BERKSHIRE HATHAWAY & WARREN BUFFETT’S MILLIONAIRES CLUB

BERKSHIRE HATHAWAY & WARREN BUFFETT’S MILLIONAIRES CLUB by Vintage Value Investing

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In 1964, when Warren Buffett first took over Berkshire Hathaway, shares for the company cost only $19.

Today?

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Berkshire Hathaway stock trades for over $200,000!

Berkshire Hathaway stock chart

Click image to enlarge.

There is a reason why Warren Buffett is regarded as the best investor of all time – he has grown Berkshire Hathaway’s book value by about 20% a year for the past 50 years!

$1,000 invested in Berkshire Hathaway in 1964 would be worth over $11.5 million today. This is, of course, remarkable. But what’s also remarkable is just how consistent Berkshire Hathaway’s rise has been throughout the years (if you had bought the stock and held on to it).

Here is a chart showing the value of $1,000 invested in Berkshire Hathaway today, depending on what year you could have invested in the company.

Berkshire Hathaway $1,000 Chart

A $1,000 investment in 1965 would be worth about $11.5 million today.

A $1,000 investment in the 1970’s would be worth over $1 million today.

A $1,000 investment in the 1980’s would be worth $50,000 – $100,000 today.

A $1,000 investment in the 1990’s would be worth $5,000 – $10,000 today.

The result: Warren Buffett’s Millionaires Club, comprised of the investors who have bought Berkshire Hathaway stock over the years and have held it for long enough to have let Warren Buffett’s compounding magic take effect.

As the WSJ points out in its article Warren Buffett’s Millionaires Club: “Like Mr. Buffett, Berkshire shareholders are an unusual bunch.”

This is true. I saw it first-hand when I went to the Berkshire Hathaway Annual Shareholders Meeting in Omaha last May. Shareholders include everyone from finance professionals, lawyers, and doctors, to teachers, farmers, and truckers.

Download your Free 2015 Berkshire Hathaway Meeting eBook here

Members of Warren Buffett’s Millionaires Club should really thank Warren Buffett and Berkshire Hathaway every day.

Early Berkshire Hathaway stockholders have used shares to finance children’s educations, buy homes and put up collateral for loans. Hundreds of millions of dollars of stock already have gone to shareholders’ alma maters, cultural institutions and medical research.

One shareholder highlighted in the WSJ article drives a Hyundai that sports a sticker that reads:

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BERKSHIRE HATHAWAY & WARREN BUFFETT’S MILLIONAIRES CLUB

In 1964, when Warren Buffett first took over Berkshire Hathaway, shares for the company cost only $19.

Today?

Berkshire Hathaway stock trades for over $200,000!

Berkshire Hathaway stock chart

Click image to enlarge.

There is a reason why Warren Buffett is regarded as the best investor of all time – he has grown Berkshire Hathaway’s book value by about 20% a year for the past 50 years!

$1,000 invested in Berkshire Hathaway in 1964 would be worth over $11.5 million today. This is, of course, remarkable. But what’s also remarkable is just how consistent Berkshire Hathaway’s rise has been throughout the years (if you had bought the stock and held on to it).

Here is a chart showing the value of $1,000 invested in Berkshire Hathaway today, depending on what year you could have invested in the company.

Berkshire Hathaway $1,000 Chart

A $1,000 investment in 1965 would be worth about $11.5 million today.

A $1,000 investment in the 1970’s would be worth over $1 million today.

A $1,000 investment in the 1980’s would be worth $50,000 – $100,000 today.

A $1,000 investment in the 1990’s would be worth $5,000 – $10,000 today.

The result: Warren Buffett’s Millionaires Club, comprised of the investors who have bought Berkshire Hathaway stock over the years and have held it for long enough to have let Warren Buffett’s compounding magic take effect.

As the WSJ points out in its article Warren Buffett’s Millionaires Club: “Like Mr. Buffett, Berkshire shareholders are an unusual bunch.”

This is true. I saw it first-hand when I went to the Berkshire Hathaway Annual Shareholders Meeting in Omaha last May. Shareholders include everyone from finance professionals, lawyers, and doctors, to teachers, farmers, and truckers.

Download your Free 2015 Berkshire Hathaway Meeting eBook here

Members of Warren Buffett’s Millionaires Club should really thank Warren Buffett and Berkshire Hathaway every day.

Early Berkshire Hathaway stockholders have used shares to finance children’s educations, buy homes and put up collateral for loans. Hundreds of millions of dollars of stock already have gone to shareholders’ alma maters, cultural institutions and medical research.

One shareholder highlighted in the WSJ article drives a Hyundai that sports a sticker that reads:

I think we should add “…and God Save the Oracle of Omaha.”

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Ben Graham, the father of value investing, wasn’t born in this century. Nor was he born in the last century. Benjamin Graham – born Benjamin Grossbaum – was born in London, England in 1894. He published the value investing bible Security Analysis in 1934, which was followed by the value investing New Testament The Intelligent Investor in 1949. Warren Buffett, the value investing messiah and Graham’s most famous and successful disciple, was born in 1930 and attended Graham’s classes at Columbia in 1950-51. And the not-so-prodigal son Charlie Munger even has Warren beat by six years – he was born in 1924. I’m not trying to give a history lesson here, but I find these dates very interesting. Value investing is an old strategy. It’s been around for a long time, long before the Capital Asset Pricing Model, long before the Black-Scholes Model, long before CLO’s, long before the founders of today’s hottest high-tech IPOs were even born. And yet people have very short term memories. Once a bull market gets some legs in it, the quest to get “the most money as quickly as possible” causes prices to get bid up. Human nature kicks in and dollar signs start appearing in people’s eyes. New methodologies are touted and fundamental principles are left in the rear view mirror. “Today is always the dawning of a new age. Things are different than they were yesterday. The world is changing and we must adapt.” Yes, all very true statements but the new and “fool-proof” methods and strategies and overleveraging and excess risk-taking only work when the economic environmental conditions allow them to work. Using the latest “fool-proof” investment strategy is like running around a thunderstorm with a lightning rod in your hand: if you’re unharmed after a while then it might seem like you’ve developed a method to avoid getting struck by lightning – but sooner or later you will get hit. And yet value investors are for the most part immune to the thunder and lightning. This isn’t at all to say that value investors never lose money, go bust, or suffer during recessions. However, by sticking to fundamentals and avoiding excessive risk-taking (i.e. dumb decisions), the collective value investor class seems to have much fewer examples of the spectacular crash-and-burn cases that often are found with investors’ who employ different strategies. As a result, value investors have historically outperformed other types of investors over the long term. And there is plenty of empirical evidence to back this up. Check this and this and this and this out. In fact, since 1926 value stocks have outperformed growth stocks by an average of four percentage points annually, according to the authoritative index compiled by finance professors Eugene Fama of the University of Chicago and Kenneth French of Dartmouth College. So, the value investing philosophy has endured for over 80 years and is the most consistently successful strategy that can be applied. And while hot stocks, over-leveraged portfolios, and the newest complicated financial strategies will come and go, making many wishful investors rich very quick and poor even quicker, value investing will quietly continue to help its adherents fatten their wallets. It will always endure and will always remain classically in fashion. In other words, value investing is vintage. Which explains half of this website’s name. As for the value part? The intention of this site is to explain, discuss, ask, learn, teach, and debate those topics and questions that I’ve always been most interested in, and hopefully that you’re most curious about, too. This includes: What is value investing? Value investing strategies Stock picks Company reviews Basic financial concepts Investor profiles Investment ideas Current events Economics Behavioral finance And, ultimately, ways to become a better investor I want to note the importance of the way I use value here. It’s not the simplistic definition of “low P/E” stocks that some financial services lazily use to classify investors, which the word “value” has recently morphed into meaning. To me, value investing equates to the term “Intelligent Investing,” as described by Ben Graham. Intelligent investing involves analyzing a company’s fundamentals and can be characterized by an intense focus on a stock’s price, it’s intrinsic value, and the very important ratio between the two. This is value investing as the term was originally meant to be used decades ago, and is the only way it should be used today. So without much further ado, it’s my very good honor to meet you and you may call me…