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Do you know Charlie Munger’s mistake that has cost him $200 million?
In 1977, Charlie was offered 300 shares of Belridge Oil.
Charlie’s comments on Belridge: “ An idiot could have told you that there was no possibility of losing money and a large possibility of making money”
Charlie’s comments on Belridge: “ An idiot could have told you that there was no possibility of losing money and a large possibility of making money”
Charlie even exclaimed that this was the most undervalued stock he had seen in his life, as the market was valuing Belridge’s oil reserves at 29c/barrel while the going rate was $5-6/barrel.
Charlie bought those 300 shares at $15/share , however 3 days later he was offered 1500 more shares, which he declined to buy.
The reason for him declining had nothing to do with Belridge as a business , but was due to Charlie not wanting to go through the process of selling something to buy the stock.
If Charlie had gone through the minor inconvenience he would have made $5 487 000 , when Belridge was bought by Shell. Which he would have sunk into buying Berkshire stock.
Ouch!
Charlie bought those 300 shares at $15/share , however 3 days later he was offered 1500 more shares, which he declined to buy.
The reason for him declining had nothing to do with Belridge as a business , but was due to Charlie not wanting to go through the process of selling something to buy the stock.
If Charlie had gone through the minor inconvenience he would have made $5 487 000 , when Belridge was bought by Shell. Which he would have sunk into buying Berkshire stock.
Ouch!
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Buffettttttt : Although Munger has taken responsibility for his mistakes and has reflected on them and taken stock of them, the incident reflects the fact that he occasionally made mistakes in his investment decisions. In the long run, however, Munger's investment thinking and approach are still considered smart and successful, and he has been one of Berkshire Hathaway's key leaders, contributing significantly to the company's performance.