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thoughtsonthisMar 21, 2011
Aren't electronics where money is right now?
Closed AccountMar 22, 2011
right now? you need to be more specific with your question
also, following trends tends to be a loser
bcard3088Mar 22, 2011
just because something is raking in money right now doesn't mean it will be that way in 10 years. electronics are such a volatile investment compared to well-established products like coca cola. so it's tough to judge. it's warren freaking buffett, he knows what he's doing
badgerpoisonMar 22, 2011
If there is money in something then the stock price is adjusted for it. Profit is made if a company exceeds market expectations, and lost if a company falls short of them.
Throw in high volatility for tech, this is called a risk premium.
The risk premium depends on how optimistic or pessimistic an investor is. An optimistic investor may say Apple is going to be the SH!t in 10 years as it is today, there is no chance any company will stop Apple. This investor will value Apple stock highly (low risk premium).
A pessimistic investor may say that there are so many competitors who will copy Apple's strategy within a few years that it is very possible that Apple fails to meet market expectations in light of competition. Stock valued with a high risk premium. Buffet falls closer to this view of companies in the tech industry.
The actual stock price will carry a risk premium somewhere in the middle - it depends on many factors including the balance of optimistic and pessimistic investors.
thoughtsonthisMar 21, 2011
Aren't electronics where money is right now?
bobosmitorMar 21, 2011
So he likes coca cola better. Hmmm.
fyqueMar 21, 2011
There is nothing wrong in it. Instead It's a really smart thing to do..
hackiewackieMar 21, 2011
Never heard of Warren Buffet making a wrong choice
bossm4nMar 21, 2011
He chose Obama for president. Sorry, couldn't resist.
luv2luvMar 21, 2011
Buffet always sees what's ahead so maybe there's something we should listen to here
jbmcbMar 22, 2011
No - he likes what is predictable. He can't predict the electronics market so he stays out.
macbookformeMar 21, 2011
He's the One! He knows!
smr36Mar 21, 2011
Warren knows what he knows, and what's important, knows what he doesn't know. He does a thorough research of each company he invests in and has a remarkable investment track record. He would admit that there are opportunities for investment in technology companies for those who are knowledgeable in that area and are able to apply the same analytical process as he does to his investments.
jjpinpinMar 22, 2011
Warren is of the Benjamin Graham school of value investing and defensive investing. Tech stocks and "sexy stocks" tend to be very volatile and people bid them up into astronomical price/earnings ratios, that is why Warren avoids these types of stocks, because they can drop like lead balloons. You're right he may not know be an expert on iphones and ipads but he has purchased manufacturing companies and I doubt he is an expert on all things manufacturing either.
blacklilyninjaMar 21, 2011
people will stop drinking coke products now.
yurmutha412Mar 21, 2011
There's going to be a trend away from sugery drinks like Coca Cola so I'd disagree with him on that point. It's almost like investing in a cigarette company about 10 years ago. There's an awareness that it's unhealthy and it's growing.Comment is buried, click here to see the rest.
Closed AccountMar 22, 2011
you need to learn that there more to stock trading that buying low and selling high
this is why you are poor
yurmutha412Mar 22, 2011
I am basically poor, however, I manage my own IRA, pick my own stocks, and it's increased over 300 percent in the last 10 years without putting any money into it. That's actually 4 times higher.
Closed AccountMar 22, 2011
you don't need to increase the value of stocks to make money
this is why you are poor
yurmutha412Mar 22, 2011
I have 4 times the value that I had in 2000. I'm poor because I haven't had a job in 10 years. I live off stocks, and I built my own house so I take the least amount I need to live. My personal stock account has doubled in the last 7 years even with me taking my living expenses from it.
Closed AccountMar 22, 2011
4 times the value in 11 years? lmao
that's not a lot of return, especially when you only do one-way trading
yurmutha412Mar 22, 2011
To add, Berkshire Hathaway, Warren's fund, hasn't quite doubled in that length of time.
misaiatoMar 22, 2011
Coca Cola makes more than just sugery drinks... http://www.thecoca-colacompany.com/brands/brandlist.html
They own some of the most notable bottled water brands like Smar****er and Dasani. While people move out of the "coke" products they are moving into the "health" products - which Coca Cola owns.
Show me a 10 year period where Buffett was wrong. He doesn't invest to make you money in a month. He invests to make money over a lifetime.
yurmutha412Mar 22, 2011
That's a good point. I didn't know they had that large a variety of products.
misaiatoMar 22, 2011
Buffett has always said (in his biography especially) that he only invests in things he can understand.
I think at it's simplest - CocaCola can be broken down like this:
In 10 years, people are going to be drinking stuff.
CocaCola makes lots of stuff people want to drink.
Value :)
Plus - Buffett likes CocaCola (purportedly drinking it every day)
digitaldeadstarMar 21, 2011
Tech stocks are hot right now, and most likely will continue to be hot in the future as technology grows more and more. That being said, Buffett invests in what he knows. That's smart investing. You can question his decisions all you want, and he may miss out on some great opportunities, but I think it's safe to say he has done pretty well at the whole investing thing.
swordedgeMar 22, 2011
Many many years ago, Buffett said that you should invest in what you understand. Buffett does not understand electronics.
badgerpoisonMar 22, 2011
That may not be what he is saying here. Buffet can afford to hire people who understand the technology industry.
He may also be saying that no one knows the exact future of companies in technology because they tend to be very volatile. Berkshire is not in the business of investing in such uncertainty.
dfrankzorMar 22, 2011
He has a very good point, it's hard to judge with electronics companies as so many things factor into their futures. I would say that Microsoft would be safe to invest in simply because of their size and near monopoly on the PC software market.
badgerpoisonMar 22, 2011
Apple Bubble. Twitter Bubble. Facebook bubble. Groupon Bubble.
stockjonesMar 22, 2011
so basically he is investing in industries he understands. Makes sense.
ForsytheequityMar 23, 2011
You can't dictate innovation.