Warren Buffett's biggest blunders

The Oracle of Omaha has made several investment missteps in his otherwise stellar career.

By TheStreet Staff Oct 22, 2010 11:21AM

Image credit: © Chip East/ReutersBy Don Dion, TheStreet

  

While one of Warren Buffett's greatest strengths is his ability to pick out "sure things," not all of his bets have paid off. In fact, there are a number of investments that have done more harm than good.

 

His bets on the airline industry, ConocoPhillips (COP) and Moody's (MCO) come to mind. All three can be seen as stains on his otherwise stellar career.

 

US Airways (LCC) is often highlighted as one of Buffett's most costly mistakes. In 1995, he had to write off 75% of his $385 million investment in the company.


Despite that staggering loss, Buffett has not given up on airlines. He currently owns NetJets, a jet-sharing company. As with his previous experience, this airline company has resulted in numerous headaches.

Hoping to turn the company into a profitable venture, he shook up its management in 2009, firing CEO Rick Santulli and replacing him with rumored Buffett successor David Sokol. It will be interesting to see if Buffett will eventually shed this company from the Berkshire Hathaway (BRK.A) portfolio.

 

ConocoPhillips is another investment Buffett might wish he could take back. The investor started buying shares of the oil giant in early 2006. His position was dramatically increased in 2008 when Buffett attempted to take advantage of soaring oil prices.

 

The timing was terrible. When oil prices sank, shares of ConocoPhillips followed, resulting in a multibillion-dollar hit for Berkshire Hathaway.

 

While US Airways and ConocoPhillips hurt Buffett financially, his investment in Moody's harmed his reputation. Post continues after video:

In the aftermath of the recent economic crisis, Buffett has been noticeably indecisive in his views toward the troubled ratings agency. He has expressed disappointment in the company's actions leading up to the meltdown and has been slowly chipping away at his company's stake.


But when he was issued a subpoena to appear in front of the Financial Crisis Inquiry Commission, he supported the firm, saying no one foresaw the crisis.

 

Buffett recently discussed on CNBC what he considered to be a major blunder: buying Berkshire Hathaway, the one-time textile company that has become his investment base.

 

Looking back on the deal, Buffett said the move was emotionally driven. In 1964, when he already owned a stake in the firm, he felt that he got ripped off by its management. Seeking vengeance, he took over and fired the person he felt had scammed him.

 

Buffett is a strong proponent of leaving emotions out of investing. In this situation, that belief was cast aside.

 

Buffett's mistakes highlight the fact that no one is perfect when it comes to investing. While losses can be tough to stomach, it is important not to become dissuaded.

 

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1Comment
Oct 22, 2010 1:30PM
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Like to hear about his achievements. We hear ENOUGH about people's mistakes.......
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