Berkshire Hathaway Chairman Warren Buffett
I make mistakes, too: Buffett may be one of the world's richest men, but his annual salary as chairman of Berkshire Hathaway is $1. And his annual letter has long been considered a must-read for all investors -- not just the ones the letter is addressed to. Although his letters are jam-packed with promising news and folksy, anecdotal advice to investors, this year's letter was humbled with his admittance that even the master of the investing universe can make mistakes. He acknowledged that both Berkshire Hathaway portfolio managers Todd Combs' and Ted Weschler's portfolios outperformed his. He wrote, "I must again confess that their investments outperformed mine. (Charlie says I should add 'by a lot.') If such humiliating comparisons continue, I'll have no choice but to cease talking about them."
Buffett also admitted to losing $873 million due to making a "big mistake" by purchasing Energy Future Holdings' debt. He wrote, "About $2 billion of the debt was purchased by Berkshire, pursuant to a decision I made without consulting with Charlie. That was a big mistake. Unless natural gas prices soar, EFH will almost certainly file for bankruptcy in 2014. Last year, we sold our holdings for $259 million. While owning the bonds, we received $837 million in cash interest. Overall, therefore, we suffered a pre-tax loss of $873 million. Next time, I'll call Charlie."
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