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Warren Buffett Owns Up to Mistakes

NEW YORK (TheStreet) -- With a nickname like "the Oracle of Omaha," it is possible to forget that Warren Buffett has made his fair share of mistakes during his multi-decade investing career. In this year's Berkshire Hathaway (BRK.A) letter to shareholders, however, the billionaire investor took time to present some of his most recent flubs, reminding investors, fans, and market commentators that not even the most famous and successful of investors are immune to the market's challenges.

Given his success and charisma, it is not surprising that Buffett's highlights are well documented. In addition to his successes, though, fans and followers also keep close tabs on the investor's slip-ups. For example, many are well aware of the investor's past troubles with the airline industry. Although he has managed to successfully turn around NetJets in recent years, the staggering loss he was forced to write off from his bad bet on U.S. Airways remains a smudge on his record.

Energy is another industry the investor has struggled with in the past. While he has long maintained exposure to oil and gas companies, Warren Buffett famously doubled down in 2008 on ConocoPhillips (COP) just as oil prices were peaking. The bet quickly went sour as crude prices crumbled, leading to a more than $1 billion loss. In the years following this bad bet, the investor has dramatically pared back his stake in oil producers, most recently closing out his Exxon Mobil (XOM) position entirely. He still maintains small exposure to ConocoPhillips.





Once again, energy appears to be wreaking havoc on Buffett's portfolio. In a section listing Berkshire's lowlights over the past year, the investor noted that his company's decision to spend $2 billion to purchase bond issues of Energy Futures Holding has proven to be a "big mistake." Just as ConocoPhillips tumbled as oil prices fell off a cliff, Buffett's bet on this electric utility operation has floundered as natural gas prices turned south. With the fuel still struggled to find support, the wager will continue to inflict pain.

Perhaps the biggest error on Buffett's part over the past year, however, has been his persistent optimism towards the housing market. In this year's letter, the investor offered a mea culpa, noting that, while he expected the residential real estate market to claw back in a year or so, this forecast was "dead wrong."

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