Advice From Warren Buffett On Investing Mistakes From 1996

The best investor of all time is arguably Warren Buffett. His legendary investing career has taught generations of investors how to succeed.

In a 1996 lecture at the University of North Carolina, Buffett covered a range of subjects, including whether to sell your stocks, the risks of trading vs. investing, how to recognize exceptional businesses, and more. This is the second section of the report of this conversation; the first section covered his investing philosophy, business brands, and stock market predictions.

Buffett managed an investment partnership in the 1950s and 1960s that generated a remarkable yearly return of around 30% per year for 13 years.

Then, in 1965, Buffett purchased Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial), the world's largest investment conglomerate, for just $12 per share. Berkshire Hathaway is an old textile company (the Class A shares have famously never been split, which is why the cheaper Class B shares were created).

Buffett's Berkshire owned stock in a number of companies in 1996, including Gillette, American Express, Coca-Cola, and more (KO, Financial). Additionally, Berkshire owned all of the businesses that made up its operating business, including Nebraska Furniture Mart and See's Candies.

It's hard to find great companies, but when Buffett does, he wants to  “hold on forever."  He frequently asserts that time is the “friend of a wonderful business.”  but “time is the enemy of the poor business” Only when a company's long-term fundamentals have altered or the moat has begun to crumble does he seek to sell its stock. He has little trouble selling stocks when this happens. Buffett also suggests selling a stock if you find a better investment opportunity elsewhere.