If you had invested $10,000 in Berkshire Hathaway in 1965, you’d have around $80 million (and probably more) today, according to a 2010 Wall Street Journal report. That kind of return, of course, was powered by Warren Buffett — the Oracle of Omaha and one of the richest people in the world. Buffett’s story is unique, but because he’s relied on discipline and careful planning to build his fortune, he commands respect and attention.
When the man has something to say, ears perk up. Pencils hit the desk. Facebook feeds are ignored. Buffett’s insights have helped throngs of other people build their own fortunes — or at least make more informed and less impulsive decisions with their investments.
Did you know, though, Buffett’s original plan was to retire at the young age of 25? Having enough to live off of, he seriously considered spending a quiet life in Nebraska with his young family. Obviously, he took a different path, and a lot has changed over the past 50 years. But what if he had stuck to his original plan? The financial world would be a different place. A fateful decision, however, changed all of that.
“The thing is, when I got out of college, I had $9,800, but by the end of 1955, I was up to $127,000. I thought, I’ll go back to Omaha, take some college classes, and read a lot — I was going to retire!” Buffett said in a 2012 Forbes article. “I figured we could live on $12,000 a year, and off my $127,000 asset base, I could easily make that. I told my wife, ‘Compound interest guarantees I’m going to get rich.’”
Instead, he ended up investing and eventually taking over Berkshire Hathaway, a company which is now among the most valuable in the world. So what would the world look like without Warren Buffett as we know him — if he was merely some retiree who’d been living quietly in Omaha for the past 50 years? The differences run deeper than you might expect.
First and foremost, we’d lack of one of the world’s most valuable and important companies.
1. Berkshire Hathaway’s fate
Without Buffett, what would have become of Berkshire Hathaway? Nothing, in all likelihood. At least it wouldn’t look like it does today.
The company, prior to Buffett’s entrance, was a failing textile business. After he jumped into the fray, it’s grown to become one of the most valuable companies in the world. Its current market cap is around $410 billion. But when Buffett took over in 1965, the company’s balance sheet showed it was struggling. Its assets were equal to its liabilities. Now, 52 years later, it has $80 billion in cash.
What if Buffett had not taken over the company decades ago? It’s probably a safe assumption to think the company would have slowly sunk beneath the waves.
Next: Shareholders would have missed remarkable returns.