1997: How does Buffett avoid making the same mistake twice?

WARREN BUFFETT: The earlier part about — you know, I’ve said about learning from your mistakes, the best thing to do is learn from other guys’ mistakes, I mean, you know —

It’s like, you know, [U.S. General George] Patton used to say, you know, “It’s an honor to die for your country. Make sure the other guy gets the honor,” you know and — (Laughter)

So our approach is really to try and learn vicariously. But there’s a lot of mistakes that I’ve repeated, I can tell you that.

The biggest one, probably — or the biggest category over time — is being reluctant to pay up a little for a business I knew was really outstanding, or to continue to buy it at higher prices when I knew it was outstanding.

So the cost of that has been many, many billions. And I’ll probably keep making that mistake.

There are — the mistakes are made when there are businesses you can understand and they’re attractive and you don’t do something about it.

I don’t worry at all about the mistakes that come about because when I met Bill Gates, I didn’t buy Microsoft or something. That’s not my game. But the mistakes are made when you — most of our mistakes have been mistakes of omission rather than commission.

Charlie?

CHARLIE MUNGER: Yeah. I think most people get very few, what I call, no-brainer opportunities, where it’s just so damned obvious that this is going to work. And since they are very few and they may be separated by periods of years, I think people have to learn to have the courage and the intelligence to step up in a major way when those rare opportunities come by.

WARREN BUFFETT: Yeah. You got to be willing to take a really big bite. And it’s crazy if you don’t. And it’s crazy if you dabble around at the edges, so you’re not prepared to take a big bite when the time comes.