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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (16204)	1/20/2003 9:42:07 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 78594

the difference is the Met's investment in artwork is not a wasting asset--it maintains value and appreciates, whereas Intel's plant and equipment depreciates as the technology becomes obsolescent. moreoever, artwork is unique and has scarcity value, whereas Intel's products are commodities that become increasingly plentiful (and less profitable) as time goes by. so if Intel doesn't throw off FCF from each generation of assets, it is just wasting capital. in contrast, if the Met bought their paintings at good prices, they could always sell them later at market peaks for a profit. because so much capital around the world chases the same assets in technology, almost nobody (except the monopolists like MSFT) has time to make any money on assets before they depreciate. thus technology is by and large a terrible business, once one backs out the Ponzi finance aspects apparent in certain companies. what is left is a capital-intensive commodity business in a non-growth industry without a "moat" around the assets, in Buffettspeak.