‘We blew it’: Warren Buffett’s 6 biggest investment errors and missed bets
After six decades building Berkshire from a struggling New England textile mill into a $1 trillion-plus conglomerate, the ‘Oracle of Omaha’ has made a long list of nearly prescient investment calls, with millions following his cues like divine guidance.
The Cost of What Never Happened
As Warren Buffett stepped down as chief executive of American holding company Berkshire Hathaway at the age of 95 a resurfaced clip on X captured his most unsettling investing confession- not losses that appear on balance sheets, but opportunities that were never taken. Greg Abel will now take over as the CEO of Berkshire. After six decades building Berkshire from a struggling New England textile mill into a $1 trillion-plus conglomerate, the ‘Oracle of Omaha’ has made a long list of nearly prescient investment calls, with millions following his cues like divine guidance. Here is a list of six of Warren Buffett’s biggest investment errors:
1. Dexter Shoe: A Textbook Disaster
Buffett’s most infamous mistake dates to 1993, when he bought Dexter Shoe Company for $433 million, in Berkshire stock (25,203 shares of A). He believed the firm had a durable competitive advantage, but foreign competition rapidly destroyed the business. The Berkshire shares used would now be worth over $12 billion. Buffett later wrote: “As a financial disaster, this one deserves a spot in the Guinness Book of World Records.” In a 2007 letter he admitted, "In essence, I gave away 1.6% of a wonderful business – one now valued at $220 billion – to buy a worthless business.
2. Energy Future Holdings: A Solo Misste
In 2007, Buffett invested $2 billion in bonds issued by Energy Future Holdings, at the peak of natural gas prices and without consulting Charlie Munger. However, the shale boom, fracking surge and financial crisis crushed prices in 2008. EFH suffered massive losses and ultimately filed for bankruptcy in 2014, leaving Berkshire with losses of roughly $873 million.
6. Google: The Biggest Tech Miss
The last mistake was not an actual investment but it was rather a missed opportunity like Amazon. Buffett famously avoided investing in many technology stocks, he has repeatedly said missing Google was Berkshire’s greatest technology failure. The founders met him shortly after the IPO, but he passed. 'We blew it,' he admitted at the 2017 annual shareholders meeting, adding that Alphabet’s network effects were misunderstood.
3. ConocoPhillips and Commodity Timing
Buffett also misread the oil cycle, buying around $7 billion worth of US oil major ConocoPhillips shares just before oil peaked at $147 per barrel in 2008. The subsequent collapse erased billions. Though Berkshire recovered some losses by selling gradually through 2014, Buffett, in his 2008 shareholders letter wrote that by no means did he anticipate a dramatic drop in energy prices in the latter part of the year.
4. Precision Castparts: Paying Too Much
Berkshire’s $32.1 billion acquisition of Precision Castparts in 2016 became another hard lesson. When the Covid pandemic devastated aviation in August 2020, Berkshire wrote off $9.8bn on this investment with Warren Buffett admitting that he 'paid too much'.
5. Amazon: Understanding Came Too Late
This mistake from Buffett qualifies more as an error of omission. Buffett avoided the stock for years because was outside his 'circle of competence' (understanding), as he failed to grasp its potential to disrupt retail and cloud computing early on. Buffett also admitted he underestimated Amazon’s ability to disrupt retail and cloud computing at the same time with such a rapid pace.
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