The surest test of a man’s character is his behavior when he has to deal with adverse circumstances and his admission of his errors or mistakes.
Warren Buffet often referred to as the sage of Omaha and considered to be the greatest investor of all times had his worst year. Berkshire Hathaway book value per share fell 9.6% in 2008 its biggest decline ever. The company also reported its fifth year-over-year quarterly decline. The $117 million quarterly gain in the Q4 2008 is a 96% drop from Q4 2007 $2.9 billion in fourth-quarter income.
Despite the poor results, the company’s book-value performance in 2008 still far outpaced the Standard & Poor’s 500-stock index, which fell 37% last year, including dividends, as well as hedge funds, which last year averaged about an 18% decline.
The share price is actually revealing and the share price has dropped 32% in 2008 and about 19% in 2009 beating the S&P marginally.
In his characteristic humble way, Warren Buffet in his annual letter to the shareholders said:
“During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. … Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.”
For the richest man on the planet to admit that he was dumb should teach all of us lessons about humility and the fallibility of human judgment. I have long been an admirer of the Warren Buffet’s wisdom, but now with this humility, he truly is not just a Sage, but an Enlightened Sage.
Coming after Alan Greenspan’s admission of shock that markets didn’t work, it only goes to show the ultimate measure of one’s greatness — Admitting one’s mistakes.
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