“During the 2019-23 period, I have used the words ‘mistake’ or ‘error’ 16 times in my letters to you. Many other huge companies have never used either word over that span.”

Berkshire Hathaway turned in an incredible 2024, with operating earnings up 27%. But in his annual letter on Saturday, Warren Buffett was eager to admit the mistakes he’s made running Berkshire for the last 60 years.

Making Mistakes

Buffett describes mistakes in assessing businesses and also in assessing people. He admits those mistakes, but doesn’t dwell on them.

For the last week, I’ve been kicking myself for passing on the Figure seed round. The robotics startup is now raising at a $39.5 billion valuation.

But if the greatest investor in history makes mistakes, I guess I’m entitled to a few as well! The key is to quickly admit them and learn from them.

Buffett notes that in the end, the mistakes aren’t what matters most. It’s the occasional decision you actually get right:

“And our experience is that a single winning decision can make a breathtaking difference over time.”

Let’s think about this from a venture capital perspective.

I could make 100 investments that don’t work out. And I could miss another 100 great companies.

Heck, I probably will!

But if I hit one Uber, this angel investing experiment is a huge success.

Relying on People Smarter Than Us

As ever, Buffett is self-effacing:

“Lacking such assets as athletic excellence, a wonderful voice, medical or legal skills or, for that matter, any special talents, I have had to rely on equities throughout my life. In effect, I have depended on the success of American businesses and I will continue to do so.”

I’m no Warren, but I can relate to what he’s saying. Most of the founders I meet are far more impressive people than I.

Often, I don’t even fully understand what they’re doing. But I understand enough to say, “That guy is very smart and hardworking. Give him money.”

And that’s all it takes. This is the magic of our capitalist system. We can hitch ourselves to someone else’s success, helping very modestly but profiting enormously.

The Value of Patience

“Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities.”

Buffett is fine with sitting on his hands for an extended period. He only acts when he sees a really compelling investment.

I try to do the same in my angel investing. Sometimes, I go months without making a new investment.

Indeed, I haven’t made one yet this year.

At other points, I make several investments in a matter of a few weeks. It really depends on what I see.

The key is not to get antsy. There’s no need to write a check just because I haven’t written one in a while.

It’s better to wait for that incredible opportunity. When it comes, I try to act decisively.

Being patient isn’t easy.

After all, we’re investors. We’re supposed to invest, right?

Yes, we are. But activity for activity’s sake is not going to make us money.

Wrap-Up

No matter what you invest in, whether you’re a huge institution or a small fry like me, you can always learn from Buffett. Whenever I don’t know what to do, I go back to Warren’s letters.

He’s patient, he thinks for himself, and he owns his mistakes.

Those traits make a great investor. They also make a great person.

More on investing:

Missing Figure

Using Grok 3 to Manage My Stock Portfolio

US Stocks Are Extremely Overvalued

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