Warren Buffett has become perhaps the world’s best-known investor. Over decades as the head of Berkshire Hathaway, his stock-picking skill has earned him the nickname the “Oracle of Omaha.”
But Buffett isn’t always right, a fact he readily acknowledges. He is refreshingly honest about his losses in a market where hedge funds managers and stock analysts only seem to yammer on about their successes.
So where has Buffett gone wrong? Here are a few of his investments that didn’t pay off so you can learn how to invest and lower your money stress.
The stock market went into a downward spiral in March 2020 as worries about COVID-19 began to sweep across the country and schools and businesses closed. Eventually, the Standard & Poor’s 500 index fell about 34% from its previous all-time high.
As the market reached its lows, savvy investors were able to buy up stocks at deep discounts. But Buffett was not one of them, and timing the market didn’t work out for him in that instance.
He now regrets not picking up stocks at that time. At the company’s annual shareholder meeting in April, Buffett told the crowd, "I totally missed that opportunity, I totally messed up in March of 2020.”
Buffett bought Precision Castparts in 2016 to add to his Berkshire Hathaway portfolio. But the decision turned out to be a bust.
The metal fabrication company looked good to Buffett because of its position in the aerospace industry. However, the sector took a hit in 2020 due to the pandemic, which led to the company taking an $11 billion loss.
“I paid too much for the company,” Buffett later wrote in a letter to shareholders. “No one misled me in any way — I was simply too optimistic about PCC’s normalized profit potential.”
In 1993, Buffett bought Dexter Shoes, using $433 million in Berkshire Hathaway stock to make the purchase. The company ended up being a dud. By the time Buffett let go of the investment, it had cost Berkshire Hathaway stockholders $3.5 billion.
“What I had assessed as durable competitive advantage vanished within a few years,” Buffett wrote in a 2007 letter to shareholders.
During 2008, Buffett bought shares of ConocoPhillips to add to his Berkshire Hathaway portfolio due to rising gas and oil prices. At its peak in mid-2008, oil was around $150 a barrel, so it may be easy to see why Buffett thought investing in the sector was a good idea.
But then prices fell, and the stock followed the oil market down.
“I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak,” Buffett wrote in 2009. “I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year.”
He also said the timing of his purchase ended up costing Berkshire Hathaway several billion dollars.
In 2011, Berkshire Hathaway acquired chemical manufacturer Lubrizol for $9 billion. But what Buffett didn’t know when buying the company was that David Sokol — who at the time was a leading candidate to succeed Buffett at Berkshire — had actually bought some of Lubrizol’s stock before presenting the idea to Buffett.
Sokol made money off the deal before resigning from Berkshire. At the 2011 shareholders meeting, Buffett described the situation as “sad for Berkshire, sad for Dave, still inexplicable in my mind.”
As of 2022, Berkshire Hathaway lists Lubrizol as one of its subsidiary companies.
Buying shares in the UK-based grocery store chain is another mistake that Buffett has made as an investor. At one point, Berkshire owned 415 million shares, but later sold 114 million shares as Buffett began to sour on the company.
In his 2014 letter to investors, Buffett said he regretted not selling more of it sooner.
“An attentive investor, I’m embarrassed to report, would have sold Tesco shares earlier,” he said. “I made a big mistake with this investment by dawdling.”
Berkshire Hathaway eventually got completely out of its Tesco position, but Buffett estimated a $444 million loss by not selling sooner.
Sometimes, it’s not the investments you make that trip you up but rather the investments you don’t make. One of the companies that Buffett didn’t end up investing in was Amazon.
“Obviously, I should have bought it long ago, because I admired it long ago,” he said in 2017. “But I didn’t understand the power of the model as I went along. And the price always seemed to more than reflect the power of the model at that time. So, it’s one I missed big time.”
It may sound surprising, but in 2010 Buffett admitted that the dumbest stock he ever bought was Berkshire Hathaway.
When he first began buying the stock in 1962, the textile company had been declining for years. Buffett kept buying shares and taking on more of Berkshire Hathaway. A couple of years later, a Berkshire manager approached Buffett with an offer to buy the latter’s shares. The two agreed on a price at which Buffett would sell his stock.
But when Buffett eventually received a formal offer, he saw that the manager had reneged on the original agreed-upon price and was now trying to get Buffett’s shares for a slightly lower price: “He chiseled me,” Buffett recalled.
The angry Oracle of Omaha exacted revenge by buying controlling interest in the company and firing the manager.
“The truth is, I had now committed a major amount of money to a terrible business,” he said. “And Berkshire Hathaway became the base for everything pretty much that I’ve done since.”
He estimated he lost $200 billion because of his decision to buy Berkshire, which struggled for years “carrying this anchor of all these textile assets,” as Buffett described it.
Even the Oracle of Omaha can be wrong sometimes. But he is also willing to admit when he made a mistake.
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