Technology Stocks

So why aren't some of the tech stocks with low P/Es that I've mentioned recently on the Stocks to Watch list?

The reason is simple: everything on that Stocks to Watch list is intended to be stocks I like -- for my own portfolio -- as very long-term investments if they can be bought cheap enough. Well, there's just no technology business that I'm comfortable with as a long-term investment. Most are involved in exciting, dynamic, and highly competitive industries.

That's precisely what makes them unattractive long-term investments.

No matter how good business looks today, it's just not that easy to predict their economic prospects many years from now.

With the best businesses that's not the case.

"At Berkshire we will stick with businesses whose profit picture for decades to come seems reasonably predictable. Even then, we will make plenty of mistakes." - Warren Buffett in the 2009 Berkshire Hathaway (BRKa) Shareholder Letter

Here are a couple other posts on this:


For me, it's just too difficult to judge what the economic moat of most tech stocks will look like in the long run. Occasionally, certain tech stocks have sold at enough of a discount to conservatively estimated intrinsic value that it made me willing to own some shares. In other words, their price was cheap enough relative to likely future per share cash generation (and, in some cases, there's been a meaningful chunk of net cash on the balance sheet for an added cushion) that it provided a substantial margin of safety. 

So nothing great had to happen to get a satisfactory investment result.

Even then I've only been willing to slowly accumulate very limited amounts. 

They will remain, at most, very small positions and are generally not long-term investments.

Adam

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