Buffett's advice to GM's CEO

Warren Buffett asked Mary Barra if she'd run GM differently without quarterly earnings pressure. When she said no, he told her to focus on long-term value creation, not quarterly results.

“I don't want you running the company for the quarter. I want you running it for the long term.”

Berkshire's massive GM position

Berkshire Hathaway bought GM shares starting in 2012, building up to 80 million shares worth roughly 4 billion dollars at its peak by 2020.

The early exit that backfired

Berkshire sold its remaining 22 million GM shares in the third quarter of 2023 for around 850 million dollars. The stock later tripled to about 84 dollars per share.

The missed opportunity in numbers

Those final 22 million shares would have been worth around 1.85 billion dollars at the new price, roughly 1 billion dollars more than their reported value when Berkshire sold.

Why Berkshire blinked first

GM's stock was struggling in 2023, electric vehicle demand was slower than expected, and the United Auto Workers launched a historic strike against Detroit's three largest automakers in September 2023.

GM's turnaround continued anyway

Mary Barra kept restructuring GM around its most profitable vehicles, reducing costs and returning billions to shareholders through stock repurchases totaling tens of billions since late 2023.

Lesson 1: buy through rough stretches

Dollar-cost averaging, or regularly investing a fixed amount, lets you buy through both strong and weak markets instead of betting everything on one entry point.

Lesson 2: follow the business

A stock price drop doesn't mean a company is failing. Before buying, write down why you believe the company creates value, then track measurable factors like earnings growth and debt reduction.

GM beat expectations while Berkshire sold

In 2023, GM beat quarterly expectations and raised its profit forecast, yet Berkshire sold anyway and missed the recovery that followed.

Lesson 3: diversify to weather storms

A diversified portfolio spreads exposure across companies and industries so one disappointing report won't jeopardize your entire plan or trigger a panicked sale.

ETFs offer easy diversification

Exchange-traded funds provide diversification without researching dozens of companies individually, and reduce the pressure to predict which single stock becomes the next winner.

Lesson 4: get a second opinion

Before selling, ask yourself if something actually changed at the company or if it's just a rough stretch. Consider whether you have a good reason to sell or if you're just nervous.

Consider tax costs before selling

Before liquidating a position, ask yourself what the sale will cost you in taxes and what you'll do with the money instead.

The core lesson: patience pays

Berkshire's GM exit shows that emotional selling during rough patches often costs more than holding through uncertainty, especially when the underlying business is still improving.