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I'm reading "Seeking Wisdom", which outlines Warren Buffet and Charlie Munger's investing philosophies. Two things stand out - 1. They almost never invest in h

I'm reading "Seeking Wisdom", which outlines Warren Buffet and Charlie Munger's investing philosophies. Two things stand out - 1. They almost never invest in high technology. 2. They talk about how an unsexy business that produces value for its shareholders is just as good as a sexy one. Money has no memory - money you made from dividends or equity increases in a company that sells bricks is just as good as from a company that sells something more exciting. Thus, I wonder if a lot of high tech companies are like airlines - people own them because they're sexy, whereas totally decent boring unsexy companies are much lower valued. That doesn't get into whether Twitter will justify the $10B valuation or not, but interesting to think about - saying Buffet and Munger have done pretty well would be quite the understatement.

acabal 16y ago
While I've never read that book, the one bit of Buffett advice that always stuck with me was, "Invest in what you know." And I definitely know that Twitter ain't worth 10 billion dollars.
- zaidf 16y ago
  And I definitely know that Twitter ain't worth 10 billion dollars. That's a lot like saying "I know x startup will fail." You are probably right considering vast majority of startups shooting for the stars fail. But you also don't get very many points for predicting what's gonna fail. And so it is better to invest in 30 companies where 29 turn out to be absolute crap and one turns out to be Google versus investing in 30 average companies that have average returns or NOT investing in any company at all. Of course you can invest in one solid company and have that be google. But I don't know very many people that have done that.
yequalsx 16y ago
Charlie Munger is worth reading and listening to. He once said in an interview that a person should only be allowed to make 20 trades in their lifetime. (Or some smaller number.) His reasoning was that it would limit emotional influences when making investing decisions. I've been wondering if Microsoft's stock price is low due to the perception that they aren't sexy. Their corporate division is making loads of money and they are priced like a low margin commodity business. Of course, maybe their long term survivability is in question and so the stock is low. I would rather buy stock in Microsoft at its current valuation than buy stock in Twitter at its current valuation.
- cosmicray 16y ago
  > I've been wondering if Microsoft's stock price is low due to the perception that they aren't sexy. Stock prices are (usually) set based on two factors: The current earnings/revenue situation and future expectations. MSFT and APPL both have similar current earnings. Future expectations may be an entirely different matter. If twitter is being touted as a $10B corp, then someone must have some expectations of increased future value.
  - yequalsx 16y ago
    In theory this is true but I think there are intermediate fluctuations that don't follow a rational principle. I think Warren Buffet is right when he says the market is not efficient. Maybe over a long period of time and across many industries it is but not necessarily for a particular stock.

acabal 16y ago

While I've never read that book, the one bit of Buffett advice that always stuck with me was, "Invest in what you know." And I definitely know that Twitter ain't worth 10 billion dollars.

zaidf 16y ago
And I definitely know that Twitter ain't worth 10 billion dollars. That's a lot like saying "I know x startup will fail." You are probably right considering vast majority of startups shooting for the stars fail. But you also don't get very many points for predicting what's gonna fail. And so it is better to invest in 30 companies where 29 turn out to be absolute crap and one turns out to be Google versus investing in 30 average companies that have average returns or NOT investing in any company at all. Of course you can invest in one solid company and have that be google. But I don't know very many people that have done that.

yequalsx 16y ago

Charlie Munger is worth reading and listening to. He once said in an interview that a person should only be allowed to make 20 trades in their lifetime. (Or some smaller number.) His reasoning was that it would limit emotional influences when making investing decisions. I've been wondering if Microsoft's stock price is low due to the perception that they aren't sexy. Their corporate division is making loads of money and they are priced like a low margin commodity business. Of course, maybe their long term survivability is in question and so the stock is low. I would rather buy stock in Microsoft at its current valuation than buy stock in Twitter at its current valuation.

cosmicray 16y ago
> I've been wondering if Microsoft's stock price is low due to the perception that they aren't sexy. Stock prices are (usually) set based on two factors: The current earnings/revenue situation and future expectations. MSFT and APPL both have similar current earnings. Future expectations may be an entirely different matter. If twitter is being touted as a $10B corp, then someone must have some expectations of increased future value.
- yequalsx 16y ago
  In theory this is true but I think there are intermediate fluctuations that don't follow a rational principle. I think Warren Buffet is right when he says the market is not efficient. Maybe over a long period of time and across many industries it is but not necessarily for a particular stock.