Charlie Munger has repeatedly stated, 'We've made big mistakes.' What specific examples did he give?

Charlie Munger's "We've Made Big Mistakes" – Classic Examples of Investment Blunders

Hey there! I'm a huge fan of Munger and Buffett and have spent years reading their shareholder letters and interviews. That old man Munger is brutally honest—he often says "we’ve made big mistakes" to remind everyone that investing isn’t smooth sailing. Managing a giant like Berkshire Hathaway alongside Buffett, they’ve certainly stepped into plenty of pitfalls. Below, I’ll highlight a few examples Munger himself mentioned, briefly explaining the context and lessons. These are real cases meant to help us ordinary folks learn and avoid repeating history. Just a few classic ones.

1. Missing the Chance to Invest in Google

What happened? Munger admitted at several shareholder meetings that they had an early opportunity to invest in Google but passed. Why? Google was just starting out, and they felt its valuation was too high—or simply didn’t fully grasp the potential of search engines. The result? Google became a tech titan, and its stock soared.
Munger’s take: He called this a "big mistake" because they were too conservative and missed the internet revolution. The lesson: Sometimes, don’t fixate on short-term prices; focus on long-term value.
Why it’s relatable? Imagine missing out on buying Tencent or Alibaba stock early—investing a little back then could’ve set you up for life. That’s exactly how they felt.

2. The Dexter Shoe Acquisition Debacle

What happened? In 1993, Berkshire acquired shoe manufacturer Dexter Shoe using its own stock, thinking it was a sure win. But within years, cheap imported shoes flooded the U.S. market, Dexter collapsed, and Berkshire lost billions.
Munger’s take: Munger called this one of their "dumbest mistakes" in interviews—they’d traded precious Berkshire stock for a dying business. Buffett even joked it was like "trading gold for copper."
Lesson? Always assess competitive threats before acquiring a business. Ordinary investors, too: don’t act impulsively.

3. The Bloodbath of Investing in US Airways

What happened? In 1989, they bought preferred shares in US Airways, believing the airline industry had an "economic moat." Instead, fierce competition and volatile oil prices pushed US Airways toward bankruptcy. They barely escaped but suffered heavy losses.
Munger’s take: Munger repeatedly called this a "stupid investment" at conferences, admitting they underestimated the industry’s risks. He even quipped airlines are "money-burning machines."
Why it’s relatable? Think of airline stocks crashing during the pandemic—they learned this lesson decades ago. A reminder: never invest in industries you don’t understand.

4. The Drag of Clinging to the Textile Business

What happened? Berkshire began as a textile company. After Munger and Buffett took over, they tried to pivot but spent years hesitating before finally shutting it down. During that time, the industry faced cutthroat competition and razor-thin margins—their investments yielded no returns.
Munger’s take: He often cites this as a "sunk cost trap"—they clung too long to the old business, dragging down overall performance. Munger’s exact words: "We took too long to wake up."
Lesson? If your small business is bleeding money, don’t stubbornly persist. Cut losses and pivot to better opportunities.

Munger stresses these mistakes aren’t failures but learning opportunities. As they say: "Smart people learn from mistakes; fools repeat them." If you’re a new investor, don’t fear errors—but read their books and letters. They’re packed with valuable insights. Got more questions? Ask anytime—I’ve got plenty more stories!