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Comment by dehrmann | Hacker News Reader

Not to diminish any of his accomplishments, but read his quotes and story as being a product of his time. He famously missed out on a lot of solid tech investments because of his background as a value investor. Value investing doesn't exist the same way it did when Berkshire started making a name for itself. Tech investing also isn't them same as 1997, 2004, or 2010.

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Berkshire has outperformed Nasdaq and SP500 from the IPO (May 9, 1996), 10y, 5y, 1y time periods and he has now $340B in cash.

All this with low risk holding lots of cash. He has not missed anything.

Just because it beat indexes doesn't mean it couldn't have done better.

From 2017:

https://www.cnbc.com/2017/05/06/warren-buffett-admits-he-mad...

"Not to diminish the accomplishments of Magnus Carlsen , but he has lost many games."

"Not to diminish the accomplishments of the world's best poker player, but he did lose many hands."

My point is that you have to put all of his wisdom and stories in the context of what he's good at and the environment he was in. He tried to apply his value investing playbook to early Google, and it looked like a bad investment. He later realized this (see my link), but that gets talked about less than value investing in its heyday. Aside: for debated reasons, value investing, which used to outperform, has been in a slump for a long time.

It's east to hear his story and think if you do the same thing, you'd be successful. If you did the same thing in 1970, you might be! And some of his wisdom is generally applicable, but reading his story as a guide for investing today isn't the right approach.

Think of the time horizon.

The current tech investing boom is just a blip just like previous tech booms (Auto industry boom, aircraft boom, personal computer boom).

He's always been an independent thinker. He stopped the low price to book value thing ages ago and went more for companies with good long term growth such as Apple. And recently he's switched a lot to cash/t-bills. We'll see if that proved a wise move but he's got a good track record of doing smart things rather than always doing the same thing.

Someone probably said something similar in the 1960s when Buffet avoided crowded Go-Go era investments in the 1960s to his benefit.

His only miss was actually buying Berkshire. He estimates that he lost out on well over $200B had he never bought Berkshire.

It's not that he missed out on it, both Buffett and munger said that they didn't really understand technology so they didn't feel a reason to go there. They felt they better understood insurance and railroads and candies and whatnot and they made Bank doing it.

I agree and I think furthermore no one has really understood technology enough to have consistently made the right moves, because tech stocks fundamentally were blazing a new trail.

Buffett invested in businesses that, relatively speaking, were already well understood, if not widely by everyone, the point being that you could look at the balances and financial statements of an insurance company and derive an investment plan that was based on basically nothing new. Google, and tech in general, were not like that.

I think now some tech stocks do look like that. Microsoft, Oracle, Salesforce, all have business models that are much more well understood at this point than 30 years ago.

Even though Google has been wildly successful, I do see them as riskier since they derive so much of their income from web search ads, which feels like a precarious position compared to selling office productivity suites, databases, and CRMs to enterprises (I know Google does some of this but it's not where they make the bulk of their income).

> 1997

Yeah, looking at the NASDAQ from 1997 is a good reminder of everyone's selection bias. Saying Buffett missed out on the winners (with 20/20 hindsight) is forgetting that he also missed out on a lot of losers.

Here's some of the now lesser known NASDAQ tech stocks that were doing well in 1997:

  Dell (DELL)
  Compaq (CPQ)
  Gateway (GTW)
  Silicon Graphics (SGI)
  Hewlett-Packard (HWP)
  America Online (AOL)
  Yahoo (YHOO)
  Lycos (LCOS) 
  Excite (XCIT)
  Netscape (NSCP)
  3Com (COMS) 
  Bay Networks (BAY)

From: https://www.cnet.com/tech/tech-industry/tech-stocks-and-nasd...

And nobody ever went wrong by buying IBM

This is extremely superficial.

You are, and you're doing so naively, because one of the reasons Buffett has been successful is that he stuck to things that were in his circle of competence.

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