Warren Buffett’s Biggest Mistake Changed His Life

We all know very well Warren Buffett’s investing philosophy. But human nature makes it hard to follow certain aspects of it.

Jul 27, 2014 at 7:31AM

Warren Buffett and Charlie Munger have piloted Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) to a market-crushing performance over the years. As veteran Berkshire watchers know very well, there's no big secret to this dynamic duo's success.

Buffett shares his knowledge constantly through shareholder letters and the Berkshire annual meeting in Omaha. He prefers a long-term focus, top-notch management, strong brands, staying in his circle of competence, and paying a fair price for a great business.

While many of Buffett's investing tenets can be followed by us mere mortals, there's one in particular that's tough: buying a good company when you'd rather be running away from it.

One example put forth by Andy Kilpatrick, author of Of Permanent Value: The Story of Warren Buffett, is Wells Fargo & Company (NYSE:WFC). Berkshire already owned a lot of Wells Fargo before the financial crisis, but Buffett continued to buy throughout the turmoil as the price plunged. Besides Wells Fargo, he also deployed capital into many areas during the crisis.

In addition, he's continued buying Wells Fargo even as the price has risen dramatically as the market recovered – and that's something else that average investors have trouble doing.

In this video from the Berkshire Hathaway annual meeting, Kilpatrick talks more about Buffett's successes, as well as some of his mistakes.

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Rex Moore owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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