Technology科技

Technology is clearly a boost to business productivity and a driver of better consumer products and the like, so as an individual I have a high appreciation for the power of technology. I have avoided technology sectors as an investor because in general I don't have a solid grasp of what differentiates many technology companies. I don't know how to spot durable competitive advantage in technology. To get rich, you find businesses with durable competitive advantage and you don't overpay for them. Technology is based o­n change; and change is really the enemy of the investor. Change is more rapid and unpredictable in technology relative to the broader economy. To me, all technology sectors look like 7-foot hurdles.

[Regarding 'bottom fishing' amongst technology stocks] I've seen a list of technology companies valued below their cash, but they're determined to spend that cash, so it'll go away.

[Pharmaceutical stocks in the early 1990s vs. tech stocks in 2001] "There is nothing obvious to us that technology stocks as a group are undervalued today. Also, pharmaceuticals as a group have a stellar track record of generating high returns on large amounts of capital, whereas the tech industry doesn't."

[On tech stock mania] "What the Internet offered was the ability to monetize the hopes of others. A lot of money was transferred from the gullible to the promoters. It's been a huge trap so far."

"The monetization of hope and greed is the way to make a huge amount of money. The biggest money made on Wall Street in the past few years has not been made by great performance but by great promotion."

Any time there have been real bursts of speculation in the market it does get corrected eventually. (He gave the Ben Graham voting machine quote). No wealth created just an enormous transfer of wealth. Money has been destroyed by the frictional cost of trading.

We had a mania in farmland in Nebraska, land prices spiked and when farm prices went down a lot of people and banks were devastated. A huge number of participants creates it’s own truth for a long period of time.

[CM: Wretched excess, wretched consequences. Mixing ponzi schemes with good possibilities of internet. When you mix raisins with turds, they are still turds.]

No religious belief that we will not invest in tech, just can't find one where we think we know what the bush will look like in ten years or how many birds will come out of the bush.

I have talked with Stan Lipsky at length on how the internet will affect Buffalo News, what they can do better, etc. The internet can deliver news with no incremental cost, it will change the newspaper field dramatically, people are essentially paying prices for newspapers that don't reflect their future.

It’s interesting that you mention AT&T - they’ve done poorly for years, despite charge after charge. For people who understand it, there are tremendous amounts of money to be made in this business - a lot of them in this city of Omaha. But I’m not one of them.

There’s a big difference in making a lot of money and spotting a great business. At the turn of the century there were two industries that had never existed before but changed the entire twentieth century: the airlines and the autos. They’ve been wonderful industries but lousy investments. There have been tons of capital lost in those industries, and it’s been very hard to make money by riding on the coattails of the players in these businesses.

As Alan Greenspan puts it, some hard-to-measure factor has caused us to not have inflation while enjoying growth. Technology is probably some part of that. It’s been good for stocks, and good for bonds - you can see it in the markets and it’s been beneficial from a societal standpoint.

We’re just cautious in how technological advancements affect our businesses. We try to avoid ones where change will threaten the way a business is making money.

[CM: Steel-toed work shoes, for example, do not employ a lot of technological change.]

For example, Coke is making a product that is fundamentally unchanged from fifty years ago. We’ve avoided lots of winners by sticking to this discipline - but we’ve avoided lots of losers too.

Peanut brittle also does not have a lot of technological change.

Charlie and I put money in things we understand and think we’ll know what it’ll look like in 5, 10 or 20 years. Bill being on the board doesn’t change this. I’ll listen to any idea of his and, in fact, our investment ideas overlap quite a bit. I still wish I’d bought Microsoft when I’d first met him. (Laughter)

You cannot buy high tech companies at prices like, say, you were able to buy pharmaceutical companies for in the beginning of the 1990’s. If I had to bet on anyone, it would be Microsoft. But I don’t have to bet. If anyone has superior knowledge and confidence, they can make such an investment. And they deserve to profit from it.

We’re willing to trade away a big payoff for a certain payoff. Bill Gates told me two tech companies in 1991 that he’d buy if he went to a desert island. We would have made a ton of money in them if we’d bought them, maybe more than in Coke. But he also named Coke as a third one, and we were happy to stick with that. The Dilly Bar9 has more certainty of being around in ten years than any software company.

There are dozens of software companies selling at prices that imply they’ll make $200 million or more per year in a few years - and that doesn’t happen very often. Only a dozen or so companies move into that category each year in the S&P 500. Look at the biotech companies: how many of them ever grew into the valuations they were given in the early 1990’s?