Warren Buffett’s investing track record is nearly impeccable.
Over his lifetime, Buffett has built Berkshire Hathaway into one of the biggest companies in American history, amassed a personal fortune of over $80 billion, and earned acclaim as one of the world’s foremost philanthropists.
But in a 75-year career, it’s no surprise that even Buffett has made the odd blunder – and there’s one that he claims has ultimately costed him an estimated $200 billion!
The Warren Buffett Series
Part 4: Buffett’s Biggest Wins and Fails
Today’s infographic highlights Buffett’s investing strokes of genius, as well as a few decisions he would take back.
It’s the fourth part of the Warren Buffett Series, which we’ve done in partnership with finder.com, a personal finance site that helps people make better decisions – whether they want to dabble in cryptocurrencies or become the next famous value investor.
Note: New series parts will be released intermittently. Stay tuned for future parts with our free mailing list.
How did Buffett go from local paperboy to the world’s most iconic investor?
Here are the backstories behind five of Warren’s biggest acts of genius. These are the events and decisions that would propel his name into investing folklore for centuries to come.
Buffett’s 5 Biggest Wins
From making shrewd value investing calls to taking advantage of misfortune in the salad oil market, here are some of the stories that are Buffett classics:
1. GEICO (1951)
At 20 years old, Buffett was attending Columbia Business School, and was a student of Benjamin Graham’s.
When young Buffett learned that Graham was on the board of the Government Employees Insurance Company (GEICO), he immediately took a train to Washington, D.C. to visit the company’s headquarters.
On a Saturday, Buffett banged on the door of the building until a janitor let him in, and Buffett met Lorimer Davidson – the future CEO of GEICO. Ultimately, Davidson spent four hours talking to this “highly unusual young man”.
He answered my questions, taught me the insurance business and explained to me the competitive advantage that GEICO had. That afternoon changed my life.
– Warren Buffett
By Monday, Buffett was “more excited about GEICO than any other stock in [his] life” and started buying it on the open market. He put 65% of his small fortune of $20,000 into GEICO, and the money he earned from the deal would provide a solid foundation for Buffett’s future fortune.
Although Buffett sold GEICO after locking in solid gains, the stock would rise as much as 100x over time. Buffett bought his favorite stock again a few years later, loaded up further during the 1970s, and eventually bought the whole company in the 1990s.
2. Sanborn Maps (1960)
This early deal may not be Buffett’s biggest – but it’s the clearest case of Benjamin Graham’s influence on his style.
Sanborn Maps had a lucrative business around making city maps for insurers, but eventually its mapping business started dying – and the falling stock price reflected this trend.
Buffett, after diving deep into the company’s financials, realized that Sanborn had a large investment portfolio that was built up over the company’s stronger years. Sanborn’s stock was worth $45 per share, but the value of the company’s investments tallied to $65 per share.
In other words, these investments held by the company were alone worth more than the stock – and that didn’t include the actual value of the map business itself!
Buffett accumulated the stock in 1958 and 1959, eventually putting 35% of his partnership assets in it. Then, he became a director, and convinced other shareholders to use the investment portfolio to buy out stockholders. He walked away with a 50% profit.
3. The Salad Oil Swindle (1963)
For a value investor like Buffett, every mishap is a potential opportunity.
And in 1963, a con artist named Anthony “Tino” De Angelis inadvertently set Buffett up for a massive home run. After De Angelis attempted to corner the soybean oil market using false inventories and loans, the market subsequently collapsed.
American Express – the world’s largest credit card company at the time – got caught up in the disaster, and its stock price halved as investors thought the company would fail.
Although everyone else panicked, Buffett knew the scandal wouldn’t affect the overall value of the business. He was right – and bought 5% of American Express for $20 million. By 1973, Buffett’s investment increased ten times in value.
4. Capital Cities / ABC (1985)
In the 1980s, corporate raiders and takeover madness reigned supreme.
The massive TV network ABC found itself vulnerable, and sold itself to a company that promised to keep its legacy intact. Capital Cities, a relative unknown and a fraction of the size, had somehow managed to buy ABC.
The CEO of Cap Cities, Tom Murphy – one of Buffett’s favorite managers in the world – gave Warren a call:
Pal, you’re not going to believe this. I’ve just bought ABC. You’ve got to come and tell me how I’m going to pay for it.
– Tom Murphy, Capital Cities CEO
Berkshire dropped $500 million to finance the deal. This turned Buffett into Murphy’s much-needed “900-lb gorilla” – a loyal shareholder that would hold onto shares regardless of price, as Murphy figured out how to turn the company around.
It turned out to be a fantastic gamble for Buffett, as Capital Cities/ABC sold to Disney for $19 billion in 1995.
5. Freddie Mac (1988)
Buffett started loading up on shares of Freddie Mac in 1988 for $4 per share.
By 2000, Buffett noticed the company was taking unnecessary risks to deliver double-digit growth. This risk, and its short-term focus, turned Buffett off the company. As a result, at a share price close to $70, he sold virtually all of his holdings, enjoying a return of more than 1,500%.
I figure if you see just one cockroach, there’s probably a lot.
– Warren Buffett
Later on, Freddie Mac’s business would collapse in the housing crisis, only to be taken over by the U.S. federal government. Today, its stock sells for a mere $1.50 per share.
Over the course of 75 years, it’s not surprising that even Buffett has made some serious mistakes. Here are his costliest ones:
1. Berkshire Hathaway (1962)
When Buffett first invested in Berkshire Hathaway, it was a fledgling textile company.
Buffett eventually tried to pull out, but the company changed the terms of the deal at the last minute. Buffett was spiteful, and loaded up with enough stock to fire the CEO that deceived him.
The textiles business was terrible and sucked up capital – and Berkshire unintentionally would become Buffett’s holding company for other deals. This mistake, he estimates, costed him an estimated $200 billion.
2. Dexter Shoes (1993)
Dexter Shoe Co. had a long, profitable history, an enduring franchise, and suberb management. In other words, it was the exact kind of company Buffett liked.
Buffett dropped $433 million in 1993 to buy the company, but the company’s competitive advantage soon waned. To make matters worse, Warren Buffett financed the deal with Berkshire’s own stock, compounding the mistake hugely. It ended up costing the company $3.5 billion.
To date, Dexter is the worst deal that I’ve made. But I’ll make more mistakes in the future – you can bet on that.
– Warren Buffett
Later on, Buffett would say that this deal deserved a spot in the Guinness Book of World Records as a top financial disaster.
3. Amazon.com (2000s)
Buffett says not buying Amazon was one of his biggest mistakes.
I did not think [founder Jeff Bezos] could succeed on the scale he has. [I] underestimated the brilliance of the execution.
– Warren Buffett
Given that Amazon has shot up in value to become one of the most valuable companies in the world, and that Jeff Bezos is by now the far richest person globally, it’s fair to say this whiff continues to haunt Buffett to this day.
Visualizing Global Income Distribution Over 200 Years
How has global income distribution changed over history? Below, we show three distinct periods since the Industrial Revolution.
Visualizing Global Income Distribution Over 200 Years
Has the world become more unequal?
With COVID-19 disrupting societies and lower-income countries in particular, social and economic progress made over the last decade is in danger of being reversed. And with rising living costs and inflation across much of the world, experts warn that global income inequality has been exacerbated.
But the good news is that absolute incomes across many poorer countries have significantly risen over the last century of time. And though work remains, poverty levels have fallen dramatically in spite of stark inequality.
To analyze historical trends in global income distribution, this infographic from Our World in Data looks at three periods over the last two centuries. It uses economic data from 1800, 1975, and 2015 compiled by Hans and Ola Rosling.
For global income estimates, data was gathered by country across three key variables:
- GDP per capita
- Gini coefficient, which measures income inequality by statistical distribution
Daily incomes were measured in a hypothetical “international-$” currency, equal to what a U.S. dollar would buy in America in 2011, to allow for comparable incomes across time periods and countries.
Historical Patterns in Global Income Distribution
In 1800, over 80% of the world lived in what we consider extreme poverty today.
At the time, only a small number of countries—predominantly Western European countries, Australia, Canada and the U.S.—saw meaningful economic growth. In fact, research suggests that between 1 CE and 1800 CE the majority of places around the world saw miniscule economic growth (only 0.04% annually).
By 1975, global income distribution became bimodal. Most citizens in developing countries lived below the poverty line, while most in developed countries lived above it, with incomes nearly 10 times higher on average. Post-WWII growth was unusually rapid across developed countries.
Fast forward just 40 years to 2015 and world income distribution changed again. As incomes rose faster in poorer countries than developed ones, many people were lifted out of poverty. Between 1975 and 2015, poverty declined faster than at any other time. Still, steep inequality persisted.
A Tale of Different Economic Outputs
Even as global income distribution has started to even out, economic output has trended in the opposite direction.
As the above interactive chart shows, GDP per capita was much more equal across regions in the 19th century, when it sat around $1,100 per capita on a global basis. Despite many people living below the poverty line during these times, the world also had less wealth to go around.
Today, the global average GDP per capita sits at close to $15,212 or about 14 times higher, but it is not as equally distributed.
At the highest end of the spectrum are Western and European countries. Strong economic growth, greater industrial output, and sufficient legal institutions have helped underpin higher GDP per capita numbers. Meanwhile, countries with the lowest average incomes have not seen the same levels of growth.
This highlights that poverty, and economic prosperity, is heavily influenced by where one lives.
Mapped: The 10 Largest Gold Mines in the World, by Production
Gold mining companies produced over 3,500 tonnes of gold in 2021. Where in the world are the largest gold mines?
The 10 Largest Gold Mines in the World, by Production
Gold mining is a global business, with hundreds of mining companies digging for the precious metal in dozens of countries.
But where exactly are the largest gold mines in the world?
The above infographic uses data compiled from S&P Global Market Intelligence and company reports to map the top 10 gold-producing mines in 2021.
Editor’s Note: The article uses publicly available global production data from the World Gold Council to calculate the production share of each mine. The percentages slightly differ from those calculated by S&P.
The Top Gold Mines in 2021
The 10 largest gold mines are located across nine different countries in North America, Oceania, Africa, and Asia.
Together, they accounted for around 13 million ounces or 12% of global gold production in 2021.
|Rank||Mine||Location||Production (ounces)||% of global production|
|#1||Nevada Gold Mines||🇺🇸 U.S.||3,311,000||2.9%|
|#5||Pueblo Viejo||🇩🇴 Dominican Republic||814,000||0.7%|
|#6||Kibali||🇨🇩 Democratic Republic of the Congo||812,000||0.7%|
|#8||Lihir||🇵🇬 Papua New Guinea||737,082||0.6%|
|#9||Canadian Malartic||🇨🇦 Canada||714,784||0.6%|
Share of global gold production is based on 3,561 tonnes (114.5 million troy ounces) of 2021 production as per the World Gold Council.
In 2019, the world’s two largest gold miners—Barrick Gold and Newmont Corporation—announced a historic joint venture combining their operations in Nevada. The resulting joint corporation, Nevada Gold Mines, is now the world’s largest gold mining complex with six mines churning out over 3.3 million ounces annually.
Uzbekistan’s state-owned Muruntau mine, one of the world’s deepest open-pit operations, produced just under 3 million ounces, making it the second-largest gold mine. Muruntau represents over 80% of Uzbekistan’s overall gold production.
Only two other mines—Grasberg and Olimpiada—produced more than 1 million ounces of gold in 2021. Grasberg is not only the third-largest gold mine but also one of the largest copper mines in the world. Olimpiada, owned by Russian gold mining giant Polyus, holds around 26 million ounces of gold reserves.
Polyus was also recently crowned the biggest miner in terms of gold reserves globally, holding over 104 million ounces of proven and probable gold between all deposits.
How Profitable is Gold Mining?
The price of gold is up by around 50% since 2016, and it’s hovering near the all-time high of $2,000/oz.
That’s good news for gold miners, who achieved record-high profit margins in 2020. For every ounce of gold produced in 2020, gold miners pocketed $828 on average, significantly higher than the previous high of $666/oz set in 2011.
With inflation rates hitting decade-highs in several countries, gold mining could be a sector to watch, especially given gold’s status as a traditional inflation hedge.
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