AUDIENCE MEMBER 00:00
Good afternoon. I’m Whitney Tilson, a shareholder from New York City.
And one of the things I find most refreshing and admirable about you, as corporate leaders, is that you’re very candid about making mistakes, and — as you put it last year, Mr. Munger — rubbing your noses in it.
Last year, Mr. Buffett, you talked about the $10 billion mistake of starting to buy Walmart and then stopping after it had ticked up a little bit.
Today, you seem to allude to a somewhat similar mistake. You bought a stake in PetroChina. Then after it was disclosed that you owned it, it popped up a bit. And obviously in hindsight, you could have made a lot of money had you continued buying it.
If these emotional traps — I think you called it “anchoring” at last year’s annual meeting — are the traps that even people as experienced as you gentlemen are, occasionally fall into, I sort of wonder what hope do the rest of us have?
So, my question is, is how do you — what are the mental tricks you have? Or how do you overcome these behavioral and emotional traps like anchoring? And what advice do you have for us?
WARREN BUFFETT 01:01
Well, that’s a good question. And, of course, it first — the first step is in recognition of the fact that they can be traps and that you will be affected by them. And you will make some mistakes because of them.
But Charlie in his — in “Poor Charlie’s Almanack,” which I probably do take credit for the name of, and the — he talks about the various psychological traps that people fall into. And simply reading that section, you will come away wiser than before you started on it.
We will — our personalities are such that Charlie and I probably are a little less prone to some of those mistakes than other people are. But as our record clearly indicates, we still are prone to them. And we make them and we’ll make them again.
We’re probably a little less inclined to make some of them than we were 30 or 40 years ago. But, you know, the nice thing about it is, though, is that if you make fewer of those mistakes than others, you know, they will continue making their share and you’ll get very rich.
CHARLIE MUNGER 02:18
Yeah. You don’t have to have perfect wisdom to get very rich. All you’ve got to do is have slightly more than other people, on average, over a long time. (Applause)
WARREN BUFFETT 02:31
You know, it’s the old story about the guy outrunning the bear. I mean, I don’t have to outrun the bear. I just have to outrun that other fellow. And — (Laughter)
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