At the 1998 Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) annual meeting of shareholders, one audience member asked Warren Buffett (Trades, Portfolio) if he could outline the criteria Berkshire uses to decide when to sell a stock.
Buffett’s answer to this complex question was simple. He stated that the best time to sell an investment was “if you need money for something else.”
The best time to sell
Buffett gave this answer because he believed that the most significant mistakes he has made over the years are not bad investments, but “mistakes of omission.” These mistakes don’t show up in Berkshire’s investment returns,