{"id":5139,"date":"2026-08-23T12:04:55","date_gmt":"2026-08-23T12:04:55","guid":{"rendered":"https:\/\/usmovingexpertss.com\/?p=5139"},"modified":"2026-08-23T12:04:55","modified_gmt":"2026-08-23T12:04:55","slug":"warren-buffett-explains-investing-sin-munger-called-thumb-sucking","status":"publish","type":"post","link":"https:\/\/usmovingexpertss.com\/?p=5139","title":{"rendered":"Warren Buffett explains investing sin Munger called ‘thumb-sucking’"},"content":{"rendered":"
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A stock can look very different six months after purchase, especially when its price has fallen way below the original entry point. <\/p>\n

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Most investors hold on, waiting for the price to recover rather than locking in a loss. A pattern one of the most successful investors alive says causes lasting financial damage. <\/p>\n

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In to Berkshire Hathaway shareholders, Warren Buffett identified a behavioral pattern he called \u201cthe cardinal sin\u201d of managing a business. <\/p>\n

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His late partner, Charlie Munger, had a blunter label for the habit of sitting on known problems and hoping they disappear on their own: \u201cthumb-sucking.\u201d<\/p>\n

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Buffett admitted to misjudging businesses, managers, and capital allocation at Berkshire<\/h2>\n

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Buffett\u2019s candor in the 2024 went beyond a single line about thumb-sucking.<\/p>\n

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\u201cThe cardinal sin is delaying the correction of mistakes or what Charlie Munger called \u2018thumb-sucking.\u2019 Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be,\u201d Buffett wrote in the annual Letter.<\/p>\n

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His argument was direct: once you know something is broken, every quarter you wait to act compounds the cost.<\/p>\n

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Berkshire\u2019s own Alphabet position illustrates what that delay looks like at scale. <\/p>\n

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At Berkshire\u2019s 2017 annual meeting, Buffett and Munger acknowledged missing Google as their worst mistake in tech, with Buffett citing GEICO\u2019s Google ad spending as direct insight into the business. <\/p>\n

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Two days later, on CNBC\u2019s \u201cSquawk Box,\u201d Buffett called Google \u201can extraordinary business\u201d with \u201csome aspects of a natural monopoly.\u201d Berkshire did not open a position for another eight years. <\/p>\n

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The firm opened its first Alphabet stake in the third quarter of 2025, buying 17.85 million shares valued at roughly $4.3 billion, and by the Q2 2026 13F filed August 14, 2026, that stake had grown to roughly 106 million shares, making Alphabet Berkshire\u2019s third-largest holding, in a company Buffett had said Berkshire should have owned sooner.<\/p>\n

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The SEC identified a behavioral bias that explains why investors hold losing stocks<\/h2>\n

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Behavioral researchers have given the pattern Buffett described a clinical name that appears in federal investor education materials.<\/p>\n

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The SEC\u2019s Office of Investor Education and Advocacy calls it the disposition effect, based on a the agency commissioned in 2010. <\/p>\n

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The report describes it as investors\u2019 tendency to hold losing investments too long while selling winning investments too soon.<\/p>\n

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More Warren Buffett:<\/strong><\/p>\n

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