Does Warren Buffet Make Money From His Company

Where does Warren Buffet get his money for his everyday living if he is a buy and hold investor?

As the investment industry is a vast and complex industry, there could be many different ways he could get his money based on the type of investments. (i.e. Equities pay dividends, Bonds pay coupons, etc)But to keep it simple, let’s say on 31st Dec 2009 he had 1 billion $ and he wanted to go all in, buy and hold Microsoft shares. (he’s worth today 73 bn)So he buys 33 000 000 Microsoft shares on 31 Dec 2009, worth 30.48, for a total of $1,005,840,000 .As of today, Microsoft paid a total of $7.33 dividend per share, which would get a total of $241,890,000. (Dividend History)As there are 2,545 days between the two dates, you do the math, this investment would give Warren a nice daily revenue of $95,045!And all that by holding his position, let’s not talk about today’s MSFT stock price which is $62.30, valuing his portfolio at 2 bn $, with a 1 bn $ gain in value.Imagine he would have reinvested all those dividends into the same investment, instead of spending it, he would have earned even more ;)

How does Warren Buffett make money?

Buffett was an inveterate saver, putting away significant savings, quite literally, from his paper route. In his teens he had a business running vending machines in his hometown. He never missed an opportunity to save, and invest.Early on, he invested well, and interested other people to invest their money with him. He was, in effect, a hedge fund, and charged 20% of all earnings above earnings in line with the S&P-500, as most hedge funds do, making his money off of what he earned other people, the classic ‘when their earnings go up, I make money, but when their earnings go down, I don’t lose anything,” or OPM philosophy.After he had amassed a significant amount of money he began to buy whole companies, of course, but he didn’t “get rich” that way, he “got richer.”He initially got rich by being a brilliant investor of other people’s money, then parlayed that into his own personal wealth. Buffett is a certified genius, IQ probably north of 140, who can spot anomalies in a corporate balance sheet from six feet away, and add columns of numbers in his head. But it’s not just his brilliance that made him rich. From an early age he was a scrimper and a saver, never missing an opportunity to make a buck, and he came from a fairly wealthy family where his abilities were nurtured and developed. He’s often reputed to “live in the same modest house he grew up in.” Right. A “modest” house that has a squash court in the basement. That’s not modest in my neighborhood, so let’s be realistic and say that true, it’s not the home Bill Gates now owns, nor is it the house Bill Gates grew up in, but it’s not the house I grew up in either.

Does Warren Buffet earn the majority of his money buy buying companies for cheap and selling them high, or is it from the stocks he trades?

A couple of things. He has not sold a private company he has bought - every private company he has bought is still part of BRK. He hasn’t necessarily bought them “for cheap” - he has just bought really good ones for the most part and held on. The stock investments are not “trades” and haven’t been for many decades, average holding periods for the tradeable part of his holdings have tended to be decades. Most of them have been home run choices, earning about 7% a year above the S&P500 in the long run.At this point the money being made is primarily from the first, but in the past it was primarily from the second. Now I’d say they’re 60/40. A final point: it all started with insurance company float. You should read about this (I believe there is another answer that talks about float). This also has a role (but every insurance company has float, so it doesn’t explain why ONE insurance company has so much and invests it so well).

Is it possible to follow Warren Buffett and make money?

You bet. Here is the famous op-ed he wrote in the New York Times as the financial crisis was unfolding in October 2008. He made this recommendation in real-time, without the benefit of hindsight. Those who listened to his advice prospered:So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.Why?A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.Source: http://www.nytimes.com/2008/10/1...