Warren Buffett Says He Just Doesn’t Get AAPL

Warren Buffett Says He Just Doesn’t Get AAPL

Warren Buffet, the world’s third richest man, has an aversion to buying Apple stock… because he just doesn’t get them.

“We held very few in the past and we’re likely to hold very few in the future,” said the billionaire chairman of Berkshire Hathaway. “[It is] very easy for me to come to a conclusion as to what it will look like economically in five or 10 years, and it’s not easy for me to come to a conclusion about Apple.”

My first instinct was to decry this Mumm-Ra of financial wizardry for opening his desiccated gum flap and, with a puff of dust and a voice the sound of an unoiled door hinge slowly creaking open, shouting “I’M OLD!” in this manner.

Then I thought about it, and I realized he was right. I mean, not economically — I have no idea what AAPL stock will look like in five or ten years, although I think he’s right as an investing chairman interested in the long-term to view electronics as a tumultuous market: ten years ago, for example, Microsoft and Dell seemed untoppleable, Apple seemed doomed and no one gave a damn about Google. Apple just isn’t as sure a thing as Coca-Cola over the long haul.

But Buffett’s right in another way, too. I have no idea what Apple will even look like as a company in 10 years, or even five. After all, five years ago, Apple was still primarily an MP3 player maker. Ten years ago, they were primarily a computer maker. Now, they’re primarily a mobile device maker. Twenty years from now, they could be selling us all brain implants for all I know. But unlike Buffett, I don’t fear that. It excites me.

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  • Gouldsc

    It’s really quite simple; Apple, at it’s heart is a user experience company. They excel at taking messy problems and making them easy and accessible for ordinary people.

    When trying to figure out where they’ll be in 10 years or so, it may be difficult to know exactly which direction it will be, but there will be 2 things you can be fairly confident in: a premium product with nice fat margins, and a focus on making the complex, simple for people.

  • Charel

    Who knows where Apple will be in 5 or 10 years time. But then, equally, where will Warren Buffet be in 5 or 10 years time. He has had a good run for his money. Predicting the future is nigh impossible. His investments have always been in predictable investment returns which exclude new and unproven industries.
    He can afford to not invest in Google, HP and Apple as he makes enough on the investments with proven future profitability and his influence on their development. This he can never have on Apple.

  • TheMacAdvocate

    It’s not just Apple that Warren doesn’t get; it’s the technology sector in general. None of his top 20 positions are with tech stocks. Hell – 1/4 of his holdings are Coca Cola.

  • Matthew Case

    “But unlike Buffett, I don’t fear that. It excites me.”

    Unlike Buffet, we’re also not placing billion dollar bets. I bet that ratchets up the fear level a bit.

  • techloaded

    yeah apple is a moody stock — up 30 one week down 25 the next.

  • Adam trisk

    it doesnt matter what they are in the future, they’ll be defining it and we’ll all be buying it. That’s what true visionaries do.

  • Alladdinn

    When I first saw the photo accompanying this article, before reading the headline, I thought what is Elton John doing on a Mac site?

  • Deocliciano Okssipin Vieira

    Typical USA tycoon mentality.

    They fear innovation.
    Apple main fuel is competitively & innovation, which is risky for those tycoons.

    There will be more rich people in the emerging countries, and what rich people do To Mark them apart from the rest in countries with huge gap between middle class and the “working” class?

    ** That is where Apple risk taken and clear vision breaks free.

    But Thanks God ( for those who believe in one , i do not ) people like him are AWAY away from Apple, otherwise it will be another Microsoft.

  • Deocliciano Okssipin Vieira

    Safe heaven?

    Apple like Most German companies build things like No one.

  • Stewart Unsdorfer

    Apple will DOMINATE the home television market. They will finally connect tv’s with the internet/apps in a way that EVERYONE will want a new Apple tv/internet/computer device!!
    Same as they did we smartphones & tablets.

  • aardman

    The problem is Buffettt, like most analysts, is evaluating the company’s likely future products not the company’s ability to come up with (new, successful) products. If you need to have a good feel of what Apple’s products are going to be 10 years from now, then forget investing in it. You will never know. If you knew then Microsoft, HP, Samsung and all the other Apple wannabes out there would be making a beeline to your front door.

    No one can argue with Buffet’s investment track record, but if he ran a high tech company, he’d run it to the ground nixing one proposed product after another because he just can’t stomach the uncertainty of not knowing whether that totally new product will sell and where the company will be 10 years from now.

  • aardman

    As great as Apple has performed in the SJ2 era, I predict that it’s greatest period of growth will be post-SJ when whoever succeeds him is free to take this unique Apple skill that you just described and applies it to fields that here-to-fore Jobs has just refused to even contemplate because it’s outside his area of comfort/competence. Who knows? Air travel, power transmission, banking, specialized retail, fashion?

    It would be like the post-Uncle Walt Michael Eisner era at Disney. Not that I’m in that great a hurry to see the Post-SJ era at Apple . . .

  • imajoebob

    Great Idea! They should bring in someone who knows how to leverage a product and a brand into new areas. Someone who can take a brand identity and use it to build new markets and new products. Someone with success in consumer marketing, who can take that experience and apply it to (insular) Apple.

    Maybe someone from the soft drink industry?

    Or just see if George Santayana is available.

  • imajoebob

    The “problem” is that Buffett refuses to invest in companies he does not understand. He doesn’t follow the herd, and he won’t take a risk if he can’t figure out expected outcomes. That’s why he’s called the world’s greatest investor, not its greatest gambler.

  • redrust3

    As long as no one realizes that Apple’s power is not in its flimsy gadgets but the appeal of its apps stores, no one will really “get” Apple. Bought my shares at $7 when Apple was tanking. Never regretted it. Never bought an Apple device, but enjoy the ipod nano my wife gave me four years ago.

  • HerbalEd

    Whatever Apple does five or ten years from now, I bet it makes lots of money. I’m not cashing in my Apple stock yet.

  • HerbalEd

    Well, I love moody then because Apple stock is making me lots and lots of money.

  • David

    Apple, due to the charisma of its iconic leader, is more agile than any large corporation. Other than the ill-timed Mac (the PC for “the rest of us” made before they knew they needed PCs), Apple’s ability to create products the “rest of us” (read “non-geeks”) couldn’t have imagined but now want and camp out to buy has been uncanny. They are unique in an industry of products created by geeks for geeks trying to figure out “what the rest of us” wants.

About the author

John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his girlfriend and two parakeets. You can follow him here on Twitter.

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