Warren Buffett will step down as CEO of Berkshire Hathaway at 95 years previous on the finish of 2025. He purchased the fledgling textile firm in 1965 and reworked it right into a massively profitable holding firm that owns insurers, railroad operators, furnishings makers, sweet and ice cream makers, and—prior to now 20 years—technology-related corporations.
Buffett invests in companies he is aware of about, and his funding philosophy is extensively adopted by the general public. Nonetheless, he has had missteps in his greater than 80-year funding profession.
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Whereas he’s made billions of {dollars}, and the worth of Berkshire’s inventory has multiplied many occasions over since he took the corporate’s helm in 1965, he’s additionally recorded a whole bunch of thousands and thousands of {dollars} in funding losses. Apparently, these capital losses possible pale compared to the doubtless a whole bunch of billions misplaced by way of alternatives he missed over the many years.
Warren Buffett’s 3 greatest funding missteps
The next are three of the largest errors Buffett has made whereas serving as CEO of Berkshire Hathaway.
Warren Buffett, proven right here at a Forbes occasion in 2017, will step down as CEO of Berkshire Hathaway on the finish of 2025.
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Buying Dexter Shoe in 1993
Buffett considers Berkshire’s acquisition of the Dexter Shoe firm to be the largest mistake of his funding profession. Berkshire bought Maine-based Dexter from the shoemaker’s CEO, Harold Alfond, and his nephew, Peter Lunder, for $433 million in 1993.
On the time, Dexter was seen as a sound buy as a result of it complemented Berkshire’s purchases of different American shoe producers: H.H. Brown in 1991 and Lowell Shoe in 1992.
Buffett praised Dexter for being a serious shoe producer, with 7.5 million pairs manufactured at its essential manufacturing unit in Maine and a smaller portion in Puerto Rico. In Berkshire’s 1993 annual report, he quipped that he would sing “There’s No Business Like Shoe Business” on his drive to work.
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“At Berkshire, we have no view of the future that dictates what businesses or industries we will enter,” Buffett wrote. “Indeed, we think it’s usually poison for a corporate giant’s shareholders if it embarks upon new ventures pursuant to some grand vision. We prefer instead to focus on the economic characteristics of businesses that we wish to own and the personal characteristics of managers with whom we wish to associate—and then to hope we get lucky in finding the two in combination. At Dexter, we did.”
Sadly for Buffett and Berkshire’s different shareholders, overseas competitors eroded Dexter’s enterprise, and Buffett stated within the 2014 annual report that he “simply didn’t see that coming.” He additionally remarked that, “as a financial disaster, this one deserves a spot in the Guinness Book of World Records.”
Dexter’s worth promptly went to zero. In 1999, Berkshire charged off all of the remaining accounting goodwill that was attributable to the Dexter transaction. Inside a decade of shopping for Dexter, its Maine manufacturing unit was shuttered, and Dexter was folded into H.H. Brown.
“To date, Dexter is the worst deal that I’ve made. But I’ll make more mistakes in the future—you can bet on that,” Buffett stated within the 2008 annual report.
Warren Buffett regretted utilizing Berkshire inventory to fund massive acquisitions within the Nineteen Nineties.
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Issuing shares for acquisitions
Corporations usually use a mix of inventory and money, or typically all inventory, for acquisitions, and Berkshire is not any exception. Nevertheless, Buffett has expressed remorse for utilizing Berkshire’s inventory to fund purchases that didn’t work out within the holding firm’s favor.
In 1993, Berkshire paid 25,203 Class A shares—then valued at $433 million—for Dexter. On the time, these shares have been equal to 1.6% of Berkshire’s excellent shares. When Dexter ultimately turned nugatory, Buffett deemed it an egregious mistake to have bought the corporate with shares quite than money, since these shares, if held, would have elevated dramatically in worth, offsetting the impression of the money misplaced within the buy.
“Several of my subsequent errors also involved the use of Berkshire shares to purchase businesses whose earnings were destined to simply limp along,” Buffett stated within the 2014 report. “Mistakes of that kind are deadly. Trading shares of a wonderful business—which Berkshire most certainly is—for ownership of a so-so business irreparably destroys value.”
Whereas it was a shedding proposition for Berkshire, it was a boon for the heirs of Dexter proprietor Harold Alfond, who handed alongside these shares, now value billions of {dollars}, to his heirs.
Had Berkshire held all the shares used for the transaction, they might have been valued at about $23 billion by September 2025.
Buffett additionally expressed remorse for utilizing Berkshire inventory for the $22 billion buy of Basic Reinsurance in 1998, regardless of it being a prized insurance coverage operation. Within the 2016 annual report, he stated that “it was, nevertheless, a terrible mistake on my part” to extend Berkshire’s excellent shares by 21.8% when it issued 272,200 Berkshire shares to purchase Basic Re.
“My error caused Berkshire shareholders to give far more than they received (a practice that—despite the Biblical endorsement—is far from blessed when you are buying businesses),” Buffett wrote.
These shares, as of September 2025, could be valued at greater than $200 billion.
After such questionable transactions, Berkshire these days tends to make use of money quite than inventory to pay for acquisitions. Buffett lamented that such transactions have been akin to Berkshire promoting items of the corporate at costs decrease than their future worth.
Berkshire solely began shopping for into expertise corporations within the 2010s.
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Not investing in expertise early
Buffett’s fundamental firm analysis course of contains trying into what sort of enterprise it’s, the financial traits of its opponents, and what its administration is like.
Whereas Berkshire’s main investments over its first 50 years targeted on insurance coverage, banks, and shopper product makers comparable to The Coca-Cola Firm, Buffett didn’t make important investments in technology-related corporations.
Buffett missed out on the alternatives of investing in Microsoft and Apple early within the Nineteen Eighties, when each corporations have been revolutionizing the private laptop market and promoting thousands and thousands of PC models. Even later, he remained risk-averse on tech within the Nineteen Nineties and possibly grew much more skeptical within the late Nineteen Nineties and early 2000s with the boom-and-bust run of internet-related shares.
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Buffett relented within the 2010s, although it was primarily his managers who pushed for funding within the sector. Berkshire began including a large stake in Worldwide Enterprise Machines (5.5% of the corporate, valued at $12 billion) in 2011 due to its enterprise mannequin. Berkshire elevated its stake in IBM to as a lot as 8.5% in 2016 however bought all of its holdings in 2018.
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Berkshire then targeted on Apple, recognizing it as a shopper merchandise firm that match into its portfolio of corporations. Its preliminary funding in Apple in 2016 amounted to 1.1%, valued at $7 billion. In 2021, Berkshire owned as a lot as a 5.6% stake valued at $161 billion in Apple, however has since pared it down. Nonetheless, as of its fiscal second quarter of 2025, Apple remained amongst Berkshire’s 5 greatest holdings.
Buffett has expressed remorse in not investing earlier in different big-name expertise corporations, together with Amazon, which has a number one market share in on-line commerce within the U.S., and Google’s mum or dad firm, Alphabet, which has dominated on-line search and expanded into shopper services and products.
Buffett introduced in Invoice Gates, co-founder of Microsoft, as a director of Berkshire from 2004 to 2020, although Berkshire hadn’t invested in Microsoft, whose working system runs the vast majority of desktop and laptop computer computer systems worldwide.
Wanting ahead
With Buffett stepping apart on the finish of 2025, a youthful era of executives could have the chance to use Buffett’s commonsense funding philosophy towards newer sectors within the expertise business and past. His successor, Greg Abel, will assume the function of Berkshire Hathaway CEO on January 1, 2026.
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