We have all heard of Warren Buffett’s successful investments in companies like Coca-Cola, American Express, Apple, Bank of America, Moody’s, Kraft Heinz. etc. He is one of the most idolized and revered investors globally, with a wealth of more than USD 100 billion. But there is more to Warren Buffett. In addition to being a brilliant investor, Buffett has graciously shared his learnings with millions of people worldwide. And one of his famous quotes is about learning from others’ mistakes .“While it’s good to learn from your mistakes, it’s better to learn from other people’s mistakes,” says Buffett. So, following his advice, we will examine Warren Buffett’s seven big investing mistakes. And we will try to derive lessons from them.
1. Dexter Shoe Company : In 1993, Berkshire Hathaway acquired Dexter Shoe Company, a decision Buffett later regretted. He misjudged its competitive advantage, as cheap imports undercut its market. Worse, he used Berkshire stock for the purchase—stocks that today would be worth $15 billion.
* Lesson : Always assess a company`s lasting competitive edge, and never trade strong assets for uncertain bets.
2. Tesco : By 2013, Tesco`s troubles became evident—declining sales, rising competition, and an accounting scandal. Buffett hesitated to exit, costing Berkshire $444 million.
* Lesson : Selling requires conviction. If confidence wanes, act decisively.
3. Energy Future Holdings : Buffett bought bonds in 2007, betting on rising natural gas prices. Instead, prices plummeted, leading the company to bankruptcy, costing Berkshire $873 million.
* Lesson : Seek second opinions on high-risk investments, and avoid predicting volatile commodities.
4. Lubrizol & David Sokol : A trusted executive recommended Lubrizol, hiding his personal stake in the company. Though Berkshire acquired it for $9 billion, the ethical breach tarnished its reputation.
* Lesson : Trust must be backed by thorough vetting—ask questions and follow processes.
5. Amazon : Buffett admits he underestimated Amazon`s potential and ignored its dominance in e-commerce and cloud services.
* Lesson : Expanding your expertise is crucial—don`t overlook high-growth sectors.
6. Google : Though Berkshire-owned GEICO relied on Google`s ads, Buffett never invested in the company, a decision he now regrets.
* Lesson : Pay attention to companies whose services are indispensable to your business.
7. Berkshire Hathaway : Buffett`s biggest mistake was acquiring Berkshire Hathaway itself—a failing textile company—out of spite, costing him $200 billion in lost opportunity.
* Lesson : Emotional decisions can be financially devastating.
* Bottom Line : Like all of us, Warren Buffett is a human. And he has had his fair share of mistakes. In this blog, we picked up 7 of Buffett’s biggest mistakes. Hopefully, you have learned something new in the process. And you will look to avoid similar blunders in your financial journey.