Warren Buffett often draws parallels between investing and baseball, emphasizing the importance of waiting for the right opportunities. His analogy compares an investor to a baseball batter with the advantage of not facing called strikes, allowing them to patiently wait for the perfect pitch. This concept underscores the significance of discipline and patience in making investment decisions.
However, in the pursuit of the ideal investment, Buffett warned against a common pitfall at the 2011 Berkshire Hathaway Annual Meeting. He cautioned against the tendency to measure every investment against the best deal one has ever made. This mindset, he emphasized, can lead investors to set unrealistically high standards for every transaction, potentially causing them to miss out on valuable opportunities.
Buffett highlighted the error of expecting each investment to be an absolute home run, stating, “One of the errors people make in business is that they try and measure every deal against the best deal they’ve ever made.” He pointed out that individuals may remove themselves from the investment game by holding out for deals that match or exceed their past successes, ultimately hindering their ability to capitalize on current opportunities.
The key lesson from Buffett is to recognize that not every investment needs to surpass previous achievements. Instead, he advocates for making satisfactory deals that align with the opportunities available at the time. According to Buffett, the goal is not to replicate the best deal one has ever made but to secure the best possible deal under the prevailing circumstances.
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© 2023 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.