Open Risk Taker

Warren Buffett

 

Being an open risk taker is another important entrepreneur trait. Most successful entrepreneurs work hard through planning and preparations to minimize the risk involved and take a calculated risk. For this entrepreneur trait, we have selected Warren Edward Buffett who is well-known as the investor with highest accomplishment in the world. Buffett is now 86 years old, but he is able to maintain his position as the chairman, CEO and largest shareholder of Berkshire Hathaway. (Wikimedia Foundation, Inc. , 2006)

According to Warren Buffett, “The basic ideas of investing are to look at stocks as business, use the market's fluctuations to your advantage, and seek a margin of safety. That is what Ben Graham, the Father of Value Investing taught us. A hundred years from now they will still be the cornerstones of investing.” (Wikimedia Foundation, Inc. , 2016) From this, we can see that Buffett is an entrepreneur applying the definition of risk in his investment career.

Buffett always looks further than the intrinsic value of an investment and concentrates on management of the company and the capability inhibiting by the  product in the marketplace. (Smith) Buffett and partners bought Berkshire Hathaway, a textile mill which had not make any profit for a long period. They operated the mill and used the gain from the textile business to be funds for other investments. “Opportunity comes along with risk” which is foreseen by Buffett and the risk is taken to giving a chance in succeed later.

In 1987, Berkshire Hathaway acquired a 12% ownership in Salomon Inc. After a scandal involving the CEO of Salomon Brothers, the CEO left the company and Buffett became Chairman until the crisis passed. Although Salomon Inc. is in difficulties and this may risk Berkshire Hathaway, Buffett is taking the risk to continue owning Salomon, and finally the risk becomes his accumulated wealth. (Wikimedia Foundation, Inc. , 2016)

In 2002, Buffett put in US$11 billion in assisting U.S. dollars against other currencies. By April 2006, his net profit from this investment was more than US$2 billion. In 2009, Burlington Northern Santa Fe Corp. has been purchased by Buffett to extend on new business area instead of only concentrating in financial industry. (Smith) Although Buffett is a risk taker, as an entrepreneur, he diversified his investment to minimize the risk.