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When Buffet thinks "this is BS, I won't touch it", he says politely "I don't understand". He's been repeating it for 40 years. He doesn't want to fight. He doe

When Buffet thinks "this is BS, I won't touch it", he says politely "I don't understand". He's been repeating it for 40 years. He doesn't want to fight. He doesn't care about being right in the eyes of others. I stole this line 10 years ago to decline the invitation "oh, you are a programmer, can you take a look at my computer ?". I don't understand Windows so I can't, because I use Linux. Declaring yourself incompetent is a fantastic social cheat code.

travisjungroth 8y ago
“I don’t understand” also carries extra weight when the first half of your nickname is “The Oracle”.
- sametmax 8y ago
  That's the thing though. It only works in your favor if your popularity is not low in a group. Like a joke, people will laught depending on the delivery as well as the person delivering.
- em3rgent0rdr 8y ago
  Well he is smart to know to maintain his high success rate by admitting when he doesn't understand something and knowing to avoid things he doesn't understand. Awareness of ignorance is wisdom.
whatok 8y ago
That idea really doesn't square with the initial investment made. What changed QoQ?
- dharmon 8y ago
  He's been super interested in the future of "the cloud" for some time now[1]. He is also a voracious reader. Most likely after he purchased his shares he continued reading and thinking about the state of things and where they are headed. He read something that made him question his investment thesis and re-think things that he was previously confident in. Most people, if they continue reading or thinking at all, will just look for things that confirm their previous decision. It's a good lesson to look for things that disprove what you think you know. [1] I think he likes the cloud because as opposed to most tech, there are tangible assets involved and significant capital outlays. Combined with the nature of platform lock-in, this keeps out newcomers.
  - chosenbreed37 8y ago
    > He is also a voracious reader. Most likely after he purchased his shares he continued reading and thinking about the state of things and where they are headed. He read something that made him question his investment thesis and re-think things that he was previously confident in. If that is the case then I take my hat off to him. I was also wondering why he would be pulling out of something he'd gone in the previous quarter.
  - whatok 8y ago
    Is this speculation or is there a source for his thinking behind this? It's very unlike a good portion of his investments.
    - dharmon 8y ago
      From reading his shareholder letters, watching a boatload of his talks and interviews on YouTube, and most importantly trying to re-create his thinking on most of his investments, from his early partnership days up until about IBM. (he is actually quite open about what he likes in a company, even though people think he's being cryptic) For example, he always cites figures such as return on _tangible_ assets in his interviews. He is also obsessed with moats. A large reason for the relative lack of moats in tech is that the barrier to entry is low, and has been dropping for decades. You could whip up a respectable competitor (technology-wise) to most of today's unicorns in well under a year or so with only a little bit of money, but given many years and billions of dollars you couldn't re-create Coca-Cola's distribution network. I am actually curious how you think this is not like his other investments? His investment style has changed for sure, but I would draw two lines, one that he talks about around See's Candy in the 70's. The other I would put about 10-15 years ago, where he started looking at more capital-intensive businesses (like BNSF). Both were gradual shifts, though.
      - whatok 8y ago
        Not talking about the specific investment; just the duration of it.
    - 8y ago
mromanuk 8y ago
oh, fantastic! I'm stealing your line
AnimalMuppet 8y ago
I think he's more honest than that. I think "I don't understand" means "I don't understand". But it looks like "I won't touch it" because he won't touch it if he doesn't understand. One of the things Buffet (and Munger) do very consciously is their "circle of competence". They know what they're good at. They do that. They know they're not good at other things, so they don't do them. So I think Buffet is saying that he genuinely doesn't know how to evaluate Oracle, and therefore he's out.
duado 8y ago
I do even one better to get out of doing IT work. If someone random asks me to do computer maintenance I profess my incompetence but say that I’ll give it a try. I just go into settings and make the problem one epsilon worse. Then I give it back and say “ugh I don’t know what I did, I just [disabled the network adapter] but now it won’t even open the WiFi menu.” Gives them enough information to reverse what I did but makes sure they never ask me again.
- roymurdock 8y ago
  seems pretty malicious why not just ask them to pay you for your time, or else say sorry you need to hire a professional instead of giving them more grief
  - duado 8y ago
    This is when those things aren’t working or politically infeasible at work
  - justwalt 8y ago
    Last week my mother called me after she broke down on the side of the road. So I popped her hood, broke her timing belt, then sped off. Have to agree with you, seems fairly pointless to kick someone while they’re down. Computer problems are stressful, so it’s not surprising someone would ask the first person they know is remotely involved with computing for help. It’s very easy just to tell someone a few things that they might try googling.
    - magduf 8y ago
      >It’s very easy just to tell someone a few things that they might try googling. That seems to frequently be perceived as an insult though. For some reason, everyone thinks that "computer people" can be counted on to solve their Windows PC problems for free, though they wouldn't ask their relative who's a car salesman to fix their car.
      - 8y ago
gist 8y ago
> he says politely "I don't understand". He's been repeating it for 40 years. What this actually translate to is very simple: "I can't get an edge that I am used to getting information wise from this company so I am pulling my investment". Now of course that could be because there isn't good info that they are willing or able to give him, or simply they will not play that game with him for some reason. Honestly he just doesn't like being in the same boat as ordinary people who invest. Or for that matter ordinary analysts or other high level investors. In order to be successful he has to go to the head of the line in some way. You have to have the tea leaves to read the tea leaves.
- kbenson 8y ago
  You make it sound a little negative, but really, shouldn't that be how everyone who picks individual stocks should act unless they're happy being more on the gambling side instead of the investing side of things? If the only info you can get is fully public info, the market should have accounted for it already, and in that case, you might as well take your money and but it somewhere more useful. And if you're fine with just riding the market, why risk an individual stock when you can use an index fund?
  - gist 8y ago
    Except 'everyone' is not Warren Buffet and that is my point. He is able to hold meetings and interpret signals that the regular public simply can't do. He has access to go anwhere and see anything. Even if what he sees is 'public' it is still very helpful in determining whether an investment makes sense. He can feel the tempo and he can sense things (or the people he dispatches same point if they have access). I will give a very small example to illustrate my point. Years ago I was looking at buying a small business. I was there for about 2 hours. I noticed that the phone did not ring one time in the 2 hours. Let's assume for the sake of the story that the phone ringing was not super indicative of anything (with this business I mean it wasn't a Pizza takeout place) but somewhat meaningful. They didn't have to reveal anything secret at all for me to take that info into consideration. The problem with an index fund is that since it isn't a gamble you will never win big!

travisjungroth 8y ago

“I don’t understand” also carries extra weight when the first half of your nickname is “The Oracle”.

sametmax 8y ago
That's the thing though. It only works in your favor if your popularity is not low in a group. Like a joke, people will laught depending on the delivery as well as the person delivering.
em3rgent0rdr 8y ago
Well he is smart to know to maintain his high success rate by admitting when he doesn't understand something and knowing to avoid things he doesn't understand. Awareness of ignorance is wisdom.

whatok 8y ago

That idea really doesn't square with the initial investment made. What changed QoQ?

dharmon 8y ago
He's been super interested in the future of "the cloud" for some time now[1]. He is also a voracious reader. Most likely after he purchased his shares he continued reading and thinking about the state of things and where they are headed. He read something that made him question his investment thesis and re-think things that he was previously confident in. Most people, if they continue reading or thinking at all, will just look for things that confirm their previous decision. It's a good lesson to look for things that disprove what you think you know. [1] I think he likes the cloud because as opposed to most tech, there are tangible assets involved and significant capital outlays. Combined with the nature of platform lock-in, this keeps out newcomers.
- chosenbreed37 8y ago
  > He is also a voracious reader. Most likely after he purchased his shares he continued reading and thinking about the state of things and where they are headed. He read something that made him question his investment thesis and re-think things that he was previously confident in. If that is the case then I take my hat off to him. I was also wondering why he would be pulling out of something he'd gone in the previous quarter.
- whatok 8y ago
  Is this speculation or is there a source for his thinking behind this? It's very unlike a good portion of his investments.
  - dharmon 8y ago
    From reading his shareholder letters, watching a boatload of his talks and interviews on YouTube, and most importantly trying to re-create his thinking on most of his investments, from his early partnership days up until about IBM. (he is actually quite open about what he likes in a company, even though people think he's being cryptic) For example, he always cites figures such as return on _tangible_ assets in his interviews. He is also obsessed with moats. A large reason for the relative lack of moats in tech is that the barrier to entry is low, and has been dropping for decades. You could whip up a respectable competitor (technology-wise) to most of today's unicorns in well under a year or so with only a little bit of money, but given many years and billions of dollars you couldn't re-create Coca-Cola's distribution network. I am actually curious how you think this is not like his other investments? His investment style has changed for sure, but I would draw two lines, one that he talks about around See's Candy in the 70's. The other I would put about 10-15 years ago, where he started looking at more capital-intensive businesses (like BNSF). Both were gradual shifts, though.
    - whatok 8y ago
      Not talking about the specific investment; just the duration of it.
  - 8y ago

mromanuk 8y ago

oh, fantastic! I'm stealing your line

AnimalMuppet 8y ago

I think he's more honest than that. I think "I don't understand" means "I don't understand". But it looks like "I won't touch it" because he won't touch it if he doesn't understand. One of the things Buffet (and Munger) do very consciously is their "circle of competence". They know what they're good at. They do that. They know they're not good at other things, so they don't do them. So I think Buffet is saying that he genuinely doesn't know how to evaluate Oracle, and therefore he's out.

duado 8y ago

I do even one better to get out of doing IT work. If someone random asks me to do computer maintenance I profess my incompetence but say that I’ll give it a try. I just go into settings and make the problem one epsilon worse. Then I give it back and say “ugh I don’t know what I did, I just [disabled the network adapter] but now it won’t even open the WiFi menu.” Gives them enough information to reverse what I did but makes sure they never ask me again.

roymurdock 8y ago
seems pretty malicious why not just ask them to pay you for your time, or else say sorry you need to hire a professional instead of giving them more grief
- duado 8y ago
  This is when those things aren’t working or politically infeasible at work
- justwalt 8y ago
  Last week my mother called me after she broke down on the side of the road. So I popped her hood, broke her timing belt, then sped off. Have to agree with you, seems fairly pointless to kick someone while they’re down. Computer problems are stressful, so it’s not surprising someone would ask the first person they know is remotely involved with computing for help. It’s very easy just to tell someone a few things that they might try googling.
  - magduf 8y ago
    >It’s very easy just to tell someone a few things that they might try googling. That seems to frequently be perceived as an insult though. For some reason, everyone thinks that "computer people" can be counted on to solve their Windows PC problems for free, though they wouldn't ask their relative who's a car salesman to fix their car.
    - 8y ago

gist 8y ago

> he says politely "I don't understand". He's been repeating it for 40 years. What this actually translate to is very simple: "I can't get an edge that I am used to getting information wise from this company so I am pulling my investment". Now of course that could be because there isn't good info that they are willing or able to give him, or simply they will not play that game with him for some reason. Honestly he just doesn't like being in the same boat as ordinary people who invest. Or for that matter ordinary analysts or other high level investors. In order to be successful he has to go to the head of the line in some way. You have to have the tea leaves to read the tea leaves.

kbenson 8y ago
You make it sound a little negative, but really, shouldn't that be how everyone who picks individual stocks should act unless they're happy being more on the gambling side instead of the investing side of things? If the only info you can get is fully public info, the market should have accounted for it already, and in that case, you might as well take your money and but it somewhere more useful. And if you're fine with just riding the market, why risk an individual stock when you can use an index fund?
- gist 8y ago
  Except 'everyone' is not Warren Buffet and that is my point. He is able to hold meetings and interpret signals that the regular public simply can't do. He has access to go anwhere and see anything. Even if what he sees is 'public' it is still very helpful in determining whether an investment makes sense. He can feel the tempo and he can sense things (or the people he dispatches same point if they have access). I will give a very small example to illustrate my point. Years ago I was looking at buying a small business. I was there for about 2 hours. I noticed that the phone did not ring one time in the 2 hours. Let's assume for the sake of the story that the phone ringing was not super indicative of anything (with this business I mean it wasn't a Pizza takeout place) but somewhat meaningful. They didn't have to reveal anything secret at all for me to take that info into consideration. The problem with an index fund is that since it isn't a gamble you will never win big!