QuestionerMr. Munger, I know you're fond of evoking humility to promote rational thought. So my question is, what's the most recent business mistake that you've made, Mr. Munger, and why did it occur? I'm going to take notes on this one.
CharlieThe mistakes that have been most extreme in Berkshire's history are mistakes of omission. They don't show up on our figures. They show up in opportunity costs. In other words, we have opportunities. We almost do it. In retrospect, we can tell that we were very much mistaken not to do it. In terms of the shareholders, those are the ones in our history that it really cost the most. And very few managements do much thinking or talking about operations.
Warrentalking about opportunity costs, but Warren, we have blown... Billions and billions and billions. I might as well say it.
CharlieRight, right. And we keep doing it. Some might say we're getting better at it. I don't like mentioning the specific companies because the, you know, we may, in due course, want to buy them again and have an opportunity to do so at our price. But practically everywhere. in life and in corporate life, too. What really costs in comparison with what easily might have been are the blown opportunities. I mean, it's just, it's an awesome amount of money. I might add that when we speak of errors of omission, of which we've had plenty and some very big ones, we don't mean not buying some stock where a friend runs it or we know the name and it went from 1 to 100. That doesn't mean anything. It's only, we only regard errors as being things that are within our circle of competence. So if somebody knows how to make money in cocoa beans, or they know how money to make money in a software company or anything, and we miss that. That is not an error as far as we're concerned. What's an error is when it's something we understand and we stand there and stare at it and we don't do anything. Or worse yet, what really gets me is when we do something very small with it. We do an eyedropper's worth of it. one we could do it very big.
WarrenCharlie refers to that elegantly when I do that sort of thing is when I'm sucking my thumb. And they're really, I mean, we have been thumb suckers at times with businesses that we understood well and it may have been because we started buying and the price moved up a little and we waited around hoping we would get more at the price we originally started. There can be a lot of things. things. But those are huge mistakes. Conventional accounting, of course, does not pick those up at all, but they're in our scorebook.