Why Doesn't Buffet Buy Facebook Amazon Google

[DooDiligence]

https://www.fool.com/investing/general/2016/01/19/warren-buffett-and-the-cult-of-value-investing.aspx

 

the link's prob already been posted here but I thought it was good so here...

[Uccmal]

 

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

[ScottHall]

 

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

You don't have to be polite. The "author" is me! :)

[clutch]

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Because Buffett himself said so?  ???

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

The businesses you mentioned above do not sell technologies, they just use them. That's the big difference. And you just gave the reason why Buffett sticks to these companies, and not the technology providers, because of the perceived concern that technologies advance all the time and the providers can get wiped out easily.

 

Not that I believe that Amazon, Google, or FB will be wiped off that easily...Quite the contrary  ;)

 

 

[ScottHall]

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Because Buffett himself said so?  ???

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

The businesses you mentioned above do not sell technologies, they just use them. That's the big difference. And you just gave the reason why Buffett sticks to these companies, and not the technology providers, because of the perceived concern that technologies advance all the time and the providers can get wiped out easily.

 

Not that I believe that Amazon, Google, or FB will be wiped off that easily...Quite the contrary  ;)

 

People make this argument all the time about all companies being tech companies now, and I usually assume they're just making fun of themselves as value investors in the same way that I make fun of myself as someone who is more of a growth investor these days. You have to have a little humor in your life to make it more bearable, and if you can't make fun of yourself you shouldn't make fun of anyone else.

 

I say this because it's a statement that sounds like it was created in the Spin Zone, where you're basically using elision to conflate using technology with being a tech company. Of course, the two are very different things, and you can see that just by looking at the differences in margins and returns on capital. Making use of technology and having the economics of a highly scaleable tech co. are quite different things... :)

[Uccmal]

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Because Buffett himself said so?  ???

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

The businesses you mentioned above do not sell technologies, they just use them. That's the big difference. And you just gave the reason why Buffett sticks to these companies, and not the technology providers, because of the perceived concern that technologies advance all the time and the providers can get wiped out easily.

 

Not that I believe that Amazon, Google, or FB will be wiped off that easily...Quite the contrary  ;)

 

I am not that old and I have seen many tech companies get severely damaged that had seemingly impenetrable moats at the time.  Sony, HP, Dell, RIM, Ibm, compaq... that list took me 30 seconds.  A bit more thinking and we will come up dozens.  They are not wiped out but they have lost their moats.

 

Very few have maintained their moats, amd not without alot of pain along the way for shareholders.  MSFT? 

 

Buffett invests in technology stocks.  Precision Casting is a technology company that designs and uses technology.  People always gripe about Ontario, my province, having no tech industry.  We have the largest auto parts industry of any single jurisdiction around.  I have been in many of these factories over the years and can assure you that they are extreme high tech operations.  Google, FB, and Amazon are not designing the latest cars.  Magna and Linamar are!  Look at the newest car and show me that they are not among the highest tech devices in the world. 

 

 

[Uccmal]

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Because Buffett himself said so?  ???

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

The businesses you mentioned above do not sell technologies, they just use them. That's the big difference. And you just gave the reason why Buffett sticks to these companies, and not the technology providers, because of the perceived concern that technologies advance all the time and the providers can get wiped out easily.

 

Not that I believe that Amazon, Google, or FB will be wiped off that easily...Quite the contrary  ;)

 

People make this argument all the time about all companies being tech companies now, and I usually assume they're just making fun of themselves as value investors in the same way that I make fun of myself as someone who is more of a growth investor these days. You have to have a little humor in your life to make it more bearable, and if you can't make fun of yourself you shouldn't make fun of anyone else.

 

I say this because it's a statement that sounds like it was created in the Spin Zone, where you're basically using elision to conflate using technology with being a tech company. Of course, the two are very different things, and you can see that just by looking at the differences in margins and returns on capital. Making use of technology and having the economics of a highly scaleable tech co. are quite different things... :)

 

Scott, see my other post.  The companies Buffett is investing in these days are tech companies, not just users of PCs and Ipads. 

 

[clutch]

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Because Buffett himself said so?  ???

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

The businesses you mentioned above do not sell technologies, they just use them. That's the big difference. And you just gave the reason why Buffett sticks to these companies, and not the technology providers, because of the perceived concern that technologies advance all the time and the providers can get wiped out easily.

 

Not that I believe that Amazon, Google, or FB will be wiped off that easily...Quite the contrary  ;)

 

I am not that old and I have seen many tech companies get severely damaged that had seemingly impenetrable moats at the time.  Sony, HP, Dell, RIM, Ibm, compaq... that list took me 30 seconds.  A bit more thinking and we will come up dozens.  They are not wiped out but they have lost their moats.

 

Very few have maintained their moats, amd not without alot of pain along the way for shareholders.  MSFT? 

 

Buffett invests in technology stocks.  Precision Casting is a technology company that designs and uses technology.  People always gripe about Ontario, my province, having no tech industry.  We have the largest auto parts industry of any single jurisdiction around.  I have been in many of these factories over the years and can assure you that they are extreme high tech operations.  Google, FB, and Amazon are not designing the latest cars.  Magna and Linamar are!  Look at the newest car and show me that they are not among the highest tech devices in the world.

 

Based on your notion, almost every stock is a technology stock, isn't it?

 

We were talking about technology stocks as those businesses that are conventionally categorized as a technology sector.

 

But anyways, Amazon, Google, and FB are all service-oriented technology companies and the way they built their economic moat is very different from most of the companies you listed. You should wonder why IBM is transitioning to that model and how MSFT was able to maintain its business.

 

 

[DooDiligence]

You have to have a little humor in your life to make it more bearable, and if you can't make fun of yourself you shouldn't make fun of anyone else.

 

Making use of technology and having the economics of a highly scaleable tech co. are quite different things... :)

 

++ poking at self gives credibility to F'ing with others.

 

Making use of self deprecating humor & having the economics of a highly scaleable joke machine is a license to print money...

[DooDiligence]

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Because Buffett himself said so?  ???

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

The businesses you mentioned above do not sell technologies, they just use them. That's the big difference. And you just gave the reason why Buffett sticks to these companies, and not the technology providers, because of the perceived concern that technologies advance all the time and the providers can get wiped out easily.

 

Not that I believe that Amazon, Google, or FB will be wiped off that easily...Quite the contrary  ;)

 

I am not that old and I have seen many tech companies get severely damaged that had seemingly impenetrable moats at the time.  Sony, HP, Dell, RIM, Ibm, compaq... that list took me 30 seconds.  A bit more thinking and we will come up dozens.  They are not wiped out but they have lost their moats.

 

Very few have maintained their moats, amd not without alot of pain along the way for shareholders.  MSFT? 

 

Buffett invests in technology stocks.  Precision Casting is a technology company that designs and uses technology.  People always gripe about Ontario, my province, having no tech industry.  We have the largest auto parts industry of any single jurisdiction around.  I have been in many of these factories over the years and can assure you that they are extreme high tech operations.  Google, FB, and Amazon are not designing the latest cars.  Magna and Linamar are!  Look at the newest car and show me that they are not among the highest tech devices in the world.

 

The lines between picks & shovels & miners could be seen as blurred...

[Jurgis]

Buffett said not buying Google was a mistake. He said Bezos is extraordinary CEO though he did not explicitly say that not buying Amazon was a mistake. I think he came close, but he did not say it explicitly. No mention of FB... yet.  8)

[Uccmal]

I dont know where people get this notion that Buffett doesn't invest in technology. 

 

Because Buffett himself said so?  ???

 

Go on the floor of a precision cast parts factory, in a BH energy control room, in a BNSF logistic center, or in the offices of one of his insurance companies.  I guarantee hands down that collectively Berkshire Hathaway companies are among the biggest users of technology out there. 

 

He knows Larry Page and Brin.  He doesnt invest in Google because it is over valued relative to its predictable returns.  He doesnt invest in the others mentioned for the same reason.  Visa is just overvalued.  The article says these businesses are infinitely scaleable.  That is hogwash.  Nothing is infinitely scaleable at least while on earth.  Any one of the companies mentioned by the author could be wiped off the map in a very short period of time.  They all have to keep spending and keeping ahead of the competition at a greater rate than BH Energy will ever have to.  The moment that Amazon, Google or Fb let off the development pedal is the end for them.

 

The businesses you mentioned above do not sell technologies, they just use them. That's the big difference. And you just gave the reason why Buffett sticks to these companies, and not the technology providers, because of the perceived concern that technologies advance all the time and the providers can get wiped out easily.

 

Not that I believe that Amazon, Google, or FB will be wiped off that easily...Quite the contrary  ;)

 

I am not that old and I have seen many tech companies get severely damaged that had seemingly impenetrable moats at the time.  Sony, HP, Dell, RIM, Ibm, compaq... that list took me 30 seconds.  A bit more thinking and we will come up dozens.  They are not wiped out but they have lost their moats.

 

Very few have maintained their moats, amd not without alot of pain along the way for shareholders.  MSFT? 

 

Buffett invests in technology stocks.  Precision Casting is a technology company that designs and uses technology.  People always gripe about Ontario, my province, having no tech industry.  We have the largest auto parts industry of any single jurisdiction around.  I have been in many of these factories over the years and can assure you that they are extreme high tech operations.  Google, FB, and Amazon are not designing the latest cars.  Magna and Linamar are!  Look at the newest car and show me that they are not among the highest tech devices in the world.

 

The lines between picks & shovels & miners could be seen as blurred...

 

 

That sums it up. 

[Uccmal]

I am just playing with this as a mental exercise. 

 

I can easily destroy Google or severely minimize it with upcoming technology. 

 

The easiest way occurs naturally as data storage increases.  At some point I may have enough storage on a server in my closet to store virtually all of the internet, or selectively download the parts I need.  I do this once a month.  It has the benefis of a high level of security, privacy, and taking my data away from the government and major corporations.  I could run my server to clear ads, and when I did my once a month download and upload, I could security shield it such that the government and corporations dont know what I am looking at. 

 

I could continue to access the weather reports and daily news via the public internet and subject myself to the advertising at that access point. 

 

Bezos is clearly a brilliant businessperson.  But there is a limit to the scalability of Amazon. IMO, they are creating a race to the bottom in retailing.  Margins will get ever tighter for everyone in that business.  People will still enter and try to compete with Amazon for the same reason that people buy subway sandwich outlets.  So, Amazon is forever caught in a trap of its own making.

 

Facebook I havent quite figured out.  I think it will get demolished when governments overstep their boundaries and start prosecuting, or detaining people based on their FB profiles.  I just dont understand peoples willingness to put their lives online for all to see.  I have a few tech friends who go out of their way not to have an online profile.  I try to minimize my online footprint, although I am fully aware that Google et al can easily pinpoint who and where I am.  FB to me is a little like driving a motorcycle through a rural Texas town at high speeds, and not expecting to be pulled over and held at gunpoint by a State Trooper, and then escorted out of the county (happened to a freind 30 yrs. ago).

 

So how about them apples guys? 

[DooDiligence]

...there is a limit to the scalability of Amazon. IMO, they are creating a race to the bottom in retailing.  Margins will get ever tighter for everyone in that business.  People will still enter and try to compete with Amazon for the same reason that people buy subway sandwich outlets.  So, Amazon is forever caught in a trap of its own making.

 

What happens when apparel manufacturers decide they've been squeezed enough?

 

Facebook I havent quite figured out.  I think it will get demolished when governments overstep their boundaries and start prosecuting, or detaining people based on their FB profiles.  I just dont understand peoples willingness to put their lives online for all to see.  I have a few tech friends who go out of their way not to have an online profile.  I try to minimize my online footprint, although I am fully aware that Google et al can easily pinpoint who and where I am.  FB to me is a little like driving a motorcycle through a rural Texas town at high speeds, and not expecting to be pulled over and held at gunpoint by a State Trooper, and then escorted out of the county (happened to a freind 30 yrs. ago).

 

So how about them apples guys?

 

I'm stomping a size 14 extra wide for all the world to see (and hedging exposure with OSx / iOS) metaphorically of course...

[clutch]

I am just playing with this as a mental exercise. 

 

I can easily destroy Google or severely minimize it with upcoming technology. 

 

The easiest way occurs naturally as data storage increases.  At some point I may have enough storage on a server in my closet to store virtually all of the internet, or selectively download the parts I need.  I do this once a month.  It has the benefis of a high level of security, privacy, and taking my data away from the government and major corporations.  I could run my server to clear ads, and when I did my once a month download and upload, I could security shield it such that the government and corporations dont know what I am looking at. 

 

I could continue to access the weather reports and daily news via the public internet and subject myself to the advertising at that access point. 

 

I could also start building airplanes in my garage and wipe out Boeing some day.

 

You are just trivializing all the technologies required to transfer, cache, organize, and search the entire Internet. And I have a pretty good conviction (as someone working in the field) that Google has figured out how to do all that in the most effective / efficient ways. That is part of Google's moat.

[crastogi]

Not to mention that the data grows at an exponential rate

[rkbabang]

I am just playing with this as a mental exercise. 

 

I can easily destroy Google or severely minimize it with upcoming technology. 

 

The easiest way occurs naturally as data storage increases.  At some point I may have enough storage on a server in my closet to store virtually all of the internet, or selectively download the parts I need.  I do this once a month.  It has the benefis of a high level of security, privacy, and taking my data away from the government and major corporations.  I could run my server to clear ads, and when I did my once a month download and upload, I could security shield it such that the government and corporations dont know what I am looking at. 

 

I could continue to access the weather reports and daily news via the public internet and subject myself to the advertising at that access point. 

 

I could also start building airplanes in my garage and wipe out Boeing some day.

 

You are just trivializing all the technologies required to transfer, cache, organize, and search the entire Internet. And I have a pretty good conviction (as someone working in the field) that Google has figured out how to do all that in the most effective / efficient ways. That is part of Google's moat.

 

+1, while your doing that I'm going to come up with a better way to move large amounts of heavy goods across land and completely crush BNSF's business.

[Guest Schwab711]

I have always assumed that Google has the best business, but Facebook data is winning elections around the world. FB provides that best ROI on advertising by a wide margin (pricing power). Even if user growth slows, as long as data shared continues to grow, so does the moat. I'm starting to wonder why I don't own FB. It owns the most valuable database in the world.

[abyli]

I have always assumed that Google has the best business, but Facebook data is winning elections around the world. FB provides that best ROI on advertising by a wide margin (pricing power). Even if user growth slows, as long as data shared continues to grow, so does the moat. I'm starting to wonder why I don't own FB. It owns the most valuable database in the world.

Yeah, buy it! It is not expensive.

[abyli]

Almost every year, Warren and Charlie talk about Amazon and Google. I just do not understand why they have not pulled trigger yet. Cheap or not does not depend on last year's earnings, it all depends on how much Amazon and Google would be worth 10 years from now. If it is good price 10 years from now, why do not you pull the trigger?