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
ebooksAn unforgettable anthology of contemporary reportage
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
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

Maths Teacher

£110 - £200 per day: Randstad Education Leeds: Secondary Maths Teacher for spe...

Business Analyst - Surrey - Permanent - Up to £50k DOE

£40000 - £50000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***ASP.NET Developer - Cheshire - £35k - Permanent***

£30000 - £35000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***Solutions Architect*** - Brighton - £40k - Permanent

£35000 - £40000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker