Warren Buffett 'dead wrong'


THEY call him the "Sage of Omaha", but Warren Buffett doesn't always get things right. Just ask Warren Buffett.

In his annual letter to his shareholders, the world's most famous investor has offered a series of colourful mea culpae for a selection of market predictions which subsequently proved wide of the mark. Or, in his own words, went "dead wrong".

A decision to gamble US$2 billion on a Texan energy company turned out to be "in tennis parlance ... a major unforced error".

An investment in ConocoPhillips was "dumb" and, of an ill-fated foray into the textiles industry, he writes merely: "Aaaaaaagh!"

Mr Buffett's frank comments were published on Saturday in his firm Berkshire Hathaway's annual report. They come at a time when he faces widespread scrutiny for endorsing Barack Obama's proposals to raise taxes on the wealthiest Americans.

The letter also comes amid growing interest in Mr Buffett's legacy.

At 81, and after almost half a century running the company, his investors have never been more acutely aware of the fact he cannot carry on for ever. With this in mind, Mr Buffett revealed he had identified an (as yet secret) individual, apparently from within the business, to be his successor.

He also reiterated plans to devote his $44 billion fortune to good causes, adding that despite his advancing age, he was in "excellent health" and not "going anywhere" if he could help it.

Berkshire Hathaway made $10.3 billion in 2011, down from nearly $13 billion in 2010. Much of the decline can be blamed on Mr Buffett's insistence a year ago that the US housing market was about to rebound. That prediction was "dead wrong", he admits. However he is adamant that basic laws of supply, demand, and human population growth must eventually lead to a recovery.

Elsewhere, Mr Buffett has become an object of heated public debate after he endorsed raising taxes on the so-called "1 per cent" of wealthiest Americans. He famously pointed out that his earnings were taxed at about 15 per cent, while his secretary paid twice that. As long as this endures, he believes the US will struggle to reduce its deficit. Opponents call that class warfare.

Chris Christie, the Republican Governor of New Jersey, said last week that if Mr Buffett thought he was under-taxed, he should "just write a cheque" to the US government "and shut up".

Topics:  investing stock markets

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