Tuesday, November 15, 2011

Investing: Better Late Than Never

Sometimes love comes late. This seemed to happen to Warren Buffett. The investment guru is famous for disliking technology. He preferred investments in railways, insurance, newspapers (Washington Post) and other businesses he claims to understand, the so-called "Old Economy".

But recently - in the age of 81-  the billionaire investor discovered his feelings for the so far neglected technology sector, the "New Economy". The media reported that his holding company Berkshire Hathaway took a $10.7 billion stake in International Business Machines Corp (IBM). Buffett/Berkshire also bought 9.3 millions shares of Intel. Both companies are bellwethers of the technology industry and focus on chips, IT consulting and other technology oriented services.

It looks like that Buffett now acknowledges the rising importance of the digital technologies. We live in a world where everything is accelerating. Therefore companies need to invest more and more in IT to deal with their competitors, to exploit chances in foreign markets and to adapt quickly to rapidly evolving markets. The business numbers from Intel & IBM show, that these companies are gaining access to the fast growing emerging markets, helped by technological progress which reduces prices for hardware continuously. Another boost comes from the booming global online community which uses connected devices, including PCs, smartphones, tablets, embedded devices, and smart TVs.

The technology industry should grow faster than the rest of the economy, meaning good long-term perspectives for stocks of their bellwethers.

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