I wanted to mention one more piece from the Buffett lecture that I thought was important but didn’t want to cram more info into the post.
In it, Buffett was directly asked about dealing with failure and here’s what he said:
Failure depends on how you define it. A lot of things go wrong in life, but that doesn’t necessarily mean that they’re failures. I really don’t look back. I try to learn from what I see around me, but I don’t try learn by going back over this decision or that decision or what did I do wrong or the sort. I don’t think about that at all. You can make a lot of mistakes. The nice thing about it is you’re going to make a lot of mistakes and still do very well. That’s the encouraging thing. I write about my mistakes in the report. In fact, I have a section sometimes called “mistakes du jour” and unfortunately it’s plural most years, too. It’s not the end of the world. You don’t want to make any ones that are fatal. You do not want to own securities on borrowed money because that can wipe you out. I’ve never borrowed money of any significant amount because I just didn’t want to go back to go. Borrowed money can magnify your mistakes, and it may magnify them to the point where they wipe you out. But, there’s nothing wrong with making mistakes. You should try to pick things that you understand. That is the key to what I do. Occassionally I may make a mistake when I think I understand something I don’t. Another mistake that you don’t see is when I pass up something that I’m capable of understanding. Those are mistakes of omission and sometimes they have been huge. I could point to mistakes like that which have cost us over a billion dollars. I knew enough to do something but for one reason or another, I didn’t. Fortunately, people don’t see those.
Buffett has said many times that buying Berkshire was the worst investment. Yet, it’s been a gold mine for him and every other long-term shareholder. It all depends on how you define it!
- How Twelve and a Half Cents Changed History – Irrelevant Investor
- Why Luck Plays a Big Role in Making You Rich – Bloomberg
- When You Change the World and No One Notices – M. Housel
- A Bored Investor Is a Dangerous Thing – J. Zweig
- Jack Bogle: The Undisputed Champion of the Long Run – WSJ
- How to Raise a Genius – Scientific American
- Bill Gates, Warren Buffett And Oprah All Use The 5-Hour Rule – Medium
- Jeremy Miller: “Warren Buffett’s Ground Rules” (video) – Talks at Google