Becoming Warren Buffett Requires Investment Discipline: How One TSMC Mistake Cost Berkshire Hathaway Over $16 Billion

The journey toward becoming Warren Buffett—or at least developing the investment mindset he mastered—rests on a foundation that proved remarkably effective across six decades. Yet one rare deviation from that foundation has highlighted just how crucial maintaining discipline truly is. During Berkshire Hathaway’s historic rise to $1 trillion in market value, the company’s now-retired leader accumulated nearly 6,100,000% in cumulative gains on Class A shares through unwavering adherence to fundamental principles. However, a surprising short-term trade that lasted between five and nine months in Taiwan Semiconductor Manufacturing has become one of the most instructive—and expensive—reminders of what happens when even legendary investors temporarily abandon their own rules.

The Investment Principles That Built an Empire

Before examining the costly departure from protocol, it’s essential to understand what made becoming a successful investor like Buffett possible in the first place. His philosophy wasn’t complicated, but it proved extraordinarily durable across multiple market cycles.

Buffett’s approach began with a commitment to long-term ownership. Rather than chasing quarterly fluctuations, he acquired positions in high-quality businesses with the explicit intention of holding them for years or decades. This philosophy reflected a deeper understanding: while markets experience predictable boom-and-bust cycles, expansion periods systematically outlast downturns. Businesses of genuine quality naturally flourish when investors afford them time.

Value discipline formed the second pillar. Buffett harbored a steadfast conviction that acquiring an excellent company at a fair price substantially outweighed securing a mediocre business at a bargain valuation. This meant remaining patient during market exuberance, allowing what he called “price dislocations” to emerge before deploying capital. The ability to sit and wait—what Buffett described as sitting “on his proverbial hands”—separated disciplined investors from impulsive ones.

The third element involved competitive positioning. Berkshire Hathaway’s portfolio concentrated on industry leaders possessing durable competitive advantages and sustainable moats—characteristics that protected market share and pricing power over time. These weren’t peripheral players; they were dominant operators with fortress-like business models.

Corporate trustworthiness represented another critical filter. Buffett gravitated toward organizations with experienced management teams that had earned customer loyalty through years of consistent performance. Trust, he understood, takes decades to build but can evaporate in moments, making it an invaluable asset worth paying premiums to own.

Finally, robust capital-return programs anchored his strategy. Buffett favored enterprises that deployed dividends and share buybacks strategically, incentivizing long-term shareholders while signaling management’s confidence in their own valuations.

When Short-Term Thinking Interrupted a Long-Term Legacy

For someone committed to becoming an investor of Buffett’s caliber, the Taiwan Semiconductor situation reveals how even exceptional track records don’t provide immunity from miscalculation. During the third quarter of 2022—the final period when Berkshire functioned as a net buyer of equities—Buffett’s team accumulated 60,060,880 shares of TSMC, establishing a $4.12 billion position in the world’s leading chip foundry.

The initial timing appeared sound. The 2022 bear market had generated precisely the price dislocation Buffett traditionally awaited. TSMC occupied an unmatched position as the primary supplier of advanced semiconductors consumed by Apple, Nvidia, Broadcom, Intel, and AMD. The company’s chip-on-wafer-on-substrate (CoWoS) technology had positioned itself at the forefront of artificial intelligence acceleration, stacking graphics processing units with high-bandwidth memory within AI-enabled data centers.

Yet Berkshire’s conviction proved remarkably fleeting. Form 13F filings with the Securities and Exchange Commission documented the rapid unwinding: during the fourth quarter of 2022, the company divested 86% of its position (51,768,156 shares), then completely exited during the first quarter of 2023.

Buffett explained the reversal to Wall Street analysts in May 2023 with surprising simplicity: “I don’t like its location, and I’ve reevaluated that.” His concerns likely stemmed from the 2022 CHIPS and Science Act, which incentivized domestic semiconductor manufacturing while prompting export restrictions on advanced AI-capable chips destined for China. Buffett apparently worried that similar constraints might eventually constrain Taiwan’s operations or market access.

Yet the timing of this exit—spanning merely five to nine months—proved catastrophically premature. Demand for Nvidia’s graphics processors became almost insatiable. TSMC aggressively expanded its monthly CoWoS wafer production capacity to match this hunger. The company’s growth trajectory accelerated sharply, and its stock price followed suit. By July 2025, TSMC itself achieved trillion-dollar company status.

The mathematics of this miscalculation paint a sobering picture. Had Berkshire Hathaway maintained its original TSMC position without selling any shares, that stake would have appreciated to approximately $20 billion by early 2026. Instead, Berkshire’s decision to exit early has cost the enterprise close to $16 billion in unrealized gains—a permanent fixture in the ledger of “what if” scenarios that haunt investment history.

What This Teaches Us About Becoming a Disciplined Investor

The TSMC episode illuminates a critical reality for anyone striving toward becoming an investor of substance: maintaining discipline during moments of doubt separates exceptional long-term outcomes from mediocre ones. Buffett’s original investment decision reflected disciplined thinking—purchasing a world-class business during a bear market when prices offered genuine value. His subsequent exit reflected something altogether different: a deviation from conviction in response to uncertain regulatory projections.

This distinction matters profoundly for Berkshire’s incoming leadership under CEO Greg Abel. The principles that generated nearly 6,100,000% in cumulative returns didn’t require modification; they required consistent application regardless of market sentiment or geopolitical concerns. Abel’s task involves anchoring the organization back to the time-tested philosophy that discouraged short-term trading in favor of patient capital deployment.

The TSMC miscalculation transformed what should have become another monument to patient investing into an expensive lesson about the hidden costs of abandoning one’s own framework. For investors becoming the next version of Warren Buffett, the takeaway remains unambiguous: discipline, maintained through uncertainty, typically outperforms flexibility pursued in response to speculation about future obstacles.