Mistakes That Every Investor Does #stockmarket #investing
Channel: Simplify Your Finance (SYF)
Date: 2024-04-09

Mistakes That Every Investor Does by Warren Buffett
A stock at 50, somebody's paid 100, They feel terrible. 
Somebody else paid 10, they feel wonderful. 
All these feelings, and it has no impact whatsoever.
Really. The only way a smart person that's reasonably disciplined in how they look at investments can get in trouble is through leverage. 
I mean it. 
If somebody else can pull the plug on you during the worst moment of some kind of general financial disaster, you go broke. 
And Charlie and I both have friends that have where that's happened to them. We've made plenty of mistakes in acquisitions. 
Plenty. 
But the mistakes are always about making an improper assessment of the economic conditions in the future of the industry, of the company. 
They're not a bad lease. They're not a specific labor contract. 
They're not a questionable patent. 
Those are not the things that count 
some businesses are a lot easier to understand than others and Charlie and I don't like difficult problems. 
You know, I mean we we'd rather multiply by three than by π. 
I mean it's just easier for us.
Some people think that if you jump over a 7 foot bar that the ribbon they pin on you is going to be worth more money than if you step over A1 foot bar, and it just isn't true in the investment world at at all. 
We think the most logical one is the one we have at Berkshire, where essentially we can do anything that makes sense and are not compelled to do anything that we don't think makes sense. 
I think it's a mistake to shrink the universe of possibilities. 
Ours is shrunk simply by size, but we don't try to. 
We don't set out to circumscribe our actions in any way.
if you feel you have to invest every day.
You're going to make a lot of mistakes. 
It just isn't that kind of a business. 
You have to wait till you get the fat pitch. 
If you really know businesses, you probably shouldn't own more than six of them. I mean, if you can identify 6 wonderful businesses, that is all the diversification you need and you're going to make a lot of money. 
And I will guarantee you that going into a 7th one is going to rather than putting more money in your first one. 
It's got to be a terrible mistake. 
Very few people have gotten rich on their 7th best idea, but a lot of people gotten rich on their best idea.
There's no question the human mind that what the human being is best at doing is interpreting all new information so that their prior conclusions remain intact. That is a talent everyone seems to have mastered. 
And Charlie and I have made big mistakes because in effect, we have been unwilling to to look afresh at something. 
You know that happens.
Humans will continue to make the same mistakes that they have made in the past. I mean, they get they get fearful. 
When other people are fearful, I mean that's But when when they get greedy, they get greedy en mass too. 
I mean it just that's where Charlie and I have an edge. 
We don't have an edge, particularly in many other ways, but we are able, perhaps better than most, to not really get caught up with what other people are doing.
biggest mistakes we've made by far are mistakes of omission and not Commission. 
I mean, it's the things I knew enough to do. 
They were within my circle of competence and I was sucking my thumb. 
I probably cost Berkshire at least $5 billion, for example, by sucking my thumb 20 years ago, or close to 1, Fannie Mae was was having some troubles and we could have bought the whole company for practically nothing. 
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