From Selling Coke at Age 6 to Running a Partnership - Warren Buffett Early Years

Look, some people spend their twenties figuring out what to do with their lives. Warren Buffett was already buying stocks at eleven. By his mid-twenties he was managing other people’s money and absolutely crushing the market. By his late thirties, his investment partnership had returned nearly 2,800% while the Dow did about 153%.

Let me tell you how a kid from Omaha, Nebraska turned pocket change into one of the greatest investment track records in history.

The Kid Who Saw Profit Everywhere

Warren Buffett was born on August 30, 1930 in Omaha, Nebraska. He grew up with two sisters and had an incredibly close relationship with his father. Buffett once said his father was the best gift he ever received.

Here is the thing about Buffett – he was not a normal kid. At age six, he bought six-packs of Coca-Cola from his grandfather’s convenience store for 25 cents and sold each can individually for a nickel. That is five cents of profit per six-pack. Think about that. A six-year-old figured out wholesale-to-retail arbitrage before most kids figure out how to tie their shoes.

And that childhood hustle? It stuck with him. Decades later, that early experience with Coca-Cola’s brand power was one of the reasons he made a massive investment in the company in 1988.

By age eleven, Buffett made his first stock market investment: three shares of Cities Service Preferred, bought at $38 per share (he even bought some for his older sister Doris). Shortly after, the stock dropped to $27. Most adults would have panic-sold. This eleven-year-old held on.

When it bounced back to $40, he sold for a small profit. Smart, right? Well, kind of. The stock eventually went to $200. He left a fortune on the table.

That early experience taught him a lesson that would define his entire career: patience pays, and selling too early can cost you more than buying wrong.

College – The Reluctant Student

When Buffett graduated high school in 1947, he had zero interest in more school. He was already making money delivering newspapers and had his eye on other ventures. He was basically the 1940s equivalent of a teenager who wants to drop out to build a startup.

His father pushed him into the Wharton Business School at the University of Pennsylvania. Buffett lasted two years. His complaint? He felt he was smarter than his professors. Whether that was teenage arrogance or actual genius is up for debate, but given how things turned out, I am leaning toward genius.

He transferred back home to the University of Nebraska-Lincoln and finished his degree in three years while working full-time. That is not the move of a lazy student. That is the move of someone who just wanted the credential and got back to real work as fast as possible.

The Benjamin Graham Effect

Here is where the story gets really good.

At nineteen, Buffett walked into a bookstore in Lincoln, Nebraska and picked up a copy of a well-known investing book by Benjamin Graham, often called “The Father of Value Investing.” It changed everything. Buffett has called it the best thing he ever read about investing.

Graham’s core ideas – that the market is emotional and often misprices stocks, and that you should always buy with a margin of safety – became the foundation of everything Buffett would build.

That book inspired Buffett to actually pursue graduate school, something he otherwise had no interest in. He applied to Harvard Business School. They rejected him in about ten minutes. Look, Harvard rejecting Warren Buffett might be the worst admissions decision in the history of higher education.

But here is where it gets interesting. While browsing a Columbia University catalog at a library in Omaha, Buffett discovered that Benjamin Graham was actually teaching there. He had assumed Graham was long gone. He wrote a letter to Graham’s colleague David Dodd, basically saying “I thought you guys were dead, but since you are not, I would love to attend.”

A few weeks before the semester started, Dodd wrote back: “You are in.”

Buffett thrived at Columbia. He became the only student ever to receive an A+ in one of Graham’s investing classes. He studied Graham with laser focus. When he found out Graham was chairman of an insurance company called GEICO, Buffett took a train to Washington, D.C. on a Saturday just to check out the headquarters. He ended up spending hours talking with the company’s Financial Vice President about the insurance business. Decades later, Buffett would acquire GEICO entirely.

This is the kind of obsessive curiosity that separates good investors from legendary ones.

Back to Omaha – Working for Dad

After Columbia, Buffett desperately wanted to work for Graham’s firm, the Graham-Newman Corporation. He even offered to work for free. Graham turned him down – not because of Buffett’s abilities, but because Graham preferred hiring employees from groups that faced discrimination at other firms.

Graham did recommend Buffett to other investment firms, but working for the competition did not appeal to the young investor. Instead, he went back to Omaha and joined his father’s securities brokerage firm, Buffett-Falk & Company.

During this time, Buffett sharpened his skills as an analyst. He made some unconventional personal investments – a Texaco gas station, some real estate. He took a Dale Carnegie course to improve his public speaking (yes, even Buffett had to work on soft skills) and started teaching evening classes at the University of Omaha.

But the whole time, he kept writing letters to Benjamin Graham, sharing investment ideas and filling orders for him. It was a long game. And it worked.

Graham eventually hired him.

Graham-Newman – The Masterclass

In 1954, Buffett and his wife Susie moved to the suburbs of New York so he could work at the Graham-Newman Corporation. This was the real-world education that shaped his investing approach.

Every day, Buffett dug through stock research reports, applying a deeply quantitative approach to finding undervalued companies. But even then, differences between him and Graham started showing up. Graham was purely about the numbers. Buffett cared about numbers too, but he was also interested in things you cannot easily quantify – the quality of a company’s management team, its competitive advantages, its long-term positioning.

That blend of quantitative rigor with qualitative judgment would eventually become Buffett’s signature style.

The Graham-Newman chapter was short. In 1956, just two years after Buffett joined, Graham decided to retire and wind down the firm. Buffett headed back to Omaha. But this time, he had a plan.

The Buffett Partnership – Where the Magic Happened

By the time he left New York, Buffett had built a personal savings exceeding $100,000. In 1956, he secured investments from seven limited partners and launched his own investment partnerships with a starting capital of $105,100 – $105,000 from his partners and $100 from himself.

His fee structure was revolutionary. Most investment managers charged a flat percentage of assets regardless of performance. Buffett thought that was ridiculous. Why should a manager get paid when they lose your money? Instead, he charged one-quarter of any returns above 4%. If he did not beat 4%, he made nothing on management fees. That is skin in the game. That is alignment of interests.

Buffett organized his portfolio into three categories:

• Generals: Undervalued stocks of publicly traded companies
• Workouts: Merger arbitrage plays where he bought shares of acquisition targets below the stated purchase price
• Activist investments: Situations where Buffett saw specific actions that could dramatically boost a company’s value

The results were nothing short of absurd.

In his first five years, the partnership returned 251% cumulatively (28.5% annually) while the Dow returned just 74.3% (11.8% annually). By 1962, six years in, he was managing over $7.2 million – roughly $59 million in today’s dollars. His personal stake topped $1 million.

As the partnership grew to over 90 limited partners across 11 separate legal entities, Buffett consolidated everything into one vehicle: The Buffett Partnership, Ltd. He set the minimum investment at $100,000 and finally got himself an office on Farnam Street in Omaha.

Ten years in, the numbers were staggering. The partnership was up over 1,000% versus 123% for the Dow. Assets hit $44 million (over $400 million in today’s money). Buffett’s personal stake reached roughly $7 million (over $60 million today).

In 1968, the partnership recorded its best year ever – a 59% gain – pushing total assets past $100 million.

Here is the full track record:

29.5% annually for thirteen years. Let that sink in.

Knowing When to Walk Away

But here is the part most people miss about Buffett. He did not just know how to make money. He knew when to stop.

By the late 1960s, the Vietnam War was creating geopolitical uncertainty. Stock valuations were climbing. The bargain-priced stocks Buffett specialized in were disappearing. He could not find enough good ideas to deploy the partnership’s growing assets.

In May 1969, Buffett announced he was liquidating the partnership. He spent the rest of the year unwinding positions, keeping only two holdings: Berkshire Hathaway and Diversified Retailing.

He distributed Berkshire Hathaway shares to his limited partners along with a letter saying he planned to stay involved with the company. He held roughly 29% of Berkshire Hathaway himself.

Most fund managers would have kept collecting fees and riding the wave. Buffett walked away because he refused to play a game he did not understand just to protect his ego.

That takes more discipline than any stock pick ever will.

What We Can Learn

Buffett’s early years are not just a biography. They are a playbook.

Start early and stay curious. Buffett was running business experiments at six years old. You do not need to be six, but the earlier you start investing, the more time compounding has to work. Even small amounts matter when you give them decades.

Find your mentors. Buffett sought out Benjamin Graham and essentially forced himself into the man’s orbit through persistence, letters, and showing up uninvited on a Saturday. In today’s world, you have podcasts, YouTube, online communities, and direct access to smart people on social media. Use them.

Align incentives. Buffett’s fee structure was brilliant because it meant he only made money when his investors made money. Whenever you work with a financial advisor or invest in a fund, ask yourself: does this person get paid whether I win or lose?

Know when to walk away. Buffett shut down one of the most successful investment partnerships in history because conditions changed. He did not chase returns into territory he did not understand. That is not weakness. That is wisdom.

Be patient. His first stock investment taught him that selling too early is just as costly as buying too late. The best investors are comfortable being bored.

Key Takeaways

• Buffett showed entrepreneurial instincts from age six and made his first stock investment at eleven
• He reluctantly pursued formal education but thrived once he found Benjamin Graham at Columbia
• He spent years building a relationship with Graham before finally being hired at Graham-Newman
• The Buffett Partnership compounded at 29.5% annually over 13 years, crushing the Dow’s 7.4%
• His performance-based fee structure aligned his interests perfectly with his investors
• He voluntarily liquidated the partnership in 1969 when he could no longer find enough bargains – choosing integrity over easy fees
• His remaining Berkshire Hathaway stake became the foundation for the next chapter of his career