Warren Buffett: Buying IBM a mistake? Don't think so, but ...

Warren Buffett said Monday investing in IBM was the right decision, but it could turn out to be a mistake.

"We've owned stocks that we've lost money in," Buffett told CNBC's "Squawk Box." "If I'm wrong, you sell them out and take a big loss. We've done that on a few occasions with stocks and bonds over the years."

Shares of IBM have fallen more than 4 percent this year and are off about 18.5 percent in the last year.

Buffett's Berkshire Hathaway held an 8.59 percent stake on IBM as of Dec. 31. Berkshire's annual report showed the conglomerate had lost $2.6 billion on the investment at the end of last year.

"What you pay for a stock doesn't mean anything. What means something is where the company's going to be in five to 10 years," Buffett said. "I think IBM will be worth more money but, like I said, I could be wrong but we'll accept that."

The Oracle of Omaha also discouraged the average investor from trying to emulate his investment strategy regarding IBM, adding that most investors are likely better off buying into an index fund.

"I'm not an investment adviser. I wouldn't ever urge them to do anything based on what we do. If they want to do what Berkshire does, then they should buy Berkshire," he said. "I think they're making a big mistake by piggybacking me or 10 other people whose names appear in the paper. That is not a great strategy; a great strategy is just to buy stocks consistently over a lifetime and not worry too much about whether they go up or down in any given month or year."

Berkshire's holdings include $3 billion in preferred Dow Chemical shares since 2009, which pay an annual dividend of 8.5 percent. If the stock price holds above $53 for about a month, Dow will have the option of converting approximately 72 million preferred shares into common stock, which was trading premarket Monday at $48.75.

If that happened, Buffett suggested, Berkshire may sell its stake in the chemical company.

"We bought a preferred [stock] that we liked, and we did not buy the common, and we have not bought the common ever since. There's other stocks that we would like better as a common stock," he said.