Date
26 May 2017
Warren Buffett says he was 'too dumb' to realize what was going to happen in terms of Amazon. He said he never even considered buying the online retailer. Photo: Bloomberg
Warren Buffett says he was 'too dumb' to realize what was going to happen in terms of Amazon. He said he never even considered buying the online retailer. Photo: Bloomberg

Warren Buffett’s investment tips on technology

Billionaire investor Warren Buffett and his partner Charlie Munger spoke for hours at the Berkshire Hathaway annual meeting in Omaha on Saturday. This year, the pair discussed a wide range of topics related to tech.

Buffett talked about his sale of IBM shares while adding more to his Apple Inc. holding.

“Apple is different, and it’s a great consumer product. I’ve invested a lot in IBM, but I did not get a good return. Honestly speaking, I don’t have a deep understanding of the hi-tech business so far,” Buffett said.

Then Buffett admitted how he totally missed Amazon.

“I was too dumb to realize what was going to happen. I admired Jeff, but I did not think he’d succeed on the scale that he has, and I didn’t even think of the possibility that he’d do the things with the cloud services. I never even considered buying Amazon,” Buffett said.

“If you asked me if, while he was building up the retail operation, he’d also be doing something that would disrupt the tech industry, that would have been a long shot for me. I really underestimated the brilliance of the execution.”

As usual, Buffet discussed the importance of moat and how he would project business prospects five to 10 years down the road in view of how that moat may or may not get eroded (especially in an era of rapid technological advances).

For example, the advances in artificial intelligence (AI) have forced Buffett to consider the impact such technology could have on his businesses.

“I would say that driverless trucks are a lot more of a threat than an opportunity,” not just to Berkshire’s railroad business but also to its insurance business,” Buffett said.

“Self-driving vehicles would make the world safer; it’s going to be a very good thing. But it won’t be a good thing for auto insurers,” he said.

Buffett expects AI development will greatly lift productivity but it will also bring considerable uncertainty.

If AI is going to play a big role in the future, perhaps investors should think about owning some shares in this sector.

Since it’s hard to tell what is the best time to buy, using the dollar averaging approach to accumulate shares on a monthly basis may be a good idea.

This article appeared in the Hong Kong Economic Journal on May 10

Translation by Julie Zhu

[Chinese version 中文版]

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RT/RA

Columnist at the Hong Kong Economic Journal

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