When Warren Buffett bought Berkshire Hathaway in 1965, it was a failing New England textile mill — he later called the purchase the worst trade of his life and estimated the decision to use it as his holding company instead of starting fresh cost shareholders roughly $200 billion in compounded returns

Warren Buffett has spent six decades publicly regretting the single trade that made him one of the wealthiest people on Earth.

The acquisition of Berkshire Hathaway — then a shrinking textile operation in New England, with mills closing and capital bleeding out — turned into the corporate shell that now houses major insurance, transportation, and retail subsidiaries, along with a stock portfolio worth hundreds of billions. Buffett has called it the dumbest stock he ever bought, and he estimated that channeling his investments through a dying textile company instead of starting an insurance holding company from scratch cost shareholders roughly $200 billion in compounded returns over the decades that followed.

The math is staggering. The psychology is stranger.

The trade that wasn’t supposed to happen

The original purchase was, by Buffett’s own telling, an act of spite. Seabury Stanton, Berkshire’s then-CEO, had verbally agreed to buy back Buffett’s shares at a certain price. When the tender offer arrived slightly lower — an eighth of a dollar less — Buffett refused to sell. Instead, he bought enough additional stock to take control of the company, fired Stanton, and inherited a textile business that no rational capital allocator would have touched.

He kept the mills running for another twenty years. They lost money the entire time. The textile division finally closed in 1985.

By then, Buffett had already begun using Berkshire’s cash flow to buy insurance companies, newspapers, candy makers, and equity stakes in major American corporations. The shell survived. The underlying business it was named after did not.

Why the $200 billion number matters

The counterfactual Buffett describes is straightforward. Had he started a clean insurance holding company — no obligation to dying mills, no decades of capital tied up in obsolete looms, no tax penalties from the structure he inherited — the same investment decisions would have compounded faster. Insurance float, the money policyholders pay before claims come due, is a uniquely powerful source of cheap capital. Pouring it into textiles for twenty years was the financial equivalent of running a Formula 1 engine on diesel.

Two hundred billion dollars is not a precise figure. It is Buffett’s own back-of-envelope estimate of what shareholders forfeited because he let a personal grudge dictate a structural decision. For context, that sum is larger than the GDP of most countries.