Warren Buffett's 7 Biggest Mistakes | ET Money
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In this video, we shall
In this video, we shall examine 7 big blunders that Mr. Buffett has made and what are the lessons that we can derive from it.
1. DEXTER SHOE COMPANY
Warren Buffet called Berkshire Hathaway’s 1993 purchase of the Dexter Shoe Company as the worst deal he had ever made.
Buffett made a note of this in his 1999 letter where he wrote that it was becoming extremely difficult for domestic producers to compete effectively in the shoe business with approximately 93% of the 1.3 billion pairs of shoes that were purchased in the United States coming from abroad.
2. TESCO
Tesco is a UK-based grocery chain and by 2012, Berkshire Hathaway was owning more than 5% of the business.
Now, Buffett’s mistake in the case of Tesco was that he delayed the sale of Berkshire’s remaining stake of 3.7% inspite of having read the signs
3. ENERGY FUTURE HOLDINGS
Warren Buffett rarely makes investing decisions without consulting Charlie Munger.
But as was revealed in his 2013 letter his 2.1 billion dollar bond purchase of Energy Future Holdings Corporation was one such instance .. which also turned out to be a 873 million dollar mistake.
Energy Future Holdings relied on coal-fired power plants to produce electricity and Buffett’s purchase of their high-yielding bonds in 2007 was a bet that the price of natural gas would rise making the coal-based business a lot more competitive and profitable.
At the end of it all, Berkshire sold the 2.1 billion dollar worth of bonds in 2013 at a loss of 873 million dollars
4. LUBRIZOL & DAVID SOKOL
In 2011, Warren Buffett and Berkshire Hathaway came under fire when it was revealed that David Sokol, who was the chairman of many of Berkshire’s subsidiaries had pitched Lubrizol Corporation to Buffett as a potential takeover target while owning stock in that chemicals company.
Mr. Sokol’s non-disclosure of his stock ownership to Buffet was in violation of Berkshire’s insider-trading rules .. and while Berkshire bought Lubrizol for roughly 9 billion dollars David Sokol also earned some 3 million in profits from this transaction.
5. AMAZON
So far, the mistakes we have seen were all errors of commission but here's one that qualifies more as an error of omission. In 2017, Buffett admitted that he had followed Amazon.com for a long time but never chose to invest in it.
The traditional Buffett approach is not tuned to buying a stock that trades at a rich price-earning ratio of 80, 90 or 100 which was where Amazon was in 2019 .. so that’s where a bit of incompatibility comes in.
And when we add to this, the fact that Buffett turns a blind eye to technology companies as they are not within his circle of competence then it’s not difficult to understand how costly that error of omission can be.
6. GOOGLE
Google first caught Buffett's attention because of a Berkshire-owned subsidiary.
GEICO is in the auto insurance space and relies heavily on Google’s advertising platform to acquire customers. In numbers, the company was paying about 10 dollars for every click on a GEICO ad .. while Google's cost of goods was zero making it a high profit margin business for the tech giant. Buffett admits that by virtue of him being a customer of Google’s ad business.
7. BERKSHIRE HATHAWAY
While this might come as a surprise, Warren Buffett's biggest investing mistake was one of his earliest one .. which was the purchase of Berkshire Hathaway in 1962
At the time, Berkshire Hathaway was a failing textile business but nevertheless, it qualified under the classical Benjamin Graham model of identifying cigar-butt business
00:00 Introduction
00:54 1. Dexter Shoe Company
02:48 2. TESCO
04:12 3. Energy Future Holdings
06:56 4. Lubrizol & David Sokol
08:27 5. Amazon
10:13 6. Google
11:11 7. Berkshire Hathaway
Resources used in the creation of this video:
📚 Big Mistakes - The Best Investors and Their Worst Investments : https://amzn.to/3vagDPb
► Buffett's letters to shareholders: https://www.berkshirehathaway.com/let...
► Warren's 15 biggest failures (CNBC, 2017): https://www.cnbc.com/2017/12/15/warre...
► Dinesh Sairam's tweet (2021) : Twitter: 1467129960938803200
► Lessons from Buffett's Mistakes (Acorns, 2021): https://grow.acorns.com/warren-buffet...
👉 ET Money Genius
English: Everything You Should Know About ET M...
Hindi: ET Money Genius के बारे में सब कुछ जा...
👉 To invest in Direct Plans of top Mutual Funds for free, download the ETMONEY app: https://etmoney.onelink.me/unJQ/5ca1ae3b
👉 Read more such informative articles at https://www.etmoney.com/blog
👉 Follow us on:
► Facebook: Facebook: ETMONEY
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1. DEXTER SHOE COMPANY
Warren Buffet called Berkshire Hathaway’s 1993 purchase of the Dexter Shoe Company as the worst deal he had ever made.
Buffett made a note of this in his 1999 letter where he wrote that it was becoming extremely difficult for domestic producers to compete effectively in the shoe business with approximately 93% of the 1.3 billion pairs of shoes that were purchased in the United States coming from abroad.
2. TESCO
Tesco is a UK-based grocery chain and by 2012, Berkshire Hathaway was owning more than 5% of the business.
Now, Buffett’s mistake in the case of Tesco was that he delayed the sale of Berkshire’s remaining stake of 3.7% inspite of having read the signs
3. ENERGY FUTURE HOLDINGS
Warren Buffett rarely makes investing decisions without consulting Charlie Munger.
But as was revealed in his 2013 letter his 2.1 billion dollar bond purchase of Energy Future Holdings Corporation was one such instance .. which also turned out to be a 873 million dollar mistake.
Energy Future Holdings relied on coal-fired power plants to produce electricity and Buffett’s purchase of their high-yielding bonds in 2007 was a bet that the price of natural gas would rise making the coal-based business a lot more competitive and profitable.
At the end of it all, Berkshire sold the 2.1 billion dollar worth of bonds in 2013 at a loss of 873 million dollars
4. LUBRIZOL & DAVID SOKOL
In 2011, Warren Buffett and Berkshire Hathaway came under fire when it was revealed that David Sokol, who was the chairman of many of Berkshire’s subsidiaries had pitched Lubrizol Corporation to Buffett as a potential takeover target while owning stock in that chemicals company.
Mr. Sokol’s non-disclosure of his stock ownership to Buffet was in violation of Berkshire’s insider-trading rules .. and while Berkshire bought Lubrizol for roughly 9 billion dollars David Sokol also earned some 3 million in profits from this transaction.
5. AMAZON
So far, the mistakes we have seen were all errors of commission but here's one that qualifies more as an error of omission. In 2017, Buffett admitted that he had followed Amazon.com for a long time but never chose to invest in it.
The traditional Buffett approach is not tuned to buying a stock that trades at a rich price-earning ratio of 80, 90 or 100 which was where Amazon was in 2019 .. so that’s where a bit of incompatibility comes in.
And when we add to this, the fact that Buffett turns a blind eye to technology companies as they are not within his circle of competence then it’s not difficult to understand how costly that error of omission can be.
6. GOOGLE
Google first caught Buffett's attention because of a Berkshire-owned subsidiary.
GEICO is in the auto insurance space and relies heavily on Google’s advertising platform to acquire customers. In numbers, the company was paying about 10 dollars for every click on a GEICO ad .. while Google's cost of goods was zero making it a high profit margin business for the tech giant. Buffett admits that by virtue of him being a customer of Google’s ad business.
7. BERKSHIRE HATHAWAY
While this might come as a surprise, Warren Buffett's biggest investing mistake was one of his earliest one .. which was the purchase of Berkshire Hathaway in 1962
At the time, Berkshire Hathaway was a failing textile business but nevertheless, it qualified under the classical Benjamin Graham model of identifying cigar-butt business
00:00 Introduction
00:54 1. Dexter Shoe Company
02:48 2. TESCO
04:12 3. Energy Future Holdings
06:56 4. Lubrizol & David Sokol
08:27 5. Amazon
10:13 6. Google
11:11 7. Berkshire Hathaway
Resources used in the creation of this video:
📚 Big Mistakes - The Best Investors and Their Worst Investments : https://amzn.to/3vagDPb
► Buffett's letters to shareholders: https://www.berkshirehathaway.com/let...
► Warren's 15 biggest failures (CNBC, 2017): https://www.cnbc.com/2017/12/15/warre...
► Dinesh Sairam's tweet (2021) : Twitter: 1467129960938803200
► Lessons from Buffett's Mistakes (Acorns, 2021): https://grow.acorns.com/warren-buffet...
👉 ET Money Genius
English: Everything You Should Know About ET M...
Hindi: ET Money Genius के बारे में सब कुछ जा...
👉 To invest in Direct Plans of top Mutual Funds for free, download the ETMONEY app: https://etmoney.onelink.me/unJQ/5ca1ae3b
👉 Read more such informative articles at https://www.etmoney.com/blog
👉 Follow us on:
► Facebook: Facebook: ETMONEY
► Twitter: Twitter: etmoney
► Instagram: Instagram: etmoney_official
► LinkedIn: LinkedIn: et_money
2 سال پیش
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