People tell us how great billionaire investor Warren Buffett is. But we don’t hear many going on about the things he’s done wrong in his career.

“Just think of the money we could have today if we hadn’t fallen into all those Warren Buffett traps“, we never hear.

To be fair, he has achieved an average annual return of 19.8% from shares in his Berkshire Hathaway investing company. And it’s not a one-off, or just for a few years. No, that’s his average from 1964 to 2023.

Cracking return

In that time, the US S&P 500 made a total of 31,200%, including dividends. But Berkshire Hathaway shareholders enjoyed a whopping 4.4 million percent.

Shame about all those mistakes, though… which I’d bet is not what you’re thinking.

Joking aside, one of the best things investors can do is examine mistakes and see what we can learn from them. That’s our own mistakes, and those of others.

Guru mistakes

Peter Garnry, Saxo‘s Chief Investment Strategist, suggests “By observing the mistakes of the greatest investors like Warren Buffett we should in theory be able to learn faster than doing all the mistakes ourselves“.

Buffett confesses he failed to understand the business models and potentials of Amazon and Google, now Alphabet (NASDAQ: GOOG).

Since IPO in 2004, the Google/Alphabet stock price has risen by more than 6,500%.

That’s not a nice one to miss out one. But hindsight is a great thing, and it wasn’t easy to understand at the time.

What was it, a search engine? Big deal. What did those other search engines of the early days turn out to be worth today? That’s right, Alphabet is rare among those early starters to still be here, and at the leading edge of AI development today.

Lesson

What are the lessons to be learned from not buying Alphabet stock back at IPO?

Maybe, as private investors, we shouldn’t over-analyse. Right now, I’m far from being an AI expert. But it doesn’t stop me considering Alphabet as a possible buy for that potential.

Then again, perhaps another side is… nobody ever lost money by not buying something. It’s fine to pass something up if we don’t really get it.

Timing

Buffett made a big bet on ConocoPhillips when oil prices were high in 2008, expecting them to stay that way. But the black stuff plummeted, leading Buffett to admit to “terrible timing” with that one.

What’s the lesson this time? Hmm, avoiding trying to time the market wouldn’t get us out of a bad one like that. Maybe it’s to be especially wary of buying any stock that depends on the price of a specific commodity?

Easy one

That’s just a couple of the things Buffett didn’t quite get right. And, to be fair, there aren’t all that many other examples.

But, as Peter Garnry points out, Buffett has been hampered by his success. The more he has to invest, the harder it is to find a worthwhile investment.

So maybe the final lesson is… try not to get too rich. That’s one mistake I’m sure I won’t make.