Warren Buffett was smiling today at the White House as Barack Obama presented him with the nation's highest civilian honor, the Presidential Medal of Freedom.
And the audience laughed as President Obama recounted recounted one of Buffett's earliest investing mistakes:
In 1942, an 11-year-old boy from Omaha, Nebraska, invested his entire fortune in six shares of Cities Service Preferred at $38 per share. The stock soon dropped sharply, devastating his holdings. (Laughter.) But true to form, the boy did not panic. He held those shares until the stock rebounded, earning himself a small profit. Things got a little bit better after that. (Laughter.)
But that story also has a more serious side.
In The Snowball, biographer Alice Schroeder writes that the young stockpicker sold for a small profit at $40 per share, in part due to pressure from Doris, his sister and partner in the deal. It then soared to $202 a share.
Warren learned three lessons and would call this episode one of the most important of his life. One lesson was not to overly fixate on what he had paid for a stock. The second was not to rush unthinkingly to grab a small profit...
And there was a third lesson, which was about investing other people's money. If he made a mistake, it might get somebody upset at him. So he didn't want to have responsibility for anyone else's money unless he was sure he could succeed.
You can watch all of Mr. Obama's comments, as well as the presentation of the medal, in this video clip.