The Intelligent Investor’s Mistakes: Warren Buffett
38 Buffett’s Investment Stories, Gain Wisdom, Master Risk, and Maximize Profits to Build Enduring Wealth
“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” - Warren Buffett
One of its kind the author captured the investment mistakes of none other than a legend – Warren Buffett. It is an amazing one who started from scratch and became one of the richest men through investment. Buffett has the longest successful journey as an Investor and later as a businessman.
Along this decades-long journey, Buffett did many mistakes. It is an unusual paradox. These mistakes of both types of commission and omission.
Buffett acquired Berkshire Hathaway Inc. in 1965. It was a sick textile company. He turned it into a self-sustaining machine that generates massive returns for its Owners.
The book has 38 stories of companies. In them, Buffett made many types of mistakes that investors face. The book starts with the acquisition of Berkshire Hathaway. It goes up to recently in 2023, Taiwan Semiconductor Manufacturing Company Ltd. (TSMC).
The book is divided into three parts -
Part-A: Mistakes of Commission
The commission mistakes are typical to any investors, including Buffett. These are due to biases, evaluation of the company’s economic outcome, competitive strength, how to think about the market price movement, and much more.
Part-B: Failed to Capitalize in 2008 Crash
2008 US market scenario was comparable to the 1929 depression. This was the time the market was giving exceptional opportunities to invest. Buffett’s inappropriate capital allocation cost more to Berkshire.
Part-C: Error of Omissions: “Thumb Sucking”
The error of omission is not recorded in Berkshire’s net worth. Buffett and Munger both regret often the habit of thumb-sucking. These opportunities include companies like – Amazon, Google, and many more. The book presents you with what was going in Buffett’s mind when missed these opportunities and the lessons to be learned from them.
These stories help an investor to get exposure to different situations where mistakes are possible. Also, these companies are from various industries and operate in the global market.
The author has presented the lessons based on the Buffett’s story and own experience as an investor. The lessons are touching many aspects of investments like -
1) Investment Framework and Processes
2) Investment Strategies
3) Risk Management
4) Capital Allocation
5) Valuation
6) Smart Diversification
7) Decision Making
The book is a collection of 38 companies or industries written in crisp and to the point. The author avoided jargon and wrote to give maximum value to the investors. The author himself in the stock market for the last 20 years. Hence he understands the problems faced by investors. Hence he focused on lessons and solutions for investors.
These lessons would help investors to guard against their own emotional biases. These are common challenges faced during investment journey. However, the important aspect is to recognize and act upon is what counts.
So, the investors who want to leverage on legend’s mistakes and take lean in their own journey through the book.
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