4 Signs Warren Buffett is Losing His Touch

Warren Buffett’s legendary status as an investor extraordinaire is well-earned.

The self-made billionaire is widely recognized as the 20th century’s most successful investor, and Buffett’s $60 billion fortune and success at the helm of Berkshire Hathaway speak for themselves.

But even the best fall short occasionally, and Buffett is no exception. 

A few recent money moves have experts and onlookers alike wondering if Buffett’s investment strategies are still worth imitating or if the master investor relies on outdated techniques that no longer align with today’s markets.

In the past, investors had to largely rely on experts to guide decisions about how much to invest in which companies. 

These days, though, anyone with internet access can quickly search for the best investment opportunities and move money around themselves (though working with a financial advisor is still the safer — and potentially smarter — way to start investing).

According to a recent article in The Economist, Berkshire Hathaway hasn’t updated its investment decisions to account for the fact that there are more players than ever in the investing world.

The firm is far from the only holding company, and if Berkshire Hathaway doesn’t adjust to meet the competition, it could risk losing its reputation as the go-to spot for anyone hoping to find the best investments.

Buffett is well known for investing in high-quality businesses he can count on to yield long-term profits. 

Instead of getting distracted by flash-in-the-pan startups with larger-than-life upfront profits, Buffett and Berkshire play the long game.

That means most of their investments are in stalwart companies with guaranteed yields, like Apple and Microsoft.

However, while investing in stable companies is a sure way to ensure slow and steady financial growth, it can cause investors to miss out on crucial opportunities to support (and benefit from) innovation.

According to The Economist, apart from Berkshire Hathaway’s ample Apple stock, its investments are “proudly old economy.” 

The lack of investment in innovative new tech is perhaps one key reason Berkshire Hathaway’s average return over the last 15 years is 13% — 2% less than the average return on the S&P 500.

Buffett’s ability to acknowledge his own errors is admirable — and the Oracle of Omaha is the first to admit Berkshire Hathaway paid more to acquire Kraft Heinz in 2013 than it was worth. 

However, the overpayment wasn’t necessarily the most troubling misstep made during the acquisition.

For instance, Buffett isn’t quiet about his dislike of private equity firms, but he worked with 3G Capital, a Brazilian private equity firm, to acquire Kraft Heinz. 

It’s possible Buffett’s friendship with 3G’s CEO played a part in the decision, or perhaps Buffett was keen enough on the brands themselves that he was willing to work with a private equity firm to acquire them.

Whatever the reason, Kraft Heinz fell prey to one expected outcome of a private equity acquisition: Its CEO was replaced by a 3G leader within the year. 

Plus, 3G’s emphasis on efficiency over quality — and its team’s lack of knowledge about the food industry — could have contributed to the company’s depreciation.

In 2019, Berkshire Hathaway lost $4 billion in Kraft Heinz shares, and it’s hard not to blame Buffett’s break from his own tried-and-true principles (avoid private equity; empower businesses rather than advancing a hostile takeover) for at least part of the loss.

According to The Economist, Buffett’s shareholder letters — which generally contain useful information for Berkshire Hathaway’s stockholders and American investors — don’t disclose much about the company beyond the required minimum amount.

Additionally, the company has just 26 employees, lists limited information online, and relies on a mailing address for communication. (No phone numbers or email addresses are listed on the company’s website.)

These details don’t undermine the public’s confidence in Berkshire Hathaway, and Buffett’s investing success speaks for itself. 

Still, in this era of easy access to information, the lack of clarity and detailed insight into the company’s decisions is a little out of touch with the norm.

Whether you regard some of his actions as missteps or not, Warren Buffett has had far more successes than failures, including most of his most recent actions. 

Still, we have as much to learn from our role models’ mistakes as their successes.

To that end, some of Buffett’s recent errors are a good reminder that however much you’re investing, you need to keep abreast of modern market trends. 

No one is above the occasional mistake, but taking the time to educate yourself financially can give you a leg up when it comes to keeping up with today’s ever-changing stock market.