Beginnings Summary and Analysis

By 1957, Buffett had investment partnerships with several relatives and friends, managing about $300,000 and knew virtually every stock and bond in existence, studying them voraciously. He realized that, in order to grow, new investors were needed, and he got a break when a doctor's family decided to join. Buffett's rules were quite strict. New partners were to give him their money and not ask any questions. They could add to or cashout at the end of each year. Buffett would give them all profits up to 4% and then 75% of any profits above that. By the end of 1957, Buffett's portfolios gained 10% while the Dow Jones dropped 8%. By the end of 1958, the portfolios rose 41%, the Dow 39%; by the end of the third year, the partnership money had doubled. The minimum investment was raised to $50,000. Another strict rule that often turned away potential investors was...