Warren Buffett has spent decades beating the market and transforming a failing textile mill into Berkshire Hathaway Inc. (BRK), one of the world's most admired business empires. Yet he's never pretended to have all the answers. The billionaire investor is remarkably candid about his blunders and generous about sharing what he's learned from them.

In his letter to Berkshire shareholders earlier this year, Buffett took aim at corporate culture around mistakes. Many large public companies treat admitting errors as a "taboo," he wrote, and delaying the correction of those mistakes is a "cardinal sin." He's admitted to misjudging both companies he acquired and the people he hired to run them.

The Washtub Philosophy

Buffett made some genuinely "dumb" mistakes in acquiring businesses that turned into bad investments, he acknowledged in his 2016 letter to shareholders. Writing alongside then-Vice Chair Charlie Munger, he described their role as "stewards" of investor capital, tasked with delivering strong returns regardless of market conditions.

Here's where Buffett offered perhaps his most memorable investment advice: "Charlie and I have no magic plan to add earnings except to dream big and to be prepared mentally and financially to act fast when opportunities present themselves," he wrote. "Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it's imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do."

It's a vivid metaphor for value investing. Most investors panic during market crashes. Buffett and Munger saw those moments as clearance sales where great companies go on discount.

Learning from Expensive Lessons

Buffett doesn't just talk about mistakes in the abstract. In that same 2016 letter, he got specific about Berkshire's transition during the early 1990s to focus more on acquiring businesses. Buying Dexter Shoe for $434 million was a "particularly egregious error," he admitted, because the business eventually became worthless. Another blunder: "foolishly" using Berkshire shares to buy General Reinsurance in late 1998, a decision that meant shareholders gave far more than they received.

"As is the case in marriage, business acquisitions often deliver surprises after the 'I do's,'" Buffett wrote. "I've made some dumb purchases, paying far too much for the economic goodwill of companies we acquired."

The Oracle of Omaha, who will step down as Berkshire CEO at the end of this month, has turned humility into a teaching tool. His willingness to own up to expensive mistakes stands in sharp contrast to many corporate leaders who bury their errors in accounting footnotes and carefully worded press releases.

The takeaway isn't that Buffett is fallible—we knew that already. It's that even one of history's greatest investors succeeded not through perfect decisions, but by staying ready to capitalize on rare moments when the market loses its mind and prices great businesses for far less than they're worth. No magic required. Just patience, preparation, and a really big washtub.