Warren Buffett’s Top 7 Money Mistakes (And What He Learned From Them)

Warren Buffett has not built the wealth of more than $ 100 billion through perfection. In fact, Oracle of omaha was amazingly explicit about its largest financial sticks over the decades. The good news is that his mistakes provide valuable lessons for anyone trying to build a real and sustainable wealth. In addition, they prove that even legendary investors are just human beings who sometimes make mistakes. Welcome to the club!

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Here are the most important mistakes of Buffett, and most importantly, what he learned from them.

Pavite’s investment at UK Grocery, Tesco, shows how frequency can turn small problems into major losses. Berkshire owns 415 million shares by 2012, but when fears of the administration appeared, Pavite sold only part of his position to obtain a profit of $ 43 million.

When Tesco later collapsed in profits and stocks, the late Berkshire procedure cost $ 444 million of losses after the tax. “An investor is embarrassed, I was embarrassed to report, he would have sold Tesco earlier. I made a big mistake in this investment by Dawdling,” said Buffett.

Speed ​​things in controlling damage. When the red flags are abundant, the decisive, fast procedure sometimes means that you avoid a financial disaster.

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Believe it or not, Pavite Berkshire Hathaway described “the most stupid arrows that I bought at all.” He bought what was, at the time, a failed textile company because he felt insulting while negotiating the sale. Instead of moving away from Berkshire Hathaway as planned, his wounded pride led him to buy the entire company and launch the previous owner.

The financial cost was enormous. Buffett said that his holding company will “deserve twice what it is now” if he has held his original plan to invest in insurance companies instead. This individual emotional reaction cost contracts of the best returns.

Ready -made meals: Do not let personal feelings affect money decisions. When you feel weak personally in a financial deal, this is exactly when you need to retreat, breathing breathing and thinking logically.

In 1993, Buffett believed that Dexter shoes had permanent competitive advantages that would protect their profits. Within a few years, these advantages evaporated and the company became worthless.

“I did not evaluate it as a solid competitive advantage that disappeared within a few years,” Buffett said.

This loss taught him that “really great work should have a” trench “that protects excellent revenues on the invested capital. Companies need permanent trenches – such as brands that do not accept competition, exclusive technology or cost benefits – that competitors cannot easily copy.

Without sustainable protection, it will eventually attract any successful work, competitors who will get profits to zero. The key is to find companies whose contracts will take, not just a few good years.

This error is still chasing Pavite. Although Geico Insurance, who spent millions on Google ads, has completely missed investment capabilities for the search giant. He had direct evidence of the Google business model but failed to connect points.

“I made a mistake in the inability to reach a conclusion as I really felt that at the current prices, the possibilities were much better than the aforementioned prices,” Buffett admitted. Its hesitation in adventure is one of the greatest opportunities for investment in history.

The lesson here is about lost opportunities. Sometimes the best investments are hidden in the sight of the horizon, but we ignore it because it looks very complicated or unfamiliar.

The acquisition of 9 billion dollars for the Buffett Company for Lubrizol Corporation has become a problem when David Sukol, an executive official in Berkshire, recommended the deal, secretly owned by the company. Sukol made $ 3 million of the deal without disclosing conflicts of interests.

The censorship violated the trading rules from the inside and damaged the reputation of Berkshire. At the annual meeting of 2011, Pavit said he should have asked better questions and more Sukol’s participation.

Lesson? Trust but check, especially when you share large sums. Even with the people you have worked with (or simply known) for years, asking uncomfortable questions can prevent you from making mistakes.

When crude oil reached $ 100 a barrel in 2008, Pavite jumped to Conocophillips, expected to continue the prices of climbing. Instead, he bought a peak and a witness to investment loses billions of dollars with oil disruption.

This explains how smart investors can be busy with excitement in the market. “When investing, pessimism is your friend, enemy euphoria,” said Pavite. When everyone is optimistic about a sector, prices often reflect this optimism, leaving a great room for profit.

Buffett learned that wonderful companies could still be terrible investments if they pay the wrong price. The market euphoria creates expensive shares, while pessimism creates deals. The best time to buy is when others sell, not when everyone buys.

The impressive revenue numbers in the United States looked very attractive in 1989, so Pavite bought favorite stocks. Bad news for Bavate, these revenues came at a hidden cost. Airlines need fixed capital for growth, buying new planes and expanding roads, leaving little to shareholders.

By the time when the airline made significant profits, debt payments ate most of the revenues. The company was unable to pay stock profits on Buffett’s favorite stocks. He was lucky for sale in profit at a later time, but he knew it was a pure chance.

This is the science of distinguishing between real and expensive growth. As Buffett said, “Investors poured money in a hole without a bottom, which was attracted by growth when they should have been repelled by it.” Some companies need to spend huge sums only to increase sales, and leave shareholders without anything.

The lesson is: If it looks very good, it may be the case.

What makes Pavite is unusual not its ideal record, it is his willingness to admit mistakes publicly and extract valuable lessons from them. Each error has become an educational moment that improved its future decisions.

Google Miss made him more open to technological investments, which ultimately led to major Apple positions. He strengthened his excess payments at Conocophillips his discipline on purchase only at attractive prices. Steps of the Dxter shoes, its focus is on really solid competitive advantages.

Real wisdom does not avoid all mistakes. Unfortunately, this is impossible. He learns from failure quickly and adjusts your approach. Pavite’s mistakes have become the largest Steppingsting for a better investment, not permanent setbacks. For the rest of us, he studied endurance.

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This article was originally appeared on Gobankingraates.com: The best 7 errors in Warren Buffett’s money (and what he learned from them)