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Warren Buffett Discusses Investing in Coca Cola

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Executive Summary


Warren Buffett is one of the greatest business leader, investor, and philanthropist of all time. How did he make it that far?


The 7-year old Warren Buffett was in Omaha during summer in 1937. He noticed people went out of the lawn just to cool off, so he got the idea of reselling soft drinks. He headed to his grandfather’s grocery store and bought 6 bottles for a quarter, which he then resold to people outside.


Buffett likes wonderful brands and he takes care of them dearly. Berkshire owns 400 million shares of Coca Cola stocks and they never sold a share nor are they planning of selling a share. With a great business like Coke, the danger would always be resting. Good thing about it is that Buffett sees none of that in the company.


With how Coke prospers, it is not surprising that the standard of living of Americans has been improving in the span of their lifetime. For one, they have got the formula. In the last 10 or 20 years, they keep on turning out great people like Steve Jobs. There are always problems, but problems are a stepping stone to a greater future. The world does not belong the pessimist. Happiness is the right formula and it just has to be carried out with extreme diligence and enthusiasm.


Going back to Coke, Buffett has a feeling of restlessness even as a kid when he started selling Coke. This feeling lead him to this great success – and of course, happiness.


Full Transcript


Warren Buffett is one of the greatest business leader, investor, and philanthropist of all time. How did he make it that far? Not everyone knows his story when he first started.


Imagine: Omaha. 1937. 7-year-old Warren Buffett. Summer. Hot.


It was humid. People went out of the lawn just to cool off, so Buffett got the idea of selling pops, or what today’s generation calls as soft drinks.


He went to different gas stations. During those days, every gas station had a cooler. Inside the coolers were soft drinks. Beside the coolers were can openers. Buffett went around and collected all the bottle caps for a week, and he collected 8,000 pieces. He sorted them all out and noticed how Coca Cola overwhelmed everything else.


Buffett then headed to his grandfather’s grocery store and got a good deal on Coke. He bought 6 bottles for a quarter. He went around to resell it to people outside – which always ended up being sold out. That was the best business he ever had at that age.


However, he made one mistake. Buffett didn’t put the money he saved from the Coke business into Coca Cola stocks. He reaped from that mistake many years later.


With regards to innovation in businesses, the Jacob’s Pharmacy is seen year after year until it reached 1.8 billion. When Buffett joined the board in 1980s, the figures were a whole lot less. There were a fewer shares outstanding and there was a better per capita. Investors were gaining shares around the world. Businesses like this pharmacy are good to invest in.


Buffett likes wonderful brands and he takes care of them dearly. Taking good care of businesses makes them last forever. It is obvious very obvious with Warren Buffett. Berkshire owns 400 million shares of Coca Cola stocks and they never sold a share nor are they planning of selling a share.


Everybody wants to own businesses that will participate in the future. Buffett does it; they have done it in decades at Berkshire; they will continue to do it.


With how the United States prepares for the challenges that are ahead in terms of economic policy, trade deficit tax, and reform, the country always has problems. Despite that, in Buffett’s opinion, the luckiest person on a probability basis is the one born in the USA. In 1790, the USA had 4 million people out of the hundreds of millions of people in the world. Americans weren’t smarter and they didn’t every work hard than people necessarily did, but they had system that unleased human potential. That system has produced an unbelievable bond.


The standard of living of Americans improves in the span of their lifetime. For one, they have got the formula. In the last 10 or 20 years, they keep on turning out great people like Steve Jobs. Again, there are always problems, but problems are a stepping stone to a greater future. The world does not belong the pessimist. Happiness is the right formula and it just has to be carried out with extreme diligence and enthusiasm.


Buffett likes studying failure, because he wants to see what causes businesses to go bad. The biggest thing that kills a business is complacency. Everyone wants a restlessness feeling that somebody’s always after them and they aim to stay ahead of them. Great investors always want to be on the move. With a great business like Coke, the danger would always be resting. Good thing about it is that Buffett sees none of that in coke.


The key to a great business is to compete the same way when you’ve got 1.8 billion as you were selling 10 a day. With that restlessness and belief, tomorrow will be more exciting than today.


Buffett has a feeling of restlessness even as a kid when he started selling Coke. This feeling lead him to this great success.