Even as a billionaire, Warren Buffett has long been known for his frugal habits—starting with breakfast. On his way to the office, Buffett would swing by McDonald’s and let the stock market dictate his order. If markets were down, he’d spend $2.61 on two sausage patties. If he was feeling flush, he’d splurge $3.17 on the bacon, egg, and cheese biscuit, according to a 2017 HBO documentary.
But Buffett’s relationship with the Golden Arches went far beyond breakfast food. At the end of 1996, Berkshire Hathaway owned roughly 30.4 million shares of McDonald’s—a 4.3% stake valued at about $1.4 billion.
Less than two years later, Buffett decided to sell. And in his 1998 letter to shareholders, Buffett admitted the decision ultimately wasn’t a wise one.
“The portfolio actions I took in 1998 actually decreased our gain for the year,” Buffett wrote.
“In particular, my decision to sell McDonald’s was a very big mistake. Overall, you would have been better off last year if I had regularly snuck off to the movies during market hours.”
The timing, in hindsight, proved painful. Just a few years later, McDonald’s entered a prolonged period of outperformance; since 2003, McDonald’s stock has ended the year in the red just twice—with many years growing by double-digit percentages. Today the share price is just over $341, and if Buffett had held on, Berkshire’s stake would be worth approximately $10.3 billion, not including dividends.
Warren Buffett and Charlie Munger’s advice for aspiring investors: Hold on—but learn from your mistakes
Despite his McDonald’s fumble, Buffett has long preached patience as the bedrock of successful investing.
“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes,” he wrote in 1996. “Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.”
Yet applying that philosophy in real time isn’t always easy. Buffett acknowledged that investing isn’t just about holding on long enough—it’s about scouting transformative opportunities early. For years, he avoided investing in newer tech giants like Amazon—a hesitation, he later admitted, “cost people a lot of money at Berkshire.”
In retrospect, he said, “I did not think [founder Jeff Bezos] could succeed on the scale he has. [I] underestimated the brilliance of the execution.”
It’s a theme that Buffett’s right-hand man, the late Charlie Munger, often echoed.
“We were not ideally located to be high-tech wizards,” Munger said in the 2018 Berkshire Hathaway annual shareholder meeting. “How many people of our age quickly mastered Google? I’ve been to Google headquarters. It looked to me like a kindergarten.”
And while Berkshire Hathaway may have missed out on billions more by not taking early stakes in companies like Google or Amazon, Munger encouraged others to stay humble in their investing career.
“If you’re going to live a long time, you have to keep learning—what you formerly knew is never enough,” Munger added. “So if you don’t learn to constantly revise your earlier conclusions, and get better ones, you are—I always use the same metaphor—you’re like a one-legged man in an ass-kicking contest.”
For Buffett and Munger, the McDonald’s sale in the late 1990s wasn’t just a missed gain—it was a reminder that even the most disciplined investors must continuously reassess their judgment and be willing to admit when they made a mistake.