Our Dumbest Decisions! - Warren Buffett & Charlie Munger's Honest Confession 😳💡 | Berkshire 2022
[Transcript]
CHARLIE MUNGER
Well, I remember when you had a textile mill —
WARREN BUFFETT
Oh, god.
CHARLIE MUNGER
— and it couldn’t —
WARREN BUFFETT
I try to forget it. (Laughs)
CHARLIE MUNGER
— and the textiles are really just congealed electricity, the way modern technology works.
And the TVA rates were 60% lower than the rates in New England. It was an absolutely hopeless hand, and you had the sense to fold it.
WARREN BUFFETT
Twenty-five years later, yeah. (Laughs)
CHARLIE MUNGER
Well, you didn’t pour more money into it.
WARREN BUFFETT
No, that’s right.
CHARLIE MUNGER
And, no — recognizing reality, when it’s really awful, and taking appropriate action, just involves, often, just the most elementary good sense.
How in the hell can you run a textile mill in New England when your competitors are paying way lower power rates?
WARREN BUFFETT
And I’ll tell you another problem with it, too. I mean, the fellow that I put in to run it was a really good guy. I mean, he was 100% honest with me in every way. And he was a decent human being, and he knew textiles.
And if he’d been a jerk, it would have been a lot easier. I would have probably thought differently about it.
But we just stumbled along for a while. And then, you know, we got lucky that Jack Ringwalt decided to sell his insurance company [National Indemnity] and we did this and that.
But I even bought a second textile company in New Hampshire, I mean, I don’t know how many — seven or eight years later.
I’m going to talk some about dumb decisions, maybe after lunch we’ll do it a little.
It is incredible how many dumb decisions we made. Charlie and I bought that — and Sandy Gottesman — we bought that department store, and that was in 1966.
And, you know, we were working with our own money. And why in the world did we think —
And Charlie flew to Baltimore, and I’d fly — I mean, we used to really work in those days. (Laughs)
And, there again, we had wonderful people. Louis Cohen couldn’t have been a better guy.
But everybody in that business had a different reference point. You know, they wanted to expand their company. Well, who can blame them for that? And, you know, they were planning a couple of new stores. And each department — the shoe department said, well, we’ll do it better this time, and all that kind of thing.
But the whole idea was crazy. And we got there for a little while, and we figured it out, finally. And —
CHARLIE MUNGER
We reversed course.
WARREN BUFFETT
Yeah. But why the hell did we do it in the first place? (Laughs)
CHARLIE MUNGER
Well, because we were stupid.
WARREN BUFFETT
Yeah, OK, well — (Laughter)
That’s important to realize. We paid $6 a share for that stock, and if the department store had succeeded, it might be worth, you know, $30 a share now and we’d have — and it failed, so.
But we did other things, and we merged it into Berkshire, and we’ll talk about that a little later.
And, you know, now I don’t know whether it’s — $150,000 a share now, or something like that, from the six bucks. So, if it succeeded, we would have maybe made a few dollars. And because it failed, we made hundreds of thousands of dollars per share.
But that’s the way life is. (Laughs)
You just keep going. And —
CHARLIE MUNGER
And keep learning, that’s the secret.
WARREN BUFFETT
Keep learning.
CHARLIE MUNGER
Keep learning.
WARREN BUFFETT
Keep learning.
(Source: https://buffett.cnbc.com/2022-berkshire-hathaway-annual-meeting/)
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[YAPSS Takeaway]
It's okay to make mistakes but you got to learn your mistakes and keep going.
