Warren Buffett's 'phenomenal' advice to GM CEO backfired for Berkshire despite the stock tripling. Avoid his big mistake

Warren Buffett once challenged General Motors CEO Mary Barra to run the company differently if she weren't required to report earnings quarterly. Barra declined, and Buffett advised her to focus on the long-term instead. Berkshire Hathaway invested in GM in 2012 and owned around 80 million shares by 2020, with a stake worth about $4 billion at its peak.

They gradually reduced their position before selling 22 million shares in Q3 2023 for roughly $850 million. At the time Berkshire bought in, shares were valued at $25 per share, but the final sale would have been worth around $1 billion more. Berkshire's exit came despite GM's share price tripling after their sale. The story highlights the importance of focusing on long-term value rather than quarterly earnings, and the benefits of dollar-cost averaging for regular investments.

It also suggests seeking professional financial advice for smarter investment decisions, and building a diversified portfolio to spread risk.