Warren Buffet

Was watching an interview with Warren Buffet the other night and he was asked why he doesn’t invest in technology stocks.

“When I look at the Internet, for example, I try to figure out how an industry or company can be hurt or changed by it, and then I avoid it,” Buffett said in the Fortune article. “That doesn’t mean I don’t think there’s a lot of money to be made from that change. I just don’t think I am the one to make a lot of money out of it.”

Mr. Buffet clearly understands that they key to success is not only knowing what you do well but also knowing what you don’t do well, even if other people are making tons of money by doing it.

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2 Responses

  1. Of course Buffet invested hugely in newspapers, thinking there would be no change too.

    Buffet’s approach is a study in tax management. If you never sell it, you keep compounding tax free. Buy and hold well run monopolies growing faster than the overall stock market and you’ll do very very well. Another thing against tech companies is so much of their stock performance is PE swings, not actual earnings growth. Microsoft went for years recently where they were growing very well, but their PE was declining just as fast, so they went nowhere. Buffet likes the long haul stocks that he buys into relatively cheaply.

    I have to think that if Buffet were to invest in Tech, he’d like SaaS. These are long haul compound interest recurring revenue models that generate tons of cash (preferring cash over GAAP revenue is another Buffet hallmark).

    Cheers!

    BW

  2. Bob,
    I love Buffet’s approach to investing and life in general… do what you know best and don’t over think it.

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