Even the most seasoned business leaders like Warren Buffett can miss out on the next big wave in investing if they are too cautious about navigating through uncharted waters.

During the bull run of the US tech sector in the late 1990s and early 2000s, Buffett had an aversion towards tech stocks.

Playing it safe also has its consequences

While other investors might have easily been swayed to buy into startups in the years leading up to the Dot-Com Bubble, he stood on the far end of the spectrum – admitting that he didn’t know enough about the tech industry to invest in it.

Buffett would realise, in hindsight, that this overly cautious approach also caused him to miss out on the early-stage growth of what would become the behemoths of that era.

With a strategic leadership style during economic downturns, Buffett has been a trusted voice among investors for years. He emphasises value investing, which facilitates the growth of undervalued companies – a strategy that has proven effective during market crises.

His approach contrasts with peacetime CEOs who prioritise growth and expansion in stable markets.

Yet, not very many delve into the “mistakes” that led him to develop a wartime strategy.

As CEO of Berkshire Hathaway, Buffett has had his share of missed opportunities. He regrets not having invested early on in Amazon and Google primarily due to his underestimation of their potential. He described his decision as “stupid,” admitting how he failed to recognise their future dominance. Buffett once recounted: 

I was too dumb to realise what was going to happen.

The CEO first had to understand the market. At the time, he believed tech companies lacked a sustainable competitive advantage, also called a “moat,” making him believe their future profitability was uncertain.

This led him to favour more stable, predictable businesses. His investment philosophy often centred on companies with tangible assets and strong brand loyalty, which he found more appealing than the volatile nature of tech stocks.

At the turn of the millennium and throughout the 2010s, however, more tech companies grew to become trusted consumer brands: Microsoft, Apple and Amazon to name a few. And this prompted the CEO to reconsider his stance.

Buffett recognised the need to adapt his own investment philosophy to include tech firms with strong brand value and competitive advantages, as seen in his later investments in Apple and Amazon.

He learned how some tech companies can provide sustainable growth and profitability, challenging his earlier belief that they were too volatile. He shifted to actively investing in tech companies, especially those now delivering solutions powered by artificial intelligence.

Notably, he acquired significant stakes in businesses that have now become among Berkshire’s best investments.

Humility as a superpower

Buffett’s humility has profoundly influenced his later investment decisions in tech by fostering a mindset of continuous learning and adaptability.

Acknowledging his past mistakes, particularly in missing opportunities with companies like Amazon and Google, he embraced humility as a strength, allowing him to reassess his views on technology.

This shift led him to invest significantly in Apple, recognising it as a consumer products company rather than merely a tech firm.

Buffett’s willingness to admit errors and adapt his strategy underscores the importance of humility in navigating the complexities of modern investing.