shares of companies whose products he could identify well with.

Buffett buys businesses not stocks.
The stock sheet actually has no meaning because it is only a representation of the company, what he thinks about is not the analysis graph, but the value and performance behind the business.

Two Mandatory Rules in Warren Buffett's Business

In doing business, buffett has its own rules. These two rules that Buffett has always applied were able to make him the success he is today. The first rule: never lose in business. Rule Two: never forget the first rule. Simple indeed, but if applied in business this rule is not easy to implement.

Good emotional control

There are three simple keys that can be used to have good emotional control. First, be calm. The world of investors is full of stock values ​​that fluctuate every day. The second key to emotional control is patience. Warren has learned the lesson to be a patient investor since he was young, at the age of 11 years.

The third key to emotional control is to think rationally. Warren said an optimistic attitude does not always bring positive results and vice versa.

CHAPTER III CONCLUSION

Warren Buffett, a world-famous investor, and once the number one richest person in the world. Not only is he an investor, he is also an entrepreneur and a philanthropist. This success did not come easily, but with hard work, patience, and a strong desire.

Even though he is a child from the rich class, he is not complacent with the wealth of his parents, he has been accustomed to being independent from a young age, and taking advantage of his free time to do activities he likes.

Suggestion :

According to Warren Buffett, to be a great investor, you must have some rules. One of them, namely the first rule, never lose in investing, the second rule, never forget the first rule.

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