In 1993, Warren Buffett bought Dexter Shoe. Dexter was a company admired by investors the world over due to its strong margins and loyal customers. Warren genuinely believed it had “durable competitive advantage”.

But then, a devastating mistake…

Warren didn’t pay cash.

Instead of being paid in cash, the owners of Dexter Shoe wanted to be paid exclusively in shares of Berkshire Hathaway: 25,203 Class A shares – worth about $433 million at the time.

Slowly, cracks started to appear at Dexter.

Overseas competition crushed their domestic sales model. Margins evaporated. The brand collapsed and the company was worth zero.

But the real disaster wasn’t that Dexter failed, it was how Warren bought the company.

Those 25,203 Berkshire Hathaway shares he traded – the crown jewel he spent decades building – would now be worth well over $17 billion…

Warren was speechless: “I gave away 1.6% of a wonderful business…for a worthless business!”

That single mistake cost him more than any market downturn or bad stock pick.

A rare and humbling lesson for the world’s greatest investor.

After making the biggest mistake of his career, Warren outlined a new perspective on life and business in a famous shareholder letter:

“Don’t risk what you have and need, for what you don’t have and don’t need.”