Everyone praises Warren Buffett for his investing track record. But he makes mistakes just like everyone else. Here are seven of Buffett’s biggest investing mistakes, writes Gav Blaxberg, CEO of Wolf Financial.
1. Tesco. In 2012, Berkshire owned 415 million shares in the grocery chain Tesco. In 2014, Tesco overstated its profits and shares tanked. Buffett was concerned about management but never sold. This resulted in a $444 million after-tax loss.
2. ConocoPhillips. Buffett spent over $7 billion on ConocoPhillips (COP). He expected future energy prices to rise, resulting in a stock increase. Instead, energy prices dropped dramatically and his $7 billion investment dropped to $4.4 billion.
3. Alphabet Inc. (GOOGL). Warren admitted his regret in not purchasing Google early on. Like many, Buffett didn’t understand tech stocks and ignored them. Ironically, Berkshire owned GEICO Insurance, which depended on Google Ads.
4. US Air. In 1989, US Air stock was soaring, so Buffett bought shares. Unfortunately, the company didn’t have enough revenue to pay the stock dividends. Buffett luckily recuperated his losses thanks to new CEO Stephen Wolf – who turned the company around.
5. Lubrizol. Berkshire purchased Lubrizol for $9 billion. The problem? Chairman David Sokol profited $3 million from this purchase. David didn’t disclose his stock ownership to Buffett, which violated insider trading rules. Buffett should have dug deeper before investing.
6. Berkshire Hathaway Inc. (BRK.A) Buffett says the dumbest stock he ever purchased was Berkshire. He bought the failing textile company in 1962, hoping to turn it around. After 20 years of trying, the textile side of Hathaway failed. Buffett estimates this cost him $200 billion.
7. Dexter Shoes. In the 1990s, Buffett bought Dexter Shoe Co. for $433 million in Berkshire stock. This cost the company $3.5 billion, which was 1.6% of Berkshire’s net worth at the time. To this day, Buffett says this is the worst deal he ever made.
Warren Buffett is considered the best investor of all time. Despite this, he’s made multiple billion-dollar mistakes in his career.
So, what’s the moral of the story? You’re going to make investment mistakes. The key is to minimize those losses and maximize your wins.
