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The greatest thing about Buffett is his willingness to change his mind. He started out by investing in "cigar butt" companies that were often valued at huge di

The greatest thing about Buffett is his willingness to change his mind. He started out by investing in "cigar butt" companies that were often valued at huge discount to their book value. Then he changed: bought lots of Coke stock. He said he was not able to predict the outcomes of technology companies and therefore was very unlikely to invest in the sector. Then he changed: bought lots of IBM stock. He has stated in a number of his letters to Berkshire Hathaway shareholders that the newspaper business has lost its "moat", its competitive advantage. Now he's changed: buying a huge number of local media properties at an incredible discount. Buffett's adaptability, patience, and willingness to change tack is what makes Berkshire Hathaway such a powerhouse. As his partner Charlie Munger said of their performance over the last 40 years: "if you stripped out the top 20 bets we've made then our performance is a joke". They've made big bets on lots of distressed assets. This bet is relatively tiny compared to Berkshire's size. They are look for more "elephants" like the Burlington North railway.

adventureful 14y ago
He didn't change his mind about being unable to predict the outcomes of technology companies at all. In fact, he reinforced that very statement in discussing having purchased IBM. He bought IBM because, in his own words, he no longer considers it an unpredictable technology company (subject to changing trends), but rather a company that services infrastructure, like a plumber. He sees an IBM that is no longer highly subject to unexpected shifts in technology. They're more like Accenture than the IBM of 1980 at this point. He didn't change, IBM did. It's why you won't see him doing very many more tech investments. Intel is a far more curious investment on his part than IBM, but it was a piddling investment compared to IBM. He was right about newspapers, and he's breaking his own rules. He'll buy almost anything at the right price, and that's the case here, he's buying a cigar butt. The greatest thing about Buffett is his unwillingness to change. It's his dedication to not changing his principles that has kept him from blowing up as most do over such a long duration. Instead he tries to follow the same strict capital allocation rules that work over and over and over again, and always will.
- richardburton 14y ago
  His principles have changed several times as I have outlined. His core investment philosophy has not. - Stick to what you know. - Price is what you pay; value is what you get. - Bet big. - Focus, do not diversify.

adventureful 14y ago

He didn't change his mind about being unable to predict the outcomes of technology companies at all. In fact, he reinforced that very statement in discussing having purchased IBM. He bought IBM because, in his own words, he no longer considers it an unpredictable technology company (subject to changing trends), but rather a company that services infrastructure, like a plumber. He sees an IBM that is no longer highly subject to unexpected shifts in technology. They're more like Accenture than the IBM of 1980 at this point. He didn't change, IBM did. It's why you won't see him doing very many more tech investments. Intel is a far more curious investment on his part than IBM, but it was a piddling investment compared to IBM. He was right about newspapers, and he's breaking his own rules. He'll buy almost anything at the right price, and that's the case here, he's buying a cigar butt. The greatest thing about Buffett is his unwillingness to change. It's his dedication to not changing his principles that has kept him from blowing up as most do over such a long duration. Instead he tries to follow the same strict capital allocation rules that work over and over and over again, and always will.

richardburton 14y ago
His principles have changed several times as I have outlined. His core investment philosophy has not. - Stick to what you know. - Price is what you pay; value is what you get. - Bet big. - Focus, do not diversify.