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Of world's richest men and their words

May 5, 2008

Three of the world's richest men are in news these days, directly or indirectly. While the only Indian amongst them, Mukesh Ambani has been featured in Forbes for the US$ 2 bn palatial home that he is building in Mumbai, the other two - Bill Gates (Microsoft) and Warren Buffett (Berkshire Hathaway) are occupying news space and mind space for the corporate developments taking place in their respective companies. Let us talk about Bill Gates first. Mr. Gates' company, Microsoft has withdrawn its offer for rival Yahoo, citing that the consideration demanded by the latter 'does not make sense'. As a matter of fact, Microsoft had bid for the Internet business' second largest player in January this year, for a consideration of US$ 45 bn. However, after much deliberation internally, and taking into account Yahoo asking for a further US$ 5 bn (which Microsoft believes defies economics), the latter has withdrawn its bid for the former.

Readers would do well to note that Microsoft has been trying to break Google's hegemony in the Internet domain but has actually struggled to compete with the latter for billions of dollars of advertising shifting to the Web. Post this Yahoo episode, Microsoft's management has indicated that they will continue to pursue an aggressive strategy in the Internet space, even if it were to be done individually.

Now, coming to Warren Buffett, the legendary investor, in his company Berkshire Hathaway's annual general meeting, has asked investors to 'think small'. As sourced from CNN's financial website, Buffett has made a simple point to investors - "As an investor, you don't need to predict the economic cycle (or even pay much attention to it). Instead, you should focus on evaluating individual businesses if you pick your own stocks."

  • Read our analyses of Warren Buffett's letters to shareholders

    When asked as to what were his views on the US economy, he indicated of having no clue and said that he did not care about it either. He said "I haven't the faintest idea. We never talk about it, it never comes up in our board meetings or other discussions. We're not in that business [of economic forecasting]. We don't know how to be in that business. If we knew where the economy was going, we'd do nothing but play the S&P futures market." So much has been the humility of this man who has indeed been one of the greatest investors the world has ever seen.

    And when asked about his views on Berkshire Hathaway, he said, "We think Berkshire is an attractive investment [at today's price]. We don't think it's the most attractive in the world." Some lessons for the corporate chieftains who harp about how their company's stock is the most attractive investment opportunity an investor can buy into.

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