Tony, Re: "Buffett, I saw him on TV recently, giving an investing seminar of sorts to a high school student group. He impressed me as being very good at talking at the level he needs to, and as a terrific advisor. Very impressive guy. Maybe he could learn tech stocks by reading SI."
I like Buffett too. I've read all the books about him and those written by and about his mentor Ben Graham. But as you know, Buffett (despite a close friendship with Bill Gates) has steered clear of techs. Because he says... he doesn't understand them.
Even if Buffett made the effort to learn tech stocks, which I doubt he would, I don't believe he would be buying much TECH at these prices. Current valuations (even Intel's in MHO) seem to leave very little room for a "margin of safety" (share price discounted below share value).
On the other hand... Berkshire Hathaway is priced quite attractively at current levels (+/-30% below intrinsic value). I was a buyer of BRKB in the closing days of 1999. My interpretation is that there is very little further downside risk with BRK and considerable upside potential. My purchase of BRKB is designed as a hedge against a potential tech/internut sector correction and its possible affect on my portfolio.
A correction might pull quality names (INTC, MSFT, CSCO) down with the lesser quality (many profitless, a few product less) ones. Guilt by association if you will. I believe a correction is becoming more and more likely with each passing day, as already insane valuations (particluarly internets) continue to deviate from reality. Fortune recently had a good piece by Buffet in which he addressed John Q. Investor's overly optimistic expectations for investment returns, specifically from internet companies.
We'll see what happens. As insurance, I am placing a significant bet on Mr. Buffett. I figure in ten years he will deliver a satisfactory return with very low risk. I'll keep my techs. Warren won't touch them.
I am still very long on Intel, although I had to lighten up a bit to pick up my Baby-B's. Sold a few shares today at 85.
Regards and Happy New year! |
