Warren Buffett did not set up more than $ 100 billion fortune being perfect. In fact, Omaha’s Oracle is a surprisingly nominee about the biggest financial flips for decades. Good news, his mistakes offer valuable lessons for everyone trying to build a real, sustainable wealth. Moreover, they prove that even legendary investors are people who sometimes get wrong. Welcome to the club!
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Behold, Buffettin’s best money bugs and more importantly, What did he learn from them.
Buffettin Investment Grocery Tesco in the UK shows how to hesitate Turn small problems into large casualties. Berkshire, 415 million shares in 2012, but when the concerns about the management, Buffett sold only a part of Buffett for $ 43 million.
When TESCO subsequently collapsed excessive profits and shares, the deferred action is $ 444 million after tax loss. “A careful investor, I am ashamed to report, previously sold Tesco shares. I did a big mistake with this investment.” Buffett said.
Speed controls control. When red flags are plentiful, sometimes fast decisive action means to prevent the financial disaster.
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Believe me or Buffett Berkshire Hathaway called “the most stupid stock I have buying so far.” At that time, he felt insulting a failed texture company, during sales talks. Instead of getting away from Berkshire Hathaway, the wounded pride was to buy him all the work and fire the previous owner.
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The financial value was very large. Buffett, if the holding company stuck in an investment plan instead of insurance companies, “said the holding company will be valuable as much as it is now.” This single emotional reaction ended with a better return to him.
Takeaway is clear: never allow private feelings Affect cash decisions. When you think in person in a personal financial deal, you should step back and think back and logically.
In 1993, Buffett thought there were advantages of competition that protecting the gains of Dexter shoes. During several years, these benefits were evaporated and the company was worthless.
Buffett explained: “What I appreciate as a sustainable competitive advantage for several years.”
“It should be” tolerant “Moat” tolerate “a really great job that has taught him the loss.” Companies need permanent moats – incredible brands, exclusive brands, exclusive technology or expense benefits – competitors cannot easily copy.
Any successful work without continuous protection will eventually attract their profits to zero. The key, the advantages are the last decades, not only a few good years, not for decades.
This error still prepares Buffett. Although there is a geico insurance that spends millions of Google advertising, the search giant has completely missed the investment potential. Google’s work model was functioning, but could not close the dots.
“I really came to a conclusion that I felt at these prices, I could not come to a conclusion, and prospects were better than the specified prices,” he said. He did not want to go beyond the familiar area, it cost him one of the greatest investment opportunities in history.
The lesson here is about the missed opportunities. Sometimes the best investments are hiding in a flat glance, but see them because it looks very complicated or unfamiliar.
Buffettin $ 9 billion purchase, Berkshire Executive David Sokol, which recommends $ 9 billion in purchasing $ 9 billion in the Lubrizol Corporation, appeared secretly the company’s shareholder. Sokol earned $ 3 million from the operation without disclosing a conflict of interest.
Control violated internal trade rules and broke the reputation of Berkshir. At the annual meeting of 2011, Buffett said that the participation of Sokol had to ask more questions.
Lesson? But if there is a validation, especially large amounts. You can avoid hesitation to asking for worried questions, along with (or just known people, or simply known people.
The raw oil was $ 100 / one barrel in 2008, Buffett jumped into the ConocoPhillips Foundation, waiting for energy prices to continue climbing. Instead, he bought it on the summit, and the investments were accused of billions of oil crash.
This shows how smart investors are caught in the excitement of the market. “When investing, pessimism is your friend, euphoria is an enemy,” said Buffett. When everyone is optimistic about an sector, prices often leave a small place for optimism, gain.
Buffett learned that big companies can still have terrible investments if you pay the wrong price. Market euphoria creates expensive shares, while pessimism creates a deal. The best time to get, when others sell, not everyone is buying.
The US effective income numbers seemed very attractive in 1989, so Buffett received the selected shares. Bad news for Buffett, these revenues came with a The secret value. Airlines need constant equity to buy new planes and expand the routes.
Until the airline’s meaningful earnings, they ate most of the majority of debt payments. The company could not pay dividends in the preferred shareholder of Buffett. He later sold lucky in a gain, but he knew it was a clean chance.
This taught to separate real growth and expensive growth. Buffett, “Investors poured money on a bottomless hole in which the growth was involved in this time.” Some enterprises must spend very large amounts to increase sales, they must leave shareholders with nothing.
The lesson is: If it looks very good to be true, it can just be.
The thing that makes Buffett emergency is not its perfect trace, it is a desire to accept errors open and remove valuable lessons from them. Each mistake was the moment of a teaching that improves future decisions.
Google Miss has made it more open to its technology investments, as a result, it eventually leads to great tasks in Apple. His more cope with CONOCOPHILPPS has strengthened its discipline only to get at attractive prices. His Dexter shoes focused on the attention of really sustainable competition.
The real wisdom does not avoid all mistakes. Unfortunately, this is not possible. This learns to adjust your quick and approach from failures. Buffettin’s biggest mistakes, not constant failures, but to invest better in investment. For the rest of our tolerance is a lesson.
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