This investment cost Berkshire Hathaway billions – Buffett still convinced of long-term prospects 06/08/2023

There’s always some risk involved in trading in the stock market, and that’s why even great investors like Berkshire Hathaway CEO Warren Buffett make mistakes in their long history in the stock market. This bad investment cost Warren Buffett billions.

• Warren Buffett has made many good investment decisions
• However, Starinvestor has also made a few bad purchases
• This investment cost Buffett billions

Star investor Warren Buffett has made many good investment decisions in his life and has accumulated billions in wealth. But among the many good decisions, even a legendary investor like Buffett has made a few mistakes.

Warren Buffett’s biggest mistakes

One of his biggest mistakes was that Buffett didn’t buy when the stock market crashed in the spring of 2020 as a result of the corona pandemic. He warned against buying stocks and sold some of his holdings. But the crash was soon followed by a strong recovery, and the Oracle of Omaha missed that opportunity. At the annual meeting of Berkshire Hathaway shareholders in April 2022, he admitted, according to Finance Buzz, “I missed this great buying opportunity, I totally screwed it up in March 2020.” He missed another opportunity with Amazon, which he had his sights on relatively early on, but from which he bought shares late.

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But in retrospect, Buffett was not only annoyed about missed opportunities, but also about investments that later turned out to be bad buys. For example, his Berkshire Hathaway purchase. According to his estimates, Buffett may have lost about $200 billion in total by purchasing his current investment vehicle. He also classified the purchase of the shoe company Dexter Shoes, the purchase of ConocoPhillips shares in the middle of the oil and gas price boom and his investment in the British supermarket chain Tesco as bad investments.

Precision Castparts investment cost Buffett billions

Buffett made another big bad investment when he bought aircraft and industrial parts manufacturer Precision Castparts for $32 billion in 2016. The investment marked the largest acquisition in Berkshire Hathaway’s history to date. But in hindsight, Buffett acknowledged that he was overly optimistic “about PCC’s normalized earnings potential.” In 2021, he admitted to having paid too much for the company, whose situation had been further aggravated by the negative effects of the COVID-19 pandemic and which had not been able to meet expectations until then. As Reuters reported, Berkshire Hathaway wrote off $9.8 billion in Precision Castparts assets in August 2020 as the coronavirus pandemic weakened demand.

But the company is keen to overcome the challenges, Benzinga said, and long-term industry forecasts would predict growth and demand for aerospace products. Therefore, Precision Castparts continues to expand its workforce.

Despite the setback, Buffett also remains confident in the company’s long-term prospects. In his annual letter to investors in 2021, according to Reuters, he wrote that he had “bought a good company – the best in its business” and that his investment holding company was “lucky” that Precision boss Mark Donegan was still in charge.
“However, I was wrong when I estimated the average level of future earnings, and was therefore wrong when I calculated the reasonable price for the company,” quoted Benzinga the star investor. “PCC is far from my first mistake of this kind. But it’s a big problem.”

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