Warren Buffett is widely considered the greatest investor of all time, but his track record is not without blemish. What separates him from most investors isn’t perfection — it’s his willingness to study his own failures and share those lessons publicly.
Over the decades, in Berkshire Hathaway shareholder letters and interviews, Buffett has been unusually candid about what went wrong. These mistakes reveal patterns that any investor can learn from and avoid.
1. Buying Fair Businesses Instead of Great Ones
Early in his career, Buffett was heavily influenced by Benjamin Graham’s approach of finding companies that were statistically cheap, regardless of business quality. He admits this framework caused him to spend years buying mediocre businesses simply because they looked inexpensive on paper.
Berkshire Hathaway itself was the prime example. He bought it as a cheap textile company, only to watch it struggle for years as the underlying business deteriorated. As Buffett later noted, “Time is the friend of the wonderful business, the enemy of the mediocre.” The lesson that stuck: a great business at a fair price almost always beats a fair business at a great price.
2. Holding Onto Losing Investments Too Long
Buffett has openly admitted that one of his costliest habits was refusing to sell investments once it became clear the original thesis was no longer valid. He held on out of hope, familiarity, or a reluctance to admit error — and in most cases, time made things worse, not better.
Dexter Shoe Company is the most painful example. Buffett not only purchased a business that eventually went to zero, but he also paid for it with Berkshire stock that later became extraordinarily valuable. The lesson is sharp: once a mistake is clear, the cost of delay compounds quickly.
3. Missing the Great Compounders
Buffett has said that some of his biggest regrets weren’t bad investments — they were stocks he never bought or bought too late. He had the opportunity to study Amazon and Google when they were still in relatively early growth stages, but he passed on both at that time and only bought them much later in their growth cycles.
1. Google (Alphabet)
Buffett has been quite vocal about his regret regarding Google. He admits he had a front-row seat to their success but failed to act.
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The “Front Row” Seat: Geico (owned by Berkshire Hathaway) was a major early customer of Google’s advertising platform. Buffett saw firsthand how effective the ads were and how much Geico was paying for them.
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The Regret: In 2017, he told shareholders, “I blew it.” He realized too late that Google had a “natural monopoly” on search advertising with virtually no incremental cost to scale.
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“I don’t mind having caught Amazon early. The guy (Jeff Bezos) is a miracle worker; it’s very peculiar. I give myself a pass on that, but I feel like a horse’s ass for not identifying Google better. I think Warren feels the same way. We screwed up.” “Google has a huge new moat. In fact, I’ve probably never seen such a wide moat… Their moat is filled with sharks”. – Charlie Munger
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Berkshire Hathaway now holds a position in Alphabet (Google’s parent company).
2. Amazon
Buffett’s relationship with Amazon followed a similar path of public praise mixed with self-criticism.
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The Oversight: Munger has called Jeff Bezos a “miracle worker” and admitted he underestimated Bezos’s ability to dominate both retail and the cloud (AWS) simultaneously.
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The Late Entry: Berkshire finally bought Amazon shares in 2019. At that point, Amazon was already a trillion-dollar company.
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The Twist: Buffett noted that the decision to buy Amazon wasn’t actually his—it was made by one of his two investment managers, Todd Combs or Ted Weschler. Buffett gave it his blessing, admitting he should have been “smart enough” to do it years prior.
He has acknowledged that failing to act on obvious, durable businesses with enormous competitive advantages likely costs Berkshire more than any investment he actually made. Missing a true compounding machine for years or decades is a far more expensive error than most investors realize at the time.
4. Straying Outside the Circle of Competence
One of Buffett’s most consistent principles is staying within what he calls his “circle of competence.” When he has drifted outside it, he suffers the results. He has been direct about the fact that overconfidence in his own understanding of a business is a recurring source of error.
His investment in Tesco, the British grocery chain, is a documented example. He misjudged the competitive dynamics and accounting issues involved, and eventually sold at a significant loss. “Risk comes from not knowing what you’re doing,” he has said — a line that reads like a personal warning as much as general advice.
5. Overpaying Even for Quality
Buffett has been clear that buying a wonderful business does not automatically make an investment successful. If the price paid is too high, even a great company can produce poor returns for years. Valuation discipline matters regardless of business quality.
This is perhaps his most nuanced lesson, because it runs counter to a popular simplification of his philosophy. The full picture is captured in one of his most cited lines: “Price is what you pay. Value is what you get.” Those two things are rarely the same number, and the gap between them determines the outcome.
6. Underestimating Management Red Flags
Buffett has written and spoken at length about the importance of management character. He has also admitted that he has not always applied that standard rigorously enough when evaluating businesses. On more than one occasion, he trusted managers who later proved to be disappointing stewards of capital.
He treats integrity as non-negotiable in the people he partners with, and he has said he tries to assess it before anything else. His regrets in this area have reinforced one consistent rule: no financial metric can compensate for poor character at the top of a business.
7. Letting Inertia Delay Necessary Action
Sometimes Buffett’s mistakes were not about the wrong decision, but about the right decision made too slowly. He has reflected on situations where he recognized a problem clearly but allowed comfort, loyalty, or institutional inertia to delay acting on what he already knew.
This pattern applies to both selling underperforming investments and reallocating capital to better opportunities. The emotional attachment to a prior decision or to the people involved can override rational judgment. Buffett’s self-diagnosis in these cases has been unflinching: the error was not ignorance, it was hesitation.
8. Not Betting Big Enough on High-Conviction Ideas
Buffett has also acknowledged the opposite side of the sizing problem. When the odds are genuinely and overwhelmingly in your favor, a small position is its own kind of mistake. He has described situations where he identified a great opportunity early but deployed far less capital than the conviction warranted.
Position sizing is not just a risk management tool — it is a return driver. When you have a real edge and a long runway, failing to act aggressively is a form of underperformance. Buffett has been known to concentrate heavily when confidence is justified, and he views excessive caution in high-conviction situations as a costly habit to break.
Conclusion
What makes Buffett’s mistake list remarkable is not the mistakes themselves — it’s how clearly he articulates what he learned from each one. Most investors prefer to move past their errors quietly. He turned it into a curriculum.
The patterns are consistent across decades: prioritize business quality, act quickly on broken theses, don’t miss the obvious compounders, stay within your competence, pay the right price, demand management integrity, override inertia, and size positions to match conviction.
His long-term edge was never about being right every time. It was about learning from failure systematically and refusing to repeat the same mistakes at scale. That discipline, more than any single investment, is the foundation of everything Berkshire became.