It goes without saying that Warren Buffett is a living legend. He is generally considered the most successful investor of the 20th century. Through his conglomerate Berkshire Hathaway, Warren oversees a diverse portfolio of investments in a wide range of industries. Warren didn’t actually found Berkshire. Like all of his assets, he first started out as a regular investor. He started buying shares in 1962 and took majority control in 1965. Today he uses Berkshire as his investment vehicle and umbrella holding company.
Over the last several decades, Warren has used a disciplined investing strategy to make large investments in companies via Berkshire. He has also outright acquired dozens of companies. Some of the notable companies that Berkshire Hathaway owns outright or has significant investments in, include:
- Apple: Berkshire Hathaway holds a significant stake in Apple, worth over $120 billion
- Coca-Cola: Berkshire Hathaway is one of the largest shareholders in Coca-Cola, with a stake worth over $22 billion
- American Express: Berkshire Hathaway has a large stake in American Express, worth over $15 billion
- Bank of America: Berkshire Hathaway is a major shareholder in Bank of America, with a stake worth over $30 billion
- Burlington Northern Santa Fe: Berkshire Hathaway owns one of the largest railroad companies in North America, which it acquired in 2010 for $26 billion.
- See’s Candies: Berkshire Hathaway owns this California-based candy company, which has been an extremely successful investment for the company.
- Geico: Berkshire Acquired 100% of the insurance giant Geico in 1996
- Fruit of the Loom: Acquired 100% of the underwear maker in 2002
Back in 1965 when Warren became the majority owner of Berkshire Hathaway, a single share cost on average…
$19
Twenty years later, in the mid-1980s, a single share of Berkshire Hathaway Class A stock would cost you…
$1,500
Today a single share would cost you around…
$500,000
The company’s current market cap is a little under $700 billion.
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$1,000 Invested In 1965
If you are a regular reader of Celebrity Net Worth, you may have heard the story of Dorothy and Myer Kripke, Warren’s Omaha neighbors in 1965 who asked him (he was 35 years old at the time) to help them manager their life savings of $67,000. Warren agreed. Thirty year later their $67,000 was $25 million. Assuming they never sold a single share, on the day Myer Kripke died in 2014 (Dorothy died in 2000), their $67,000 had grown to be worth over $150 million. If his relatives still own those shares, they are worth around $400 million.
But keep in mind, not many people had $67,000 in 1965. That was actually A LOT of money, worth the inflation equivalent of around $600,000.
How much money would you have today if you had invested just $1,000 with Warren Buffett back in 1965?
FYI, $1,000 in 1965 is around $9,500 today.
The Answer:
$25 million
Here’s the more specific math:
As we stated earlier, a single share of Berkshire Class A stock cost $19 in 1965. So $1,000 would have purchased 52 shares. At today’s price per share of $478,000, your 52 shares would be worth…
$24,863,280
That’s an impressive number, but – TRIGGER WARNING if you worship Warren Buffett – I’m about to burst your bubble…
David Silverman/Getty Images)
$1,000 Invested In the S&P 500
Not many people on the planet had the ability to invest with Warren Buffett in 1965. You basically had to be a neighbor like the Dorothy and Myer Kripke.
So let’s say you had $1,000 in 1965 and decided to just plunk it all into a basic ETF that tracked the S&P 500. And let’s also say you reinvested all of your dividends. Today your $1,000 would be…
$24,931,000
So YES Warren beat the S&P since 1965… but BARELY! And in fairness, my math for $25 million with Berkshire did not include dividends from the companies Berkshire owns. Berkshire itself does not pay a dividend, but many of companies it invests in do. Those dividends could be reinvested and very likely boost the $25m by a few million today. So Warren still wins! But perhaps not by as much as you would have guessed!
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