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Follow up to your edit - and I'm totally familiar with the "Circle of Competence" philosophy, but given Buffett has stated he won't invest in things which he do
by nstj 10y ago
Follow up to your edit - and I'm totally familiar with the "Circle of Competence" philosophy, but given Buffett has stated he won't invest in things which he doesn't understand, and he's said he doesn't understand tech, then it's safe to say that he has a "no tech" rule. I've always been unsure of how to interpret the circle of competence thing, as people always develop new skills, so personally I look at it as "only invest in things with which you are most familiar".
- saganus 10y agoMaybe it's not about not understanding tech per se, but about not understanding the company. If they feel like they understand how Apple works by now, that would make it qualify as not not-understanding, and thus it would not break the "rule". Apple is a tech company but in the eyes of Berkshire maybe they are predictable enough regardless of what they produce (i.e. in terms of their cash flow, product strategy, etc).
- MaysonL 10y agoMaybe it's about whether or not Apple is still a tech company?
- sumedh 10y ago> unsure of how to interpret the circle of competence thing Can you figure out what apple would be doing 10 years from now. If no then its out of your circle of competence. Do you know what Coca Cola would be doing 10 years from now, if yes then it is in your circle of competence.
- jalopy 10y agoVery good summary of circle of competence. Obviously a bit more complicated than that in practice, but this is probably 80% of it.
- nstj 10y agoYes. What I'm saying is that conceptually I understand Buffett's implementation of the circle of competence, it's just that his circle seems immutable, and I believe for many people they develop insights into new areas/categories of investing, while he seems to have focused on a specific area for his entire lifetime.