Business Week has an article about the annual letter from Warren Buffett at Berkshire Hathaway BRK.A and BRK.B (link).
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"By yearend, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game."
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Yikes! Buffett points out specific stocks where he was the shuttle hit by the racket. Conoco Phillips bought when oil was peaking, and two Irish banks that seemed cheap when bought, but declined another 90% from the buy in price.
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"Last year I made a major mistake of commission (and maybe more; this one sticks out). Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year.
"I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.
"I made some other already-recognizable errors as well. They were smaller, but unfortunately not that small. During 2008, I spent $244 million for shares of two Irish banks that appeared cheap to me. At yearend we wrote these holdings down to market: $27 million, for an 89 percent loss. Since then, the two stocks have declined even further.
"The tennis crowd would call my mistakes 'unforced errors.'"
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