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Buffett: Stop digging when in a hole, cut losses
Warren Buffett's advice to stop digging when in a hole is a lesson in cutting losses, the Times of India reports. Buffett explained the rule in a 1990 letter to Berkshire Hathaway…
The Story in Brief
Warren Buffett's advice to stop digging when in a hole is a lesson in cutting losses, the Times of India reports. Buffett explained the rule in a 1990 letter to Berkshire Hathaway shareholders, referring to insurance executives who kept lowering prices despite losses.
He himself fell into the trap with Berkshire Hathaway, a failing textile company he bought in 1962, pouring money into it before finally stopping. The lesson applies to life and business: recognise mistakes, swallow pride, and move on.
The Indian Opinion
The 'stop digging' advice sounds like common sense, but in practice, pride and the sunk-cost fallacy trap even seasoned investors. The narrative that it is easy to walk away ignores the emotional weight of past investments. Buffett's own story proves that recognising a bad bet takes honesty. The real test is whether we can admit failure and move on before the hole gets deeper. How many of us actually will?
Source: timesofindia.indiatimes.com
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