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Buffett’s Missed Amazon Opportunity: An Investment Regret with Psychological Resonance

Buffett’s Amazon Regret

Reflecting on the Missed Opportunity

Warren Buffett, the Chairman and CEO of Berkshire Hathaway Inc., is known for his successful investment history. However, one missed opportunity that still stings is his decision to forgo investing in Inc. during its early years.

A Costly Missed Opportunity

Buffett has openly expressed his regrets about passing up on Amazon, not once but twice. In 1994, when Amazon was in its infancy as an online bookstore, Buffett chose not to invest. The same situation unfolded in 1997 when Amazon went public. During that time, even Wall Street was skeptical of the prospects of an online initial public offering (IPO).

Buffett’s Regrets and High Regard for Bezos

Despite missing these chances, Buffett holds Jeff Bezos, the Founder of Amazon, in high esteem. He recognized Bezos as both “an extraordinarily clear thinker as well as a brilliant thinker” when they first met two decades ago.

The ‘Miracle’ of Amazon’s Growth

Buffett’s reservations about Amazon investing were rooted in the “miracle” of its growth. He tends to avoid betting on what he considers miraculous. In his words, “If I think something is going to be a miracle, I tend not to bet on it.”

A Tale of Missed Opportunities

Buffett had admired Jeff Bezos but hadn’t fully grasped Amazon’s potential. He admitted, “I met him 20 years ago or so, and I thought he was something special, but I didn’t realize you could go from books to what’s happened there.”

Psychological Barriers to Investment

Buffett’s reluctance to invest in Amazon is not based on doubts about the company’s potential. It’s deeply rooted in his investment philosophy. He acknowledged, “I was too dumb to realize what was going to happen.”

The Weight of Missed Opportunities

Buffett’s hesitance to invest in Amazon is not merely a matter of investment philosophy. He revealed that his reluctance to act is deeply psychological, stating, “I’ve probably got so many psychological problems with the fact that I didn’t do it that it’s tough to do it now.”

The Reminder of Missed Potential

Each Amazon annual report served as a stark reminder of the opportunity he missed. Bezos included his original 1997 shareholder letter in these reports, emphasizing what could have been.

An Investment Approach Lesson

Buffett’s Amazon oversight doesn’t reflect a fault in his investment approach; instead, it highlights an execution error. It showcases the diversity of investment approaches available in the financial landscape.

Lessons for Aspiring Investors

Investment opportunities abound, and knowing oneself is often the most valuable asset when deciding where to invest. Some may opt for steady, proven investments like Buffett, while others may chase innovative opportunities, accepting higher risks for potentially higher rewards. Each path has its unique appeal and consequences.

In investing, hindsight provides clarity, and even seasoned investors like Warren Buffett acknowledge that not all decisions result in home runs. His choice to overlook Amazon serves as an educational story, emphasizing that investment opportunities are abundant, but understanding oneself is a critical factor in making informed investment decisions.

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