Berkshire Hathaway 2017 Annual Meeting Audience Question # 43

Why Warren started investing in tech companies

Warren Buffett:

OK. Station 3.

Audience Member:

Hello.

Warren Buffett:

Hi.

Audience Member:

My name is Michael Monahan. And I’m from Long Island, New York.

I don’t know if this question qualifies as investment advice. So I have a short, different question if you don’t want answer this one.

Unlike the last shareholder from zone 3, this will not be a stump speech, nor a protest.

One of your most well-known pieces of investment advice is to buy what you know. Additionally, you said earlier, one of the main criteria for buying is if you could ever understand the business.

Ever since I came to my first meeting in 2011, you were not known for being a tech guy. You have said smart phones are too smart for you, you don’t have a computer at your desk, and you’ve only tweeted nine times in the last four years.

Warren Buffett:

It was either that or going to a monastery.

Audience Member:

Despite this, you’ve recently been investing, looking, and talking more about tech companies.

My question to you and also to Charlie to comment is, what you turned you from the Oracle of Omaha to the Tech Maven of Omaha?

Warren Buffett:

Well, I don’t think I would… I don’t think I’ve talked that much about tech companies.

But the truth is, we made a large investment in IB… I made a large investment in IBM, and… which has not turned out that well. We haven’t lost money. But in terms of the bull market we’ve been in, it’s been a significant laggard.

And, then, fairly recently, we took a large position in Apple, which I do regard as more a consumer goods company, in terms of certain economic characteristics. Although, that…

You know, it has a huge tech component in terms of what that product can do, or what other people might come along to do, to leapfrog it in some way.

But I’ve… I think I’ll end up being… no guarantees… but I think I’ll end up being 1- for-2 instead of 0- for-2. But we’ll find out.

Charlie?

I make no pretense whatsoever of being on the intellectual level of some 15-year-old that’s got an interest in tech. I think I may know… have some insights into consumer behavior.

I, certainly, can get a lot of information on consumer behavior and, then try to draw inferences about what that means about what consumer behavior is likely to be in the future. But we will find with…

The one… the other thing I’ll guarantee is I’ll make some mistakes on marketable securities, and I’ve made them in other areas than tech. So it… you’ll not bat a thousand, you know, no matter what industries you stick… you try to stick by.

I know insurance pretty well. But I think we probably lost money on an insurance stock, perhaps, you know, once or twice over the years. So it… you don’t bat a thousand.

But I have gained no real knowledge about tech in the last… well, since I was born, actually.

Charlie?

Charlie Munger:

I think it’s a very good sign that you bought the Apple. It shows either one of two things. Either it is you’ve gone crazy or you’re learning.

I prefer the learning explanation.

Warren Buffett:

Well, so do I, actually.

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