Warren Buffett, the ‘Oracle of Omaha’, has built his reputation as arguably the most successful investor in history through decades of market-beating returns at Berkshire Hathaway. With Buffett set to retire at the end of 2025 after 60 years at Berkshire’s helm, now is an ideal time to examine his investment legacy. While his successes have been studied extensively, even Buffett has made some notable mistakes. This article examines both his triumphs and missteps, offering valuable insights for investors as the Buffett era draws to a close.
Overview of Buffett’s investment style
Warren Buffett’s approach centres on several key principles:
- Value investing (seeking companies trading below intrinsic value)
- Businesses with economic moats (sustainable competitive advantages)
- A long-term investment horizon
- Staying within his circle of competence
- Emphasising management quality
This disciplined approach has guided him through market cycles for over six decades. As Buffett said in his 2022 annual letter to Berkshire shareholders: ‘Charlie and I are not stock-pickers; we are business-pickers’.
Buffett’s notable investment wins
Coca-Cola
Buffett began purchasing Coca-Cola shares in 1988, eventually building a US$1.3 billion position, about 9.3% of the company’s outstanding shares. The stock has now been held for 36 years.
Reasons for investing: Buffett recognised Coca-Cola’s strong brand strength, global distribution network, consistent growth and growing dividends. The company embodied his preference for simple business models with strong competitive advantages.
Outcome: The initial US$1.3 billion investment is now worth over US$28.5 billion as of this writing. By 2024, Berkshire was receiving approximately US$776 million in annual dividends from Coca-Cola, more than half the original investment amount every year.
Takeaway: Great businesses with strong brands can compound wealth for decades, demonstrating the power of patience over market timing.
Apple
Buffett began purchasing Apple shares in 2016, and it remains Berkshire’s largest holding, even after a few rounds of trimming in 2023 and 2024.
Reasons for investing: It was a shock to the world when Buffett first invested in Apple, as he had famously avoided technology stocks for decades, claiming they were outside his circle of competence. But, Buffett viewed Apple not as a technology company but as a consumer products company with exceptional brand loyalty, robust cash flow and pricing power. His grandchildren were also iPhone devotees.
Outcome: Berkshire’s approximately US$40 billion investment had grown to over US$150 billion by the last quarter of 2023, making it the most profitable investment in Buffett’s career. However, Berkshire reduced its stake by 56% from 2023 to 2024, selling over 515 million shares, and now holds 300 million shares, valued at US$61 billion.
Takeaway: Adapting investment criteria to evolving markets, while staying true to core principles, can open the door to exceptional opportunities, even if it means stepping outside your comfort zone.
American Express
Buffett first invested during a crisis in 1964 when American Express faced potential bankruptcy due to the ‘Salad Oil Scandal’. But Berkshire’s American Express position was built primarily in the mid-1990s.
Reasons for investing: Buffett recognised that while American Express faced a temporary setback, its core business, like charge cards, traveller’s cheques, and related businesses, remained robust. Its brand and network remained valuable assets that would help them survive the scandal.
Outcome: The purchases were completed in 1995 and cost around US$1.3 billion. Berkshire now owns about 21.6% of American Express, worth over US$45 billion. Annual dividends received from this investment have grown from US$41 million to around US$425 million.
Takeaway: Market overreactions to temporary problems can create exceptional buying opportunities for fundamentally sound businesses.
Buffett’s notable investment mistakes
Dexter Shoe
In 1993, Berkshire acquired Dexter Shoe for US$433 million, paid in 25,203 shares of Berkshire Hathaway Class A stock. Buffett invested in the company because he believed Dexter had a sustainable competitive advantage in the U.S. shoe manufacturing industry.
Outcome: Foreign competition quickly eroded Dexter’s market position, especially China, which rapidly improved its quality and had a much lower labour cost. By 2001, Dexter had ceased U.S. production entirely. The Berkshire shares used to acquire Dexter would be worth over US$19 billion as of 21 May 2025.
Takeaway: Buffet failed to recognise the vulnerability of US manufacturing to global competition. Companies can only earn substantial profits if they have a sustainable competitive advantage over other firms, and these high profits may attract more competitors to come in and share the pie. Using Berkshire stock rather than cash magnified the consequences of the error.
ConocoPhillips
In 2008, Berkshire Hathaway invested approximately US$7 billion (85 million shares) in ConocoPhillips, making it one of the company’s largest positions at the time. Buffett made this investment when oil prices were near record highs, exceeding US$140 per barrel. He anticipated that prices would continue rising due to growing global demand and constrained supply growth.
Outcome: Shortly after Berkshire’s investment, oil prices collapsed during the 2008 financial crisis, falling below $45 per barrel. Buffett later admitted this timing was a significant mistake, and Berkshire sold much of its position at a substantial loss, estimated at nearly US$2 billion.
Takeaway: The ConocoPhillips investment highlights the risks of relying on macroeconomic predictions, even for seasoned investors. It serves as a reminder to be especially cautious with resource-sector companies and to think twice before investing in stocks that have experienced dramatic momentum over many years.
Salomon Brothers
Berkshire invested US$700 million in Salomon Brothers convertible preferred stock in 1987, eventually becoming the company’s largest shareholder with a 12% stake. Buffett invested in it because it offered an attractive dividend yield (9%) and conversion features. Buffett also believed in the leadership capabilities of John Gutfreund, Salomon’s CEO at the time.
Outcome: In 1991, Salomon was embroiled in a scandal when the firm was caught submitting illegal bids in Treasury auctions. Gutfreund failed to promptly notify regulators, leading to his resignation. Buffett had to step in as interim chairman to save the company from collapse, testifying before Congress and implementing reforms. Salomon survived and was eventually acquired by Travellers Group (later merged into Citigroup) in 1997.
Takeaway: The Salomon experience reinforced the critical importance of management integrity in Buffett’s investment philosophy. No matter how profitable a company is, a lack of ethics can destroy it overnight.
The fifth perspective
Warren Buffett’s six-decade career offers invaluable lessons through both triumphs and failures. As he prepares to step down from Berkshire Hathaway, his investment legacy becomes even more worthy to study. What makes me admire Buffett is not the absence of mistakes, but his willingness to acknowledge them, learn from them, and adapt accordingly. As the investment world prepares for the post-Buffett era, Buffett’s investment philosophy will still remain as relevant as ever.
