Foresight

Warren Buffett is the most successful American investor and ranked 3rd in the 2015 world’s billionaire. Warren Buffett is the biggest stockholder of his diversified holding company, Berkshire Hathaway. Warren Buffett be known as “Wizard of Omaha” due to he has a good foresight about value investing.

Subsidiary companies under Berkshire Hathaway include food and beverage sector, clothing, insurance and finance, logistic, media and others. Class A stock of Berkshire Hathaway is the most expensive stocks among public United States companies. Buffett being trusted by people and if people know that Buffett is interested to buy a particular stock, that particular stock’s price would increase by 10%.

Buffett only invests in companies with steady returns. Although Buffett didn’t know anything about farming, but he able to made a good profit off the Buffett Farm. Buffett has tripled its earnings and five times more valuable than the cost that he paid after 28 years. Berkshire bought 1.3% of PetroChina, one of the dominant oil companies in China for $488 million in 2002 and 2003. PetroChina had a market value of $37 billion, but Buffett think that it was worth $100 billion. PetroChina’s market value reached $275 billion due to the rising oil price and new discoveries. Berkshire reaped a $3.6 billion gain after sold the shares of PetroChina by the time 2007 due to his foresight about the future value of PetroChina.

 Buffett bought Berkshire Hathaway which is a textile company in 1965 with the price of $12 a share. Buffet became a billionaire after he started selling the Class A shares of Berkshire Hathaway in 1990. Berkshire Hathaway would be the most successful investment of Buffett. Because of the foresight of Buffett, Berkshire successfully generates cash from its insurance business and invests the cash very good. Berkshire Hathaway has annual average compounded return of 22% and total return of 1745300%. (Gandel, 2014)