At the shareholders meeting of Berkshine Hathaway on May 9, Warren Buffett admitted he was wrong to not invest in Amazon and underestimated Jeff Bezos.
“I was too dumb to realise what would happen . . . I did not think he could succeed on the scale that he has.”
Amazon was founded in 1994, IPO in 1997, when it spent $ 10,000 (200 million) to buy Amazon shares, the value of that investment is now $ 4.9 million (108 billion), about 500 times more.
It took more than 30 years for Buffett to admit mistakes. He has other super-profitable investments to be able to make a name and to be courageous and confident to say his mistake. Falling into many other investors later, missed that train is considered to be unloading a lifetime of business.
From 200 million at IPO to 108 billion after 20 years, although impressive. But the stock price of Amazon in those 20 years is also three sinks, the time of 12/1999 Amazon stock lost 95% of the value (from 200 million VND in 97 to 10 million in late 1999). Who has the courage to stick to it so long, especially when most of the time Amazon has always been in a “sinking” state.
Buffett’s philosophy is to invest only in companies where his business model understands, has credible leaders, good profit / cash flow and not much debt. Except for the leadership criteria, Amazon “failed” completely to the remaining criteria of Buffett, Amazon’s 20 years of existence, now 19 years is a loss, many years of big losses, and only profit since 2016.
Buffett has succeeded thanks to that formula / philosophy. But people, too, are able to see and feel confident, and lead to abuse. Finding a formula for making money, a lucky object or a knock-out attack is just going on and on, using it … that you can forget that that spiritual “blow” also has its time.
Time changes and we better change with it.