While Buffett has undoubtedly successfully purchased many companies at discounts to their intrinsic values, he is only human. This chapter is dedicated to describing some of the investment mistakes Buffett has made.
First of all, it is actually difficult to determine when a Buffett investment has gone wrong. Unlike the case with short-term trading, value investments can sometimes take years to show their expected returns. Many of the companies Buffett has purchased have actually dropped in value for a period of time before roaring back. But there are nevertheless some companies Buffett has sold at a loss, and those are described in further detail.
Berkshire's investments in Salomon, General Re, NetJets, and Pier 1 Imports are considered mistakes by the author. These investments are critiqued and analyzed. In a couple of cases, Buffett has had to take over active management of the firms, and managed to turn some of them into successes. But these are still deemed mistakes, as the author asserts that Buffett would not have bought in had he known what was in store.
However, in many of the cases, the incidents which caused these investments to go wrong would have been difficult to foresee. A rogue trader (Salomon) and hidden liabilities (General Re) would be very difficult for investors to prevent from occurring, so it's not immediately clear what the reader is to learn from these mistakes.