In their recent interview with CNBC, Charles Munger and Warren Buffett discussed what to do when you know that you’ve made a mistake. Here’s an excerpt from the interview:
BUFFETT: Now, if the department store had succeeded, we’d have a nice little business then. Send us a nice little check, but because it failed, we’ve made 25, well, we made more than $25 billion in that, didn’t look like it at the time, though.
QUICK: So, when you realized it was a mistake, what did you do? How, how did you address it?
BUFFETT: We asked Sandy, who was the best salesman among us, to go sell it. And, and we sold it. And we put the money into Berkshire.
MUNGER: We got about 95% of our money back.
BUFFETT: Yeah. And we’d borrowed $6 million in there, so now we had, so we bought Berkshire stock and we bought Blue Chip Stamp stock and eventually put it all together. It looked like a plate of spaghetti at one time, which was not good, as it was complicated. And so, we, we put ’em all together. And, you know, I’ve still got stock and Charlie’s still got stock that came out of retailing, as do a number of my partners. But from the old days. Best thing that happened to us was that this place failed obviously was a failure.
QUICK: Why? What did you learn?
BUFFETT: Pardon me–
MUNGER: To leave quickly.
BUFFETT: Yeah. And, and move the capital someplace else.
MUNGER: One thing we’ve learned is, if it’s clear that something is a mistake, is to fix it quickly. It doesn’t get better while you wait.
You can watch the entire interview here:
https://youtu.be/BWzNVMrcnKw
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