PERHAPS if you have been following the stock exchange, you would have seen that there is a new trend lately. We have seen Apple becoming the first company to reach and cross the $2 trillion market capitalization and Elon Musk surpassing Jeff Bezos as one of the richest man in the world. These have been one of the best years to live in the world ruled by the technological companies.
Is this the end of value investing which has been popularized by the ‘Oracle of Omaha’ – Warren Buffet? Mr W Buffet is one the richest man in the planet, who bases his investing approach on value investing. He is a good disciple of value investing laid down by Benjamin Graham. Buffet who celebrated his 90th birthday last year once wrote he prefers “simple business” adding that “if there’s lots of technology, we won’t understand it”
We have seen a new dimensional shift on what Buffet said back then and his approach nowadays. His portfolio now consists of Apple and Microsoft (both technological companies). Apple now has the lion’s share in his portfolio more than 40%. He has admitted of late that he was wrong about technological companies that when he passed on investing on Amazon and Google back then he “made the wrong decisions”.
Let me introduce you to another billionaire Chamath Palihapitiya. The founder and CEO of Social Capital. Palihapitiya worked at Facebook from the years 2007 to 2011 and is credited with helping it achieve massive growth. The 44 year old invest heavily on technological companies and some of his portfolio include Tesla ,Slack ,Sofi amongst others .He is termed as the “new Warren Buffet” by some investors.
The Sri Lankan native whose family seek refuge in Canada when he was still a child is on his way of becoming one of the greatest investors. He does not shy away as he outlined his ambition to build “our generation’s Berkshire Hathaway”.
The billionaire wants to build, “a Berkshire, a holding company that, instead of holding Gillette and Coca-Cola and McDonald’s, will hold technology businesses”.
Josh Brown, an investor admitted that Palihapitiya has figured out how to have the zero cost of capital and the endless money coming in, and everything he touches turns to gold immediately, because he’s had past success.
We have seen how technological companies and Bitcoin has become the “it thing”. Is Warren Buffet wrong about Bitcoin? Are these companies going to take Blackberry’s path-gone and never to be resurrected again or they to be part of our daily life? The mind boggles.
Technology has changed the way we view everything. WhatsApp has become a necessity as it speeds up communication. Zoom has come and has played a key role in making us conduct online meetings during these difficult periods. The rise and the emergence of GameStop. Is this going to end at all? If we invest in these companies in the long run is it going to end in tears or in wealth?
Bringing it back home, the Stock Exchange doesn’t have much technology companies, we have Cassava Smartech and it has generally been performing well. Some analysts are also expecting a boom this year since the pandemic is favoring tech companies. Investing pays even more when you put your money in start-ups. Let’s build a Silicon Valley back home and invest in start-ups for they can be more returning as compared to the public listed companies.
Is this the end of value investing or it has been re-invented?