Even I get things dead wrong on occasion, admits Warren Buffett

World's most famous investor writes to shareholders and owns up to his mistakes

Los Angeles

They call him the "Sage of Omaha", but Warren Buffett doesn't always get things right. Just ask Warren Buffett.

In his annual letter to his shareholders, the world's most famous investor has offered a series of colourful mea culpae for a selection of market predictions which subsequently proved wide of the mark. Or, in his own words, went "dead wrong".

A decision to gamble $2bn (£1.26bn) on a Texan energy company turned out to be "in tennis parlance ... a major unforced error". An investment in ConocoPhillips was "dumb" and, of an ill-fated foray into the textiles industry, he writes merely: "Aaaaaaagh!"

Mr Buffett's frank comments were published on Saturday in his firm Berkshire Hathaway's annual report. They come at a time when he faces widespread scrutiny for endorsing Barack Obama's proposals to raise taxes on the wealthiest Americans.

The letter also comes amid growing interest in Mr Buffett's legacy. At 81, and after almost half a century running the company, his investors have never been more acutely aware of the fact he cannot carry on for ever. With this in mind, Mr Buffett revealed he had identified an (as yet secret) individual, apparently from within the business, to be his successor.

He also reiterated plans to devote his $44bn fortune to good causes, adding that despite his advancing age, he was in "excellent health" and not "going anywhere" if he could help it.

Berkshire Hathaway made $10.3bn in 2011, down from nearly $13bn in 2010. Much of the decline can be blamed on Mr Buffett's insistence a year ago that the US housing market was about to rebound. That prediction was "dead wrong", he admits. However he is adamant that basic laws of supply, demand, and human population growth must eventually lead to a recovery.

Elsewhere, Mr Buffett has become an object of heated public debate after he endorsed raising taxes on the so-called "1 per cent" of wealthiest Americans. He famously pointed out that his earnings were taxed at about 15 per cent, while his secretary paid twice that. As long as this endures, he believes the US will struggle to reduce its deficit. Opponents call that class warfare.

Chris Christie, the Republican Governor of New Jersey, said last week that if Mr Buffett thought he was under-taxed, he should "just write a cheque" to the US government "and shut up".

Bad investments: Buffett's blunders

HOUSING

The blunder: Mr Buffett predicted in last year's letter that the US housing recovery would begin within the next year and help to fuel economic growth.

The explanation: Mr Buffett doesn't mince words and says he was "dead wrong" about this one. But he says basic biology makes it unavoidable that the country will need more houses.

ENERGY

The blunder: Mr Buffett spent about $2bn buying bonds offered by Texas utility Energy Future Holdings. But those bonds are now worth about $878m, and he conceded on Saturday that even that could be wiped out.

The explanation: Mr Buffett comes right out and admits misjudging the company's prospects and the likelihood that natural gas prices would remain depressed.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
On set of the Secret Cinema's Back to the Future event
filmBut why were Back to the Future screenings cancelled?
News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Arts and Entertainment
No Devotion's Geoff Rickly and Stuart Richardson
musicReview: No Devotion, O2 Academy Islington, London
News
i100
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
i100
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Commercial Litigation

Highly Attractive Salary: Austen Lloyd: CITY - SENIOR COMMERCIAL LITIGATION SO...

BI Developer - Sheffield - £35,000 ~ £40,000 DOE

£35000 - £40000 per annum + competitive: Progressive Recruitment: My client is...

Employment Solicitor

Highly Competitive Salary: Austen Lloyd: MANCHESTER - Senior Employment Solici...

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

Day In a Page

Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride