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Professor Buffett's Biggest Blunders

All three of these investments can be considered big blunders. However, none earn the top spot in Buffett's mind. What Buffett personally considers to be his biggest slip-up is surprising.

This week, sitting down with CNBC's Becky Quick, Warren Buffett was asked what he considered to be his biggest mistake made during his illustrious investing career.

Unexpectedly, rather than pointing to duds such as Conoco-Phillips, Moody's or United Airways (LCC), Buffett singled out Berkshire Hathaway, the textile-company-turned-investment-empire, which has been the base for propelling Buffett to the top of the ranks among the world's wealthiest individuals.

Looking back on the deal, Buffett explained that it was not the firm's fundamentals which triggered his desire to buy control of the company. Rather, the move was emotionally driven. In 1964, when he already owned a fair share of the firm, he felt that he got ripped off by the management. Seeking vengeance, when he managed take the reigns of the firm he fired the individual who had scammed him.

The underlying motive behind his decision to purchase Berkshire Hathaway is why he considers it to be his biggest blunder. Buffett is a strong proponent of leaving out emotions when it comes to investing. In this situation, this belief was cast aside.

Buffett's mistakes highlight the fact that no one is perfect when it comes to investing. While losses can be tough to stomach, it is important not to become dissuaded. Most of the time, there are lessons that come out of these less than pleasant times.

Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion Money Management was not long any of the equities mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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