Moving Beyond Warren Buffett: Who Can ‘Oracle’ Tech Stocks?
July 27, 2020 @ 12:43 +03:00
Warren Buffett has an unparalleled record of investing in winning businesses for epic returns. What does it say about the environment for capital markets, that the Oracle of Omaha’s last decade was a lost decade?
From 1964 to 2019, Berkshire Hathaway’s market value grew 2,744,062%. A hundred dollars in the care of Buffett became $2.7 million in a little over a half-century. Over the same period, the S&P 500 Index gained a comparatively paltry 19,784%. That’s why he’s called the Oracle. But Berkshire has underperformed the S&P 500 over the 2010s.
It looks increasingly unlikely that Warren Buffett and his value investing students at Berkshire will be the ones to deliver 2.7 million percent returns over the next half-century. So who will?
Maybe Founders Fund head Peter Thiel. The PayPal and Palantir founder is a growth investor with a heavy emphasis on tech stocks. He was an early investor in Facebook, SpaceX, Airbnb, and Spotify.
In his 2014 book, “Zero to One,” Thiel explained why it’s futile to copy a great businessman like Warren Buffett, or any great businessperson: The next Bill Gates will not start an operating system. The next Larry Page won’t start a search engine. The next Mark Zuckerberg won’t start a social network company. If you are copying these people, you are not learning from them.
Likewise, the next Warren Buffett and market oracle won’t buy and hold value shares in manufacturing, banking, and insurance. Because we live in a fundamentally different world from 1965, the Berkshire business paradigm is growing obsolete. That doesn’t mean Buffett’s principles are outdated. Most of them are timeless, but successful investors in the digital era will apply them differently.
Buffet himself might agree that he shouldn’t be copied. Instead, investors should take his principles to heart and apply them to a changing world. In 2017, Buffett said he doesn’t want to be remembered as an investor. He wants to be remembered as a good teacher.
Moving Beyond Warren Buffett: Who Can ‘Oracle’ Tech Stocks?, CCN, Jul 27