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by tim333
1935 days ago
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>From this perspective, Buffett doesn't understand how price movement works in tech companies. For someone who allegedly doesn't understand that the recent $89bn gain on Apple stock is nice going. Luck perhaps? Incidentally he's also talked about poker as a model for investing. After telling the Mr Market story in the 1987 letter he goes on: >But, like Cinderella at the ball, you must heed one warning
or everything will turn into pumpkins and mice: Mr. Market is
there to serve you, not to guide you. It is his pocketbook, not
his wisdom, that you will find useful. If he shows up some day
in a particularly foolish mood, you are free to either ignore him
or to take advantage of him, but it will be disastrous if you
fall under his influence. Indeed, if you aren't certain that you
understand and can value your business far better than Mr.
Market, you don't belong in the game. As they say in poker, "If
you've been in the game 30 minutes and you don't know who the
patsy is, you're the patsy." |
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From an investor point of view, you can't categorize companies as one label. You can categorize companies as tags. This is because every perspective that allows you to give you an edge and make money in a fairly reliable manner is a valid perspective.
Apple can be seen as a consumer/physical product company. Warren knows a lot about consumer behavior and branding. If he finds from that perspective that Apple is underpriced, then he can still make a bet while having a limited understanding of the technology by simply saying: a laptop is a laptop, it allows you to do laptop things (i.e. they're interchangeable), but Apple has an amazing brand like Coca Cola.
Of course, this isn't fully true (e.g. Windows enables different things than Apple in some cases like gaming) but combining it with superior knowledge in branding, it's good enough to make a bet.