At Berkshire Hathaway’s annual shareholder meeting in Omaha on May 5, chairman Warren Buffett called his decision to pass on Amazon and Google a mistake. A shareholder then rose from the audience to ask: If Buffett regrets turning down those companies, does he feel the same way about not investing in Microsoft?
It was a fair question, made only slightly awkward by the fact that Microsoft founder, Berkshire board member, and longtime Buffett pal Bill Gates was seated about 15 feet from the dais where the Oracle of Omaha was holding court.
“In the earlier years, it’s very clear—the answer is stupidity,” Buffett said.
Famously skeptical of tech stocks, Buffett also has said it took him too long to recognize Apple as a consumer products company rather than a tech one. (Berkshire upped its initially small stake in Apple earlier this year and is now Apple’s third-largest shareholder.) But there will be no such catch-up play for Microsoft.
These days, Buffett explained, “it just would be a mistake for Berkshire to buy Microsoft.”
He went on to explain:
If something happened a week later, a month later, in terms of [Microsoft] having better earnings than expected or making an acquisition—anything—both Bill and I would, incorrectly, but would be a target of suggestions and accusations, perhaps even that somehow he had told me something, or vice versa.
I try to stay away from a few things just totally because the inference would be drawn that we might have talked. . . There’d be a lot of people who wouldn’t believe us if something good immediately happened after we bought it.
The story checks out. Buffett and Gates have a long and close friendship and frequently team up to spearhead philanthropic efforts, play bridge, test mattresses, and conduct other typical billionaire activities. It makes sense that he’d want to avoid the suggestion of insider trading.
This also happens to be the perfect thing to say when you really don’t want to invest in a friend’s business idea. So the next time a pal or acquaintance pitches you on a dubious-seeming startup or a Kickstarter campaign, channel Buffett’s insistence on above-board dealings and respond: “I would, but I’m afraid you’re going to be too successful. Best of luck, friend.”