Jul 13, 2018
Mark Zuckerberg Now Has a Higher Net Worth Than Warren Buffett
But what is “net worth” anyway? We explain it.
Warren Buffett, the so-called Oracle of Omaha, has long been one of the richest men in the world. But in the past few days Mark Zuckerberg, founder of social media company Facebook, has overtaken him in net worth.
The three richest people globally are now all founders of tech companies. Amazon founder Jeff Bezos is the wealthiest person in the world, with a fortune estimated at $143 billion. Following Bezos is Microsoft founder Bill Gates, whose personal wealth is estimated at $93.4 billion.
What’s net worth?
Value vs. growth
Buffett, 87, has long been known for his skill picking company stocks and investing in companies that increase in value over time.
Buffett built Berkshire Hathaway from a struggling cotton mill and cloth spinning company he purchased in 1962, into a conglomerate that owns dozens of companies. The company’s stock has increased a staggering 1.8 million percent over the last 50 years.
Berkshire Hathaway is what’s known as a value company because the companies it owns or invests in can often be undervalued compared to similar companies in the market. Investors, such as Buffett, try to invest in these companies before their share price increases.
Facebook, founded by Zuckerberg from his Harvard University dorm room in 2004, is a very different kind of company. It’s what’s known as a growth company, because its employee size, revenue, and stock price have grown very quickly since the founding.
Zuckerberg’s wealth increased by nearly $9 billion this year, according to news sources. Bezos’ wealth has increased by more than $50 billion since last summer.
Both Buffett and Zuckerberg have pledged to give away most of their wealth to charity over time.
As with any type of investing, choosing between value and growth investing largely comes down to assessing the trade-off between the risk and the expected performance. Generally, a growth strategy is a style of investing that focuses on companies that have the potential to grow their earnings at a high rate, while a value strategy is a style of investing that focuses on companies that may be priced below their actual value.