Chuz,re your post re valuing intangibles.Warren Buffet ridiculed Yahoo in Berkshire Hathaway annual meeting last May butnot Dell
He said if he were teaching a class and anyone said there was value in
Internet stocks he'd flunk them. He also if I remember correctly was
told that Yahoo didn't recommend Berkshire, "we don't recommend Yahoo
either," he said.
Of course Buffett likes quantifiable value.
However, he praises Microsoft, and Intel or at least Gates and Grove and their intelligence and cunning and probably IMO would praise Michael Dell for his inventive effeciencies and the creators of Yahoo as well,
but Buffett has a rule that if he can't predict or anticipate accurately what a company's business will be like 10,15, or 20 years out then he concludes that he does not understand the business well enough to buy it. He adheres to
this discipline.
But from my brief (30 second) personal chat with the man and from other observations, I'd say he has a pirate's and a gambler's heart and if he were 20 years younger and managing a much smaller amount of money, he'd buy Dell and Yahoo and for two reasons:
--its management is very smart
--it now has an international franchise or brand name like Coca Cola and like the soft drink company has devoted followers who depend (and in the case of Yahoo, even need) it every day.
your investment philosphy posted yesterday was quite good. I printed it out and took it home so I can look at it when neccessary.
Is Chuzzlewit, a Dickens character name? I seem to remember a name like this.
I have a question for you (one you've addressed before I know). I believe Dell's "franchise" to use a Buffet-associated term or "barrier to entry" in a general sense is its business model efficiencies. That's what can make it Coca Cola not RC Cola. BUt let's assume that Compaq in time overcomes what you called its managerial greed and perfectly clones the Dell business model. THen Dell is no longer unique but has an imitator as powerful as Pepsi is to CoKe. What would be the rational action for an investor if he believed this was coming in a few years? OR is this even possible? Is Dell so far ahead that by the time COmpaq perfects its Dell imitation, it is too late? What do you think.
This is my third and last post allowed for today. I'll return anon.
jhg
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