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Buffett on what "understanding" a business means

Buffett & Munger2000-04-29videoOpen original ↗

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SpeakersQuestioner1Warren1
QuestionerIn terms of these tech stocks, you say that you don't understand them. I can't imagine you're not understanding something.
WarrenOh, we understand the product. We understand what it does for people. We just don't know the economics of it 10 years from now. I mean, you can understand all kinds. You can understand steel. I mean, you can understand home building. But if you look at a home builder and try and think where it's going to be in five or 10 years, the economics of it, that's another question. I mean, it's not a question of understanding the product they turn out, the means they use to distribute it, all of those sort of thing. It's the predictability of the economics of the situation 10 years out. And that's our problem.