Even Buffett Strikes Out – Lessons from His Biggest Investing Mistakes
Warren Buffett is arguably one of the greatest investors of all time. In his recent shareholder letter, he openly acknowledges some of his biggest mistakes—ranging from poor stock selection in public markets to acquiring declining private companies and making subpar management hiring decisions. One of the things I admire most about Buffett is his willingness to share his successes and failures in his annual letters and interviews, earning him widespread respect and admiration.
In an interview with Steve Forbes, Buffett once said: “It’s important to recognize mistakes. If somebody says, ‘I never made a mistake,’ you quit listening to him. I have made lots of mistakes. I’m gonna make more mistakes. But Babe Ruth struck out plenty of times. It’s the name of the game that you do it”.
Some of Buffett’s Biggest Mistakes
Dexter Shoe: A Multi-Billion Dollar Lesson
Buffett acquired Maine-based Dexter Shoe in the 1990s for $433 million in Berkshire Hathaway stock, a decision he later called his worst mistake. The company ultimately collapsed, and the Berkshire stock he gave away would be worth close to $15 billion today.
Lesson: Never overpay for a business without a long-lasting competitive advantage. Competitive moats matter, and industries vulnerable to cheaper alternatives can be risky investments.
Missing Out on Tech Stocks for Decades
Buffett was well aware of Amazon and Google for years, yet he chose not to invest early. He had opportunities to buy into Amazon when it was a private online bookstore and again when it went public. Reflecting on this, Buffett once admitted, “I was too dumb to realize. I did not think he (Bezos) could succeed on the scale he has”.
Similarly, Buffett was familiar with Google’s advertising prowess, as Geico—one of Berkshire’s largest holdings—had used Google’s ads early on to drive growth. Despite this, he misjudged its long-term potential and failed to invest.
Lesson: Ignoring innovation can sometimes be costly. Even if a business falls outside your initial expertise, it’s important to recognize transformative industries and evolving market trends.
The Takeaway: Even the Best Make Mistakes
Investing involves uncertainty, and everyone makes mistakes—even the greatest investors. But as Buffett’s career proves, long-term success isn’t about avoiding errors altogether—it’s about ensuring that your winners far outweigh your losers.
Hall of Fame baseball players only get on base 33% of the time, yet they are celebrated for their achievements. Investing is no different—taking calculated risks is part of growing wealth over time. Even Warren Buffett doesn’t hit a home run at every at-bat, but his ability to learn from mistakes and adjust his strategy has made him one of the greatest investors ever.