The Intelligent Investor's Mistakes: Warren Buffett: 38 Buffett’s Investment Stories, Gain Wisdom, Master Risk and Maximize Profits to Build Enduring Wealth

by Balaji Kasal

Buffett's IBM purchase was one of the biggest mistakes. He had crossed his ‘Circle of Competence’. The mistake was further compounded by holding onto the loser even though it was clear that the company was struggling. The advances in technology and fast pace of competitors, like Amazon Cloud (AWS), disrupted the market. Buffett’s own words: [2012 AGM]: “Well, I would say that I do not understand the moat around an IBM as well as I understand the moat around a Coca-Cola. But I feel good enough about IBM that we’ve put a considerable amount of money in it.” “The chances of being way wrong in IBM are probably less, at least for us, than being way wrong with Google or Apple. But that doesn’t mean that those — the latter two companies —aren’t going to do, say, far better than IBM.” [2013 AGM]: “I’ve got enough conviction about IBM’s position that we took a very large position.” [2017 AGM] “I made a large investment in IBM, and — which has not turned out that well. We haven’t lost money. But in terms of the bull market we’ve been in, it’s been a significant laggard. Bonus: Munger's own words: [2017 AGM]: “Well, we avoided the tech stocks, because we felt we had no advantage there and other people did. And I think that’s a good idea not to play where the other people are better.”