investment mistakes

BUSINESS LESSONS FROM WARREN BUFFET INVESTMENT MISTAKES

Welcome to Kanselor University where we #teachafricaaboutbusiness. Today we want to pick some key lessons from the investment mistakes that Warren Buffet said he made with Google and Amazon.

 

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Every year around this time, the Oracle of Omaha as he is popularly known as will sit with over 40,000 of his company shareholders and explain to them how he ran his and their business over the last 365 days. Most people attend the event not to get the report but to gather words of wisdom from what Warren Buffet and his partner Charlie Munger would share.

This year was not different. Warren Buffet talked about how he missed buying Google and Amazon stocks because he had concluded that he did not understand Technology company stocks. He said he should have started studying the companies when his insurance companies started to spend millions on online advertising.

His point was that he used generalization of an industry to block the good that individual companies in an industry have to offer.

Looking back, I can see how the same mistake is keeping a lot of African companies from getting the best hands. For instance, I have encountered a lot of people who would never employ anyone from a particular tribe in Nigeria. No matter what you tell them, they will say nothing good can come out of those people.

That has made them miss a lot of great staff that would have added immense benefit. I know someone who said he would never employ an Igbo pharmacist. When I convinced him to employ one, he said that one was an exemption to the rule because the young man was very good. Still the business owner did not change his believe about Igbo staff.

Imagine the investment mistakes we have been making in African just because of the things we believe without even making any effort to test if our believe is valid in the face of established facts.

Investment mistakes can be made by people like Warren Buffet with little or no financial consequence but we as start ups can not afford to make these investment mistakes because they can be very costly for our business.

The solution to avoiding investment mistakes is to stop generalizing or applying the same general rule to all situation without trying to see if a particular situation or circumstance is unique.

 

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