Why buying Berkshire was Warren Buffett's biggest mistake
As Warren Buffett goes into his last week as Berkshire Hathaway's CEO, a 2010 CNBC video clip has him explaining why buying the company was his biggest mistake.
TL;DR
- Warren Buffett considers Berkshire Hathaway the "dumbest stock I ever bought" due to its initial struggles as a textile company.
- He acquired control of Berkshire Hathaway after a dispute over a tender offer, intending to profit from its liquidation.
- The textile business became a significant drag on Berkshire's growth, and Buffett estimates the company would be worth twice as much if he had focused on better businesses from the start.
- Buffett's key lesson learned is that if you're in a lousy business, get out of it, and it's better to buy a good business at a fair price than a cheap business at a bargain price.
- He contrasts this with his business partner Charlie Munger's advice to always focus on good businesses.
- Buffett applies this lesson by being cautious about acquisitions and holding onto businesses that aren't permanently losing money, rather than constantly trading them.
- He notes that business success is not about tackling difficult challenges (like in the Olympics) but about choosing easier, more profitable paths.