- (0:15) - Is Warren Buffett Feeling Pressure To Put The Cash To Work?
- (3:15) - Interviews With Warren Buffett
- (7:00) - Tech Compared To Two Revolutionary Industries
- (10:20) - Advice From Warren Buffett: Economic Moats
- (15:00) - Episode Roundup: Podcast@Zacks.com
Welcome to Episode #58 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
Warren Buffett was back on television again recently, sitting for interviews as he seems to do just about every quarter now.
With growth stocks dominating in 2017, Berkshire Hathaway is sitting on about $100 billion in cash because, according to Buffett, there are few value investing opportunities.
Buffett and Tech Stocks
Other than Apple (AAPL - Free Report) and IBM, Berkshire has shied away from technology or social media stocks. Yet some of the technology stocks, especially in the semiconductor industry, seem really cheap.
Micron (MU - Free Report) , for example, is trading with a forward P/E of just 6.9.
But to understand why Buffett stays on the sidelines when growth stocks are booming, it’s helpful to go back in time to prior boom growth periods.
Some of you may recall that in 1998-1999, critics pounded Buffett for not buying any technology stocks. They called him old and out of touch.
In response, Buffett made public, through Fortune Magazine, his thoughts on the stock market and investing in revolutionary technologies.
Buffett’s Stock Buying Advice in 1999
In 1999, there were a lot of revolutionary technologies, such as the Internet, bursting onto the scene.
But Buffett pointed out that autos and airlines were equally as revolutionary earlier in the century. And which investments were winners among them?
It’s only easy, in hindsight, to see who will become the winners. Even today, about 20 years after the dot-com boom, it’s just becoming clear who survived among the tech companies (Yahoo anyone?).
In the auto industry, there were hundreds of auto makers and companies involved in the auto industry at one time. Eventually, you had General Motors (GM - Free Report) and Ford emerge as winners. But even then, that didn’t mean that investors won out.
Who Will Win Going Forward?
Buffett said in May 2017 that he admires Jeff Bezos and Amazon (AMZN - Free Report) . Amazon has emerged a “winner,” for now.
But what about a company like Match (MTCH - Free Report) which owns dating sites like Match.com and Tinder? These have been revolutionary apps and have transformed the way people date.
In 1999, Buffett laid out what investors should look for in ANY company, but especially those in revolutionary technologies.
Was he right and should you still follow his advice in 2017?
Tune into this week’s podcast to find out.
Want more value investing insights from Tracey?
Value investors are a special breed of investor. They don’t follow the herd.
If that is your style of investing, be sure to check out Tracey’s weekly Value Investor service to receive more in-depth analysis on value companies and see which stocks she thinks are the best bargains now.
The Value Investor portfolio holds between 20 and 25 value stocks for the long haul.
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