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Sunday, May 14, 2017

Google Share Return- multiplied 19 Times Since IPO , 2004


By on Sunday, May 14, 2017


Google has multiplied 19 Times Since IPO , 2004 

Mr. Warren Buffett has always been skeptical about the companies in Information Technology and Aviation Sector. Given the bad dynamics of both the industries, he always stayed away from both the sectors. 

However, facts have changed now. 

And as Keynes said - When the Facts Change, I Change My Mind. What Do You Do, Sir? 

Not only Mr. Buffett has started investing in both the sectors, he also regrets not investing in companies Google and Amazon. 

If we look at Google share price moment the company since its IPO in 2004 has multiplied 19 times. 

This clearly is a missed opportunity for world's largest investor. However, it will never appear in the real profit and loss account of Berkshire Hathaway. 

But if one is to draw an opportunity Profit and Loss Account, Google would perhaps be the biggest cost item. 

This is what Buffets names as Errors of Omission. 

Buffett also confessed missed opportunities that are not reflected directly in Berkshire Hathaway's profit and loss statement.
    Our biggest tech failure was missing Google. Walmart and Google were missed opportunities.
As many of equitymaster.com's readers would know, we recently interviewed one of ardent followers of Warren Buffett and Charlie Munger, Professor Sanjay Bakshi. This is what he had to say on Opportunity PnL:

    I bought Eicher Motors at Rs 200 and sold it at Rs 600 and now it sells for Rs 26,000. This type of mistake helped me realise that one can get disproportionate payoffs by staying invested in high quality businesses for a long time.

    Realising the importance of keeping an 'opportunity P&L' account marked a turning point in my investing career.

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