Warren Buffett and His Investment Mistakes

Warren Buffett continues to talk about Coke, company that is growing a lot faster outside US than in the US. Coke started in 1919 for $40/share. A year later it was selling for $19/share. There must have been a disaster. Maybe sugar prices increased. Such things effect the short term. But if you ignored the short term, and reinvested the dividends in Coke stock, you’d have about $4,000,000 today. Warren thinks that if you are right about the business, you will make a lot of money.

Investment Mistakes

Someone in the audience asks Warren Buffett what investment mistakes he has made. The mistakes were not of commission but omission. He says he has missed out on billions. He understands Fannie Mae and should have made a lot of money from it in the 1980s. Warren Buffett has made mistakes when he bought US Air preferred stock several years ago. He had a lot of cash lying around and he made a mistake and did something dumb. He admits that he bought because it was an attractive security not because it was an attractive business. Buying when you like the terms and not the business is a mistake.

Warren says that this is a good moment to remember that it is better to learn from others mistakes, not your own. So, don’t buy stocks which are outside your business. There has to be a reason to buy the business.

Someone else asks Warren Buffett what he thinks is going to happen to interest rates. Warren says that he doesn’t think about macroeconomic, because in investments you have to focus on what is important and knowable. Future interest rates are important but not knowable. What you do with your investments is making the difference between what is knowable and important. If its unimportant or unknowable, you have to forget about it. Interest rates have zero importance.

This video is Part 6 of 10 videos of this MBA Q&A Lecture with Warren Buffett. Watch Part 7 of Warren Buffett's Lecture.

Warren Buffet Quotes from this Video:

  • Learn and move on.
  • Look in the mirror and say “I am buying General Motors for $55 per share because...” and know that “I am buying General Motors for $55 per share because someone told me to at a cocktail party” is not the reason.
  • If Alan Greenspan were whispering in my ear about what they were doing over the next 12 months, it wouldn’t make any difference to me.
Submitted by YouTube Trader on Sun, 04/04/2010 - 13:06

Recently Posted Videos