Berkshire sold its McDonald's stake in 1998 — Buffett called it a 'very big mistake'

At the end of 1996 Berkshire Hathaway owned roughly 30.4 million McDonald's shares, a 4.3% stake valued at about $1.4 billion. Less than two years later Warren Buffett decided to sell. In his 1998 letter to shareholders he wrote that 'my decision to sell McDonald's was a very big mistake' and that portfolio actions that year 'actually decreased our gain'.

Fortune's 2026 retrospective notes that McDonald's then entered a long period of outperformance: since 2003 its stock has ended the year in the red just twice, with many double-digit gains. At a share price just over $341, the stake would be worth about $10.3 billion, not counting dividends. Fortune also points to Buffett's later admission that he underestimated Jeff Bezos and Amazon.

Forgone gain: Fortune says the 30.4M shares would be worth about $10.3B at $341 a share, excluding dividends

Buffett sold a large holding in 1998 after having held it at least since the end of 1996, which cut against his own rule of owning stocks for ten years.

McDonald's later outperformed, so the sale gave up decades of compounding.

By Buffett's own letter, the sale cut Berkshire's gain for 1998.

Buffett wrote in 1996 that anyone unwilling to hold a stock for ten years should not own it for ten minutes.

Even a patient investor can break his own rule. Selling a great business early costs most when it compounds for decades, and the admission arrived in the same letter as the loss.

Buffett publicly named the McDonald's sale a mistake in the 1998 letter, and Fortune says the experience became a multibillion-dollar lesson in patience. The article gives only the hypothetical value of the stake, not the sale price or the gain Berkshire actually booked. Buffett also later acknowledged underestimating Amazon, which he said cost people a lot of money at Berkshire.