Buffett's Experience In Revealing Investment Life

Some netizens are here. WeChat Asked Buffett how to look at two words of risk, Buffett's answer is not surprising: "in fact, if you buy a good company's stock at a reasonable price, you don't need to take too much risk. Of course, it does not mean that stocks will not drop sharply in the next week, a month or a year, but as long as you hold valuable stocks for a long time, if the company has a good business model and you do not buy it with borrowed money, you can make money.

But there are no general victorious generals in the investment community, even Buffett. When asked about the biggest mistake he had made, Buffett took the acquisition of Dexter, an American shoe company in 1993, as the most painful failure in his life.

"I bought a shoe company for about 400 million dollars, and finally lost all of it. The worst part is that I bought it with Berkshire's stock, and now I estimate the stock is worth 4 billion dollars." He said to the commentator.

This company is Dexter. Buffett bought his stake in 1993 and rarely traded on stock. He made a fatal mistake in the deal - he paid $420 million worth of Berkshire stock.

At the beginning of 1993, Buffett met Brown, the chairman of the Brown Footwear Company, with the boss of Dexter, Buffett. Buffett paid the cash on the spot, but Alfond was unwilling to pay the capital gains tax, so Buffett asked for Berkshire's stock trading.

A few months later, when Berkshire's stock rose to its highest level in recent years, Buffett met with Alfond again, without lawyers, accountants or investment bankers.

In Buffett's own words, the company has a "durable competitive advantage". This competitive advantage seems to be in line with Buffett's preference: like Coca-Cola, DQ ice cream, shoes are indispensable in people's daily life and are not a declining industry.

What he did not expect, however, was that the cheap "made in China" products swept through the US retail market in just a few years, and the Dexter market advantage of the United States was soon gone.

"In 1999, almost all our manufacturing, retail and service businesses achieved excellent results. The only exception is the Dexter shoe industry. But this is not a matter of company management. In terms of management skills, capabilities and dedication, Dexter management is no match for other companies. But most of our shoes are produced locally in the United States, and the competition between US manufacturers and overseas manufacturers is very difficult. Of the 1 billion 300 million pairs of shoes consumed in the United States in 1999, about 93% were imported products, and the very cheap labor force abroad was the decisive factor.

In 2001, Buffett had to admit his mistake: "Dexter years before our acquisition, in fact, there were several years after our acquisition. Despite the brutal competition from overseas shoe companies, the business is still very prosperous. At that time, I thought that Dexter should be able to continue to successfully deal with international competition, and it turned out that my judgment was totally wrong.

It can be said that in Buffett's 60 years of investment career, his biggest setback was lost to "made in China".