Why Buffett doesn't invest in Intel and Microsoft · Transcript

WarrenIt's a question of being able to identify businesses that you understand and feel very certain about. And if you understand those businesses, and many people do, but Charlie and I don't, you have the opportunity to evaluate them. And if you decide they're fairly priced and they have marvelous prospects, you're going to do very well. But there's a whole group of companies, a very large group of companies, that Charlie and I just don't know how to value. And that doesn't bother us. I mean, you know, we don't know how to figure out what cocoa beans are going to do or the Russian rouble. I mean, there's all kinds of financial instruments that we just don't feel we have the knowledge to evaluate. And really, you know, it might be a little too much to expect that somebody would understand every business in the world. And we find some that are much harder for us to understand. And when I say understand, my idea of understanding a business is that you've got a pretty good idea where it's going to be in 10 years. And I just can't get that conviction with a lot of businesses, whereas I can get it with a relatively few. But I only need a few. As you pointed out, you only need a few, six or eight or something like that. I don't think you'll find better managers than Andy Grove at Intel and Bill Gates at Microsoft. And they certainly seem to have fantastic positions. and the businesses they're in. But I don't know enough about those businesses to be as sure that those positions are fantastic as I am about being sure that Gillette and Coca-Cola businesses are fantastic. You may understand those businesses better than you understand Coke and Gillette because of your background or just the way your mind is wired. But I don't, and therefore, I have to stick with what I really think I can understand. And if there's more money to be made elsewhere, I think the people that may get entitled to it.