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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (57324)	4/15/2001 12:12:30 AM
From: Dave	Read Replies (1) \| Respond to of 74651

MSFT's investment-bank model is very different from that of BRK. BRK buys companies that are undervalued, that have strong management teams, that have high barrier to entry and strong market presence. You know, standard value investment criteria. MSFT, on the other hand, buys companies whose products either (1) strengthen MSFT's monopolies, so that they can extend their monopoly income, or (2) threaten MSFT's monopolies, so that they can divert the threat. MSFT's model is good for its monopoly income, but bad for its investment income. As MSFT becomes more an investment bank and less a tech phenomenon, its investment strategy is becoming weaker. By the way, Warren Buffett is often quoted as saying that he doesn't invest in tech stocks because he doesn't understand them. People have widely interpreted this wrongly as meaning that he just doesn't have the technical acumen to understand the complicated concepts involved, or that he can't fathom the sophisticated buzzwords required to ride the Tech Wave. But in fact, when he talks about "understanding" a market or company, he is talking about quantifying and analyzing it. His point is that you can't quantify or analyze tech markets and companies reliably. The margin of error is too high, simply because of the volatility in the tech world. BRK buys companies that will be powerful market forces for decades. BRK buys with no intention ever to sell. If you buy tech stocks with this long-term approach you will be stampeded over by daytraders and speculators in no time. Dave