You could never accuse Warren Buffett of avoiding accountability. When it comes to a transparent admission of failure, the ‘Sage of Omaha’ is as forthright as they come.
It may surprise you to learn that the multi-billionaire founder of investment firm Berkshire Hathaway has made mistakes. But a peruse through his annual letter to shareholders unearths a few mea culpas.
He incorrectly predicted an upturn in the US housing market last year, spent $2 billion on bonds in an energy business that are now worth under $900 million and didn’t spot a fall in oil and gas prices when he bought at the top of the market.
“During 2008 I did some dumb things in investments,” he admits. “I made at least one major mistake of commission and several lesser ones that also hurt.”
His worst mistake? Buying Berkshire Hathaway itself. Buffett ran the business in its original incarnation – as a textiles producer – for 20 years before moving into other areas.
“The dumbest thing I could have done was to pursue ‘opportunities’ to improve and expand the existing textile operation — so for years that’s exactly what I did,” he admitted last year.
“And then, in a final burst of brilliance, I went out and bought another textile company. Aaaaaaargh! Eventually I came to my senses, heading first into insurance and then into other industries.”
How did he sort it out?
By realising that honesty is the best policy and that, for all of the focus on a business’ leader, the team around him or her is just as crucial.
As he once said: “It is better to hang out with people better than you. Pick out associates whose behaviour is better than yours and you will drift in that direction.”
