Warren Buffett’s legacy as one of the all-time great investors is assured. However, in recent years his prowess has been called into question as the share price of Berkshire Hathaway (US:BRK.A) has underperformed a cheap index-tracking fund. Does Berkshire have the right portfolio of investments and businesses to make investors happy?
Berkshire and Buffett have been doubted before. Twenty years ago, Buffett was accused of not understanding the new world of the internet as he refused to buy grossly overvalued technology and telecom stocks. He was proved right back then as the bubble burst, but now some people think that he is out of touch again and has been too slow or unwilling to invest in the businesses that are seen as the drivers of progress and wealth creation in the years ahead.
This is not a groundless point of view. We have seen and are seeing the rise of the intangible economy or capitalism without capital. Growth and wealth is being created from leveraging technology investments in areas such as software as a service (SaaS), data, digital payments, internet retail and electric vehicles.