3 Answers: The Warren Buffett Mistakes and Bad Decisions?

Question

Most people think that just because Buffett is considered the most successful living investor on planet earth, he does not ever lose money. Well, he does.. but not permanently. Mr. Buffett, as shrewd an investor as he is, has lost up to 50% of his net worth more than once in his investing career.

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Mia Rodriguez 4 years 3 Answers 528 views 0

Answers ( 3 )

  1. That his legendary performance is not all that everyone makes it out to be — particularly in the last 25 years.

    Don’t get me wrong. He’s easily one of the better investors of all time. He made value investing mainstream.

    BUT a lot of his returns come from things that ordinary people CANT do. He uses massive amounts of leverage and uses his size to cut deals that others can’t. Go back and read about the deal he extracted from Goldman during the financial crisis. If you don’t have billions of dollars, that’s not even possible.

    Even getting a lot of the equity returns he has gotten is due to the use of leverage at rates retail investors don’t have access too.

    I always hate people saying “hey if Buffet did it buying coke stoke, since it has a big moat, then I can do that too,” when in actually Berkshire’s returns aren’t that tied to stocks like Coke.

    If they WERE, Buffet would just buy SPY.

  2. You (anyone reading this, not necessarily the person asking the question) are not Warren Buffett and will never be Warren Buffett. Warren Buffett will go down in the annals of American capitalism as one of the great investors of history. Even though he has struggled to generate the same success investing as his firm has grown, his early record is enough to ensure his place in history. His success has inspired a lot of people who will try to beat the market through the principles he’s learned (from Graham, Dodd, and Fisher). Here’s the thing: it is possible to beat the market over time. I think that EMH is a good general principle to understand investing that is mostly applicable, most of the time, for most people, but it’s not actually true strictly speaking.

    If it’s possible to beat the market, you need to ask how. Like anything that most people would like to do but do not succeed in doing, it requires doing things that most people aren’t willing to do. Most of those things aren’t sexy or exciting, and they’re not things that you can get a lot of likes on Instagram for doing. It requires a large investment of time too. Almost all amateur investors do not have time to both be good at their jobs (or at running their business) and do this as well. This is why Buffett himself advises investing in an index fund. If you’re not going to invest the time to do it right, why are you paying extra costs to trade and doing things that aren’t exactly tax efficient? You can’t just read The Intelligent Investor and Common Stocks and Uncommon Profits and become a great investor by osmosis. It’s going to require sweat, tears, and mistakes. It also is going to require one of the things humans struggle with the most; understanding what they do not know.

  3. If he was born today, he would find it harder to replicate his gains. Look at his record against the S&P:

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