Why buying Berkshire was Warren Buffett's biggest mistake

Warren Buffett is going into his past week arsenic CEO of Berkshire Hathaway, the conveyance helium has utilized to make unthinkable wealthiness for himself, and for the company's loyal longtime shareholders, implicit the past six decades.

Since helium took power successful 1965, Buffett has transformed a struggling textile institution into a monolithic conglomerate worthy much than $1 trillion.

His Class A shares account for astir each of his estimated full nett worthy of $151 billion, which puts him successful the #10 slot of the Bloomberg Billionaires Index.

He would beryllium No. 22 connected that database with astir $359 cardinal if helium held onto the hundreds of thousands of Berkshire B shares, presently valued astatine $208 billion, that he's been giving distant since 2006, with much donations to come.

Given each the occurrence he's had with the company, it whitethorn beryllium astonishing to perceive him telephone Berkshire "the dumbest banal I ever bought" ... a blunder that has outgo him hundreds of billions of dollars.

From the heavy recesses of CNBC's Warren Buffett Archive, here's a uncommon clip of Buffett successful 2010 with an in-depth mentation for Becky Quick of wherefore helium ne'er should person bought Berkshire Hathaway and the important acquisition helium learned from his costly mistake.

BECKY QUICK: All right.  Warren, convey you precise overmuch for joining america today.

WARREN BUFFETT: My pleasure.

BECKY QUICK: What we're trying to get to the bottommost of is what was the worst commercialized you ever made and what'd you larn from it?

WARREN BUFFETT: The dumbest happening I ever did?  (LAUGHTER)

BECKY QUICK: Yeah, the dumbest happening you ever did.

WARREN BUFFETT: The — the dumbest banal I ever bought — was — drum rotation present — Berkshire Hathaway. And — that whitethorn necessitate a spot of explanation.  It was aboriginal successful — 1962, and I was moving a tiny partnership, astir 7 million. They'd telephone it a hedge money now.

And present was this inexpensive stock, inexpensive by moving superior standards oregon so. But it was a banal successful a — successful a textile institution that had been going downhill for years. So, it was a immense institution originally, and they kept closing 1 mill aft another. And each clip they would adjacent a mill, they would — instrumentality the proceeds and they would bargain successful their stock. And I figured they were going to close; they lone had a fewer mills left, but that they would adjacent different one. I'd bargain the stock. I'd tender it to them and marque a tiny profit.

So I started buying the stock. And successful 1964, we had rather a spot of stock. And I went backmost and visited the management, Mr. (Seabury) Stanton. And helium looked astatine maine and helium said, 'Mr. Buffett. We've conscionable sold immoderate mills. We got immoderate excess money. We're going to person a tender offer. And astatine what terms volition you tender your stock?'

And I said, '11.50.' And helium said, 'Do you committedness maine that you'll tender astatine 11.50?' And I said, 'Mr. Stanton, you person my connection that if you bash it present successful the adjacent future, that I volition merchantability my banal to — astatine 11.50.' I went backmost to Omaha. And a fewer weeks later, I opened the message —

BECKY QUICK: Oh, you person this?

WARREN BUFFETT: And present it is: a tender connection from Berkshire Hathaway — that's from 1964. And if you look carefully, you'll spot the terms is —

BECKY QUICK: 11 and —

WARREN BUFFETT:  — 11 and three-eighths. He chiseled maine for an eighth. And if that missive had travel done with 11 and a half, I would person tendered my stock. But this made maine mad. So I went retired and started buying the stock, and I bought power of the company, and fired Mr. Stanton. (LAUGHTER)

And we went connected from there.

Now, that sounds similar a large small morality array — communicative astatine this point. But the information is I had present committed a large magnitude of wealth to a unspeakable business. And Berkshire Hathaway became the basal for everything beauteous overmuch that I've done since. 

So successful 1967, erstwhile a bully security institution came along, I bought it for Berkshire Hathaway. I truly should — should person bought it for a caller entity.

Because Berkshire Hathaway was carrying this anchor, each these textile assets. So initially, it was each textile assets that weren't immoderate good. And then, gradually, we built much things connected to it. But always, we were carrying this anchor. 

And for 20 years, I fought the textile concern earlier I gave up. As alternatively of putting that wealth into the textile concern originally, we conscionable started retired with the security company, Berkshire would beryllium worthy doubly arsenic overmuch arsenic it is now.  So —

BECKY QUICK: Twice arsenic much?

WARREN BUFFETT: Yeah. This is $200 billion. You tin — you tin fig that — comes about. Because the genius present thought helium could tally a textile business. (LAUGHTER)

BECKY QUICK: Why $200 billion?

WARREN BUFFETT: Well, due to the fact that if you look astatine taking that aforesaid wealth that I enactment into the textile concern and conscionable putting it into the security business, and starting from there, we would person had a institution that — due to the fact that each of this wealth was a drag. I mean, we had to — a nett worthy of $20 million. And Berkshire Hathaway was earning nothing, twelvemonth aft twelvemonth aft twelvemonth aft year. 

And — truthful determination you person it, the communicative of — a $200 cardinal —

Incidentally, if you travel backmost successful 10 years, I whitethorn person 1 that's adjacent worse. (LAUGHTER)

BECKY QUICK: If you — if you had to look astatine a motivation for that story, though, is it don't chopped disconnected your chemoreceptor to spite your face?

WARREN BUFFETT: I would accidental — I would accidental that nary substance whether you chopped disconnected your chemoreceptor to spite your look oregon whatever, if you get successful a lousy business, get retired of it. I mean, it — it was — it was a unspeakable mistake, conscionable due to the fact that I drifted into it, successful a sense. 

And — and I've ever said that if you privation to beryllium known arsenic a bully manager, bargain a bully business. (LAUGHTER)

That's the mode to bash it. And everyone volition deliberation you're smart.

And erstwhile I'm successful a bully business, similar radical think, 'Boy that guy's smart.' And erstwhile I'm successful a dumb business, similar textiles, and don't cognize what I'm doing, you know, oregon shoes aboriginal on, oregon immoderate it whitethorn be, you know, each that different — if you deliberation you're a managerial genius, conscionable effort yourself successful a atrocious business.

BECKY QUICK: Is that the acquisition that you learned from it?

WARREN BUFFETT: Sure.

BECKY QUICK: But — and that is thing that you've really enactment into practice?

WARREN BUFFETT: I've really enactment a enactment successful my yearly study many, many, galore decades precocious — ago, aft doing this. And I said, 'When a manager with a estimation for brilliance, meets up with a concern with a estimation for atrocious economics, it's the estimation of the concern that remains intact.'

BECKY QUICK: (LAUGHTER) So that is simply a acquisition you carried with you? And yet, it's 1 that is — you're reminded of each azygous day. It's Berkshire Hathaway.

WARREN BUFFETT: Yeah. And each present and then, I get tempted. Because I started retired with Ben Graham successful 1950 oregon so. And his full thought was buying things that were cheap.

You don't privation to bargain things that are cheap. You privation to bargain things that are good. It's overmuch amended to bargain thing that's bully astatine a just price, than thing that is inexpensive astatine a bargain price.

And I wasn't — I didn't commencement retired that way.  I — I was taught a antithetic system. 

But — but if I didn't larn from Berkshire Hathaway, I'll ne'er learn. (LAUGHTER)

BECKY QUICK: How agelong did it instrumentality you to fig retired this lesson? You said it was —

WARREN BUFFETT: Well, it took maine 20 years to springiness up connected the textile business. I — I had a fantastic feline moving it aft — aft Seabury Stanton — a chap named Ken Chase ran it. And helium was terrific. Honest and able, hardworking. And helium couldn't marque it go.

But we conscionable kept moving astatine it, trying — we bought different textile institution called Waumbec Mills successful Manchester, New Hampshire. Another mistake.

If you're going to beryllium superb with a lousy business, wherefore not beryllium superb with a bully business?

BECKY QUICK: But really, however — it took 20 years for you to yet springiness up connected it. When did you benignant of figure, oh, this is not working? Was it — did it — was it truly 20 years? Or did you benignant of cognize —

WARREN BUFFETT: Well, it was — no. I figured it retired reasonably soon. But I conscionable kept reasoning I'm not going to springiness up connected this. And incidentally, we had a enactment unit that was terrific. I mean, it — it was — we weren't done successful by thing but competitory dynamics. And I — we'd bargain caller equipment, oregon we would determination — we would adhd this mill successful Manchester, and we'd say, 'Look astatine each those synergies,' and each that. Nothing works.

I — In fact, I utilized to person a table successful my drawer. And they would support sending maine these things that if we bargain this machine, we'll prevention 14 people. If we bargain this machine, we'll prevention 12 people. I kept putting it successful my drawer. With each those machines, we'd prevention much radical than we had astatine the commencement of the — supposedly, we were operating with zero people. But it doesn't enactment that way.

BECKY QUICK: Is determination immoderate concern that you didn't get into due to the fact that you thought, hold a second, I've been down this roadworthy before? Where you were tempted and you benignant of pulled back?

WARREN BUFFETT: I get calls connected them each day. You know, I mean, I get calls — not each day. I mean, it's an exaggeration. But I get calls often connected businesses that are conscionable excessively tough. And — and radical say, you know, wherefore don't you tackle it? You know, got each these resources present and bully managers.

But the absorbing happening astir business, it's not similar the Olympics. In the Olympics, you know, if you bash immoderate dive disconnected the — connected a precocious committee and person 4 oregon 5 twists — (LAUGHTER) connected the mode down, and you spell successful the h2o a small bad, there's a grade of trouble factor. So you'll get much points than immoderate feline that conscionable does a small headfirst dive successful perfectly.

So grade of trouble counts successful the Olympics. It doesn't number successful business.  Now, you don't get immoderate other points for the information that something's precise hard to do. So you mightiness arsenic good conscionable measurement implicit one-foot bars alternatively of trying to leap implicit seven-foot bars.

BECKY QUICK: You know, radical volition say, well, hold a second. You're successful immoderate businesses that immoderate radical person written disconnected for dead: the paper business. How is that different?

WARREN BUFFETT: You're right. (LAUGHTER) But — but we bought that [The Buffalo Evening News] successful 1977.  And — and we've done precise good implicit the years.  At — astatine first, we didn't bash truthful well. But past we did precise well.

But I — the paper concern of 2010 is not the paper concern of 1977. I mean, it is diametrically different. [Berkshire sold the paper successful 2020.]

And it is true, and we enactment it successful the yearly report, that we tally Berkshire successful a mode that they don't thatch successful concern schools. Because successful concern schools, they accidental merchantability disconnected your so-so businesses and support buying caller businesses. I telephone that gin rummy management.

And erstwhile I — if I had 50 kids, you know, and 1 of them isn't doing rather arsenic good arsenic the others, I'm not going to enactment him up for adoption. Unless they are going to suffer america wealth permanently, oregon if they person large labour difficulties, we support the businesses that aren't arsenic bully arsenic the others.

So, if I'm going to travel that philosophy, I'd amended beryllium precise cautious astir what I buy, right?

BECKY QUICK: Exactly. What astir your concern partner, Charlie Munger? What would helium accidental your biggest mistake is?

WARREN BUFFETT: Well, helium would astir apt repetition this. And I would accidental I've learned a batch astir what I conscionable got done talking astir — I've learned a batch from Charlie.

Charlie told maine this from the archetypal infinitesimal I met him successful 1959. He said — helium said precisely — I could person — I could person saved myself a batch of occupation if I'd conscionable listened to him. But what did Charlie know? (LAUGHTER)

BECKY QUICK: OK.  Warren, convey you precise much.  We truly admit your time.

WARREN BUFFETT: Thanks.  Thanks for having me.

Berkshire's apical holdings of disclosed publically traded stocks successful the U.S. and Japan, by marketplace value, based connected the latest closing prices.

Holdings are arsenic of Sept. 30, arsenic reported in Berkshire Hathaway's 13F filing on November 14, 2025, but for:

• Itochu, which is arsenic of March 17, 2025, and Mitsubishi, which is arsenic of August 28, 2025. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen.

The afloat database of holdings and existent marketplace values is disposable from CNBC.com's Berkshire Hathaway Portfolio Tracker.

Please nonstop immoderate questions oregon comments astir the newsletter to maine at alex.crippen@nbcuni.com. (Sorry, but we don't guardant questions oregon comments to Buffett himself.)

If you aren't already subscribed to this newsletter, you tin motion up here.

Also, Buffett's yearly letters to shareholders are highly recommended reading. There are collected here connected Berkshire's website.

-- Alex Crippen, Editor, Warren Buffett Watch