Warren Buffett’s annual letter to Berkshire Hathaway shareholders is always packed with insights, but this year’s edition took an unexpected turn. Instead of celebrating Berkshire’s $1 trillion market cap or highlighting the company’s strengths, Buffett kicked things off with a different focus—his mistakes.
Owning Up to Costly Errors
Buffett, known for his candid and straightforward communication, wasted no time acknowledging past missteps. “Sometimes I’ve made mistakes in assessing the future economics of a business I’ve purchased for Berkshire,” he wrote. It was a frank admission that, despite decades of unparalleled investing success, even the best get it wrong sometimes.
He pointed to two significant blunders:
- Overpaying for Precision Castparts, an aerospace manufacturer that led to an $11 billion writedown in 2020.
- Being overly optimistic about IBM, a stock Berkshire eventually exited after realizing its growth prospects weren’t as strong as initially believed.
For a man whose investment decisions have built one of the most valuable companies in the world, these are rare but costly mistakes. And Buffett didn’t just stop at business miscalculations—he also admitted that hiring the wrong managers, or keeping them around too long, has been another recurring issue.
A History of Admitting Fault
This isn’t the first time Buffett has come clean about bad calls. He has been remarkably consistent in highlighting his errors, often using them as teaching moments for investors.
His letters over the past five years have frequently touched on this theme:
- 2020: He directly linked the Precision Castparts writedown to his misjudgment.
- 2021: He emphasized that public stock investments are easier to fix than buying an entire business.
- 2022: He pointed out that while individual mistakes happen, long-term winners can still overshadow the occasional poor decision.
- 2023: He revisited his biggest regret—taking control of Berkshire Hathaway 60 years ago instead of focusing on insurance companies from the start.
Buffett’s ability to acknowledge and analyze his own investing mistakes is a major reason why so many investors continue to look to him for guidance.
What Investors Can Learn from Buffett’s Reflections
Investing isn’t about getting everything right—nobody does. What matters is learning from mistakes and making adjustments along the way.
Some key takeaways from Buffett’s letter:
- No investor is perfect—even the most successful make costly miscalculations.
- Overpaying for acquisitions can have long-term financial consequences.
- Management matters—having the wrong people in charge can compound errors.
- The market rewards patience—good investments can outweigh bad ones over time.
Buffett’s transparency about his own missteps reinforces the idea that the best investors aren’t those who never fail, but those who fail less often and recover quickly.
Berkshire Hathaway’s Strong Position Despite Missteps
Even with these acknowledged mistakes, Berkshire Hathaway is stronger than ever. The company’s latest figures paint a picture of a financial powerhouse:
| Metric | Value |
|---|---|
| Market Cap | $1.1 Trillion |
| Current Price (BRK.B) | $494.10 |
| 52-Week Range | $395.66 – $507.00 |
| Gross Margin | 23.31% |
| Dividend Yield | N/A |
Despite a few bad investments, Buffett’s track record speaks for itself. His philosophy—focusing on strong, cash-generating businesses and holding them for the long term—has produced returns that outpace the broader market.
The Real Investing Mistake: Expecting Perfection
Buffett’s letter is a reminder that even the greatest investors don’t always get it right. The biggest mistake an investor can make isn’t picking a bad stock or mistiming the market—it’s expecting perfection.
Mistakes like selling too soon, misjudging a company’s future, or investing at the wrong time are inevitable. The key is minimizing the damage, learning from the experience, and continuing to invest wisely.
Buffett has built one of the most successful investment track records in history, not by avoiding mistakes, but by adapting, acknowledging errors, and staying disciplined.
