Warren Buffett didn’t build his more than $100 billion fortune by being perfect. In fact, the Oracle of Omaha has been surprisingly candid about his biggest financial flubs over the decades. The good news is his mistakes offer valuable lessons for anyone trying to build real, sustainable wealth. Plus, they prove that even legendary investors are just humans who get it wrong sometimes. Welcome to the club!
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Here are Buffett’s top money mistakes and, more importantly, what he learned from them.
Buffett’s investment in U.K. grocer Tesco shows how hesitation can turn small problems into major losses. Berkshire owned 415 million shares by 2012, but when concerns about management surfaced, Buffett sold only part of his position for a $43 million profit.
When Tesco later overstated profits and shares collapsed, his delayed action cost Berkshire $444 million in after-tax losses. “An attentive investor, I’m embarrassed to report, would have sold Tesco shares earlier. I made a big mistake with this investment by dawdling,” Buffett said.
Speed matters in damage control. When red flags are abundant, sometimes quick decisive action means you avert a financial disaster.
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Believe it or not, Buffett has called Berkshire Hathaway “the dumbest stock I ever bought.” He purchased what was, at the time, a failing textile company because he felt insulted during a sale negotiation. Instead of walking away from Berkshire Hathaway as planned, his wounded pride led him to buy the entire business and fire the previous owner.
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The financial cost was enormous. Buffett said his holding company would be “worth twice as much as it is now” if he’d stuck to his original plan of investing in insurance companies instead. This single emotional reaction cost him decades of better returns.
The takeaway is clear: Never let personal feelings influence money decisions. When you feel personally slighted in a financial deal, that’s exactly when you need to step back, take a breath and think logically.
In 1993, Buffett thought Dexter Shoes had lasting competitive advantages that would protect its profits. Within a few years, those advantages evaporated and the company became worthless.
Buffett explained: “What I had assessed as a durable competitive advantage vanished within a few years.”
This loss taught him that “a truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital.” Companies need permanent moats — like unbeatable brands, exclusive technology or cost advantages — that competitors can’t easily copy.
Without sustainable protection, any successful business will eventually attract competitors who’ll drive profits to zero. The key is finding businesses whose advantages will last decades, not just a few good years.
This mistake still haunts Buffett. Despite owning Geico insurance, which spent millions on Google advertising, he completely missed the search giant’s investment potential. He had firsthand evidence of Google’s business model working but failed to connect the dots.
“I made the mistake in not being able to come to a conclusion where I really felt that at the present prices, the prospects were far better than the prices indicated,” Buffett admitted. His reluctance to venture beyond familiar territory cost him one of the greatest investment opportunities in history.
The lesson here is about missed opportunities. Sometimes the best investments are hiding in plain sight, but we ignore them because they seem too complicated or unfamiliar.
Buffett’s $9 billion acquisition of Lubrizol Corporation became an issue when it emerged that David Sokol, a Berkshire executive who recommended the deal, secretly owned stock in the company. Sokol made $3 million from the transaction without disclosing his conflict of interest.
The oversight violated insider-trading rules and hurt Berkshire’s reputation. At the 2011 annual meeting, Buffett said he should have asked better, more direct questions about Sokol’s involvement.
The lesson? Trust but verify, especially when large sums are involved. Even with people you’ve worked with (or simply known) for years, asking uncomfortable questions can prevent you from making mistakes.
When crude oil hit $100+ per barrel in 2008, Buffett jumped into ConocoPhillips stock expecting energy prices to keep climbing. Instead, he bought at the peak and watched the investment lose billions as oil crashed.
This demonstrates how even smart investors can get caught up in market excitement. “When investing, pessimism is your friend, euphoria the enemy,” Buffett has said. When everyone is optimistic about a sector, prices often reflect that optimism, leaving little room for profit.
Buffett learned that great companies can still be terrible investments if you pay the wrong price. Market euphoria creates expensive stocks, while pessimism creates bargains. The best time to buy is when others are selling, not when everyone else is buying too.
U.S. Air’s impressive revenue numbers looked very attractive in 1989, so Buffett bought preferred shares. Bad news for Buffett, those revenues came with a hidden cost. Airlines need constant capital to grow, buying new planes and expanding routes, leaving little for shareholders.
By the time the airline achieved meaningful profits, debt payments ate up most of the returns. The company couldn’t even pay dividends on Buffett’s preferred stock. He got lucky selling at a profit later, but knew it was pure chance.
This taught him to distinguish between real growth and expensive growth. As Buffett said, “Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it.” Some businesses need to spend huge amounts just to increase sales, leaving shareholders with nothing.
The lesson is: If it looks too good to be true, it just might be.
What makes Buffett extraordinary isn’t his perfect track record, it’s his willingness to admit errors publicly and extract valuable lessons from them. Each mistake became a teaching moment that improved his future decisions.
His Google miss made him more open to technology investments, eventually leading to major positions in Apple. His ConocoPhillips overpayment reinforced his discipline about buying only at attractive prices. His Dexter Shoes loss sharpened his focus on truly durable competitive advantages.
The real wisdom isn’t avoiding all mistakes. Unfortunately, that’s impossible. It’s learning from failures quickly and adjusting your approach. Buffett’s biggest errors became steppingstones to better investing, not permanent setbacks. For the rest of us, it’s a lesson in endurance.
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This article originally appeared on GOBankingRates.com: Warren Buffett’s Top 7 Money Mistakes (And What He Learned From Them)
