3 ms·
A bit of clarification: Buffett is very big on only going after investments that are within your "circle of competence"--the domain of businesses you understand
by karzeem 19y ago
A bit of clarification: Buffett is very big on only going after investments that are within your "circle of competence"--the domain of businesses you understand well. He's saying that while there's plenty of money for investors to make in technology, he avoids it because he doesn't understand the sector.
- kingkongrevenge 19y agoBuffet's success has always been based on having loads of ultra-cheap capital lined up from insurance companies he generally owns big stakes in. He waits for obvious bargains at times when credit is tight and then acquires big positions. He is not really an investment guru. He has good connections. People who do not understand this about Buffet try to extract more lessons from him than makes sense. The lesson to get from Buffet is "Have very rich business partners and friends." He got where he is by shaping the playing field to his advantage, not by having special investment skills and knowledge. Buffet doesn't avoid technology because he "doesn't understand it." He avoids technology because ALL he is looking for are temporarily depressed assets that he has an easier time lining up capital for than others. It's rather oversimplifying, but he's kind of a one trick pony. The theoretical MO of most investors is to allocate capital for new business opportunities, and that's just not what he does.