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Warren Buffett’s 1999 technology warning was about the limits of his and Charlie Munger’s ability to identify which fast-changing tech businesses could sustain a durable competitive advantage—not a claim that technology had little value or that every investor should avoid tech stocks. In the same letter, Buffett made a separate argument: investors seemed to expect too much from equities overall. One was about Berkshire’s competence to assess particular companies; the other was about long-run market returns.
What did Buffett say about technology stocks in 1999?
In Berkshire Hathaway’s 1999 Chairman’s Letter, dated March 1, 2000 in its reproduced version, Buffett said Berkshire held no technology stocks. He and Munger nevertheless shared the view that technology products and services would transform society. Their difficulty was judging which companies in the sector could keep an advantage over time.
“Our problem — which we can’t solve by studying up — is that we have no insights into which participants in the tech field possess a truly durable competitive advantage.”
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Special offer. See more information about Outbyte and uninstall instructions. Please review EULA and Privacy policy.— Warren E. Buffett, Berkshire Hathaway 1999 Chairman’s Letter
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He described the problem as one of long-term business economics, not a lack of interest in technology:
“Predicting the long-term economics of companies that operate in fast-changing industries is simply far beyond our perimeter.”
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— Warren E. Buffett, Berkshire Hathaway 1999 Chairman’s Letter
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What did “circle of competence” mean here?
Buffett’s “perimeter” was the boundary of what he and Munger believed they could evaluate reliably. For Berkshire, recognizing that boundary meant declining to invest when they could not confidently assess a company’s lasting competitive position and economics. It was a statement about their own decision standard, not a universal rule against investing in technology.
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A secondary transcript of Berkshire’s 1999 annual meeting records Buffett saying that, if forced to bet on a technology company, he would choose Microsoft, but that he did not have to make that bet and understood the soft-drink business more clearly. Because this is a third-party transcript rather than an official verbatim record, it is best treated as illustrative context—not as a formal investment recommendation.
How the technology decision differed from Buffett’s market warning
The letter also warned that equity investors appeared to expect too much. That broader argument concerned the relationship between business earnings, economic growth, prices, and future returns—not whether Berkshire could identify a durable winner in technology.
| Dimension | Technology-stock decision | Broad market warning |
|---|---|---|
| Question | Could Berkshire identify durable economic winners in a rapidly changing industry? | Were prices and investor expectations consistent with plausible long-run earnings growth? |
| Scope | Buffett and Munger’s circle of competence and Berkshire’s portfolio | Equity returns generally |
| Time horizon | The long-term economics of individual companies | Long-run returns, not the market’s direction next month or next year |
| Reasoning in the letter | Lack of insight into which technology participants had a durable advantage | GDP and profit growth, an inflation hypothesis, dividends, and valuation expectations |
Buffett put the distinction plainly: “We have never attempted to forecast what the stock market is going to do in the next month or the next year, and we are not trying to do that now.” The letter’s concern was about what investors might earn over time at prevailing expectations; it was not a short-term market-timing call.
What assumptions underpinned the return argument?
Buffett reasoned that if corporate profits broadly grew with the economy, business valuations could not rise much faster than economic output indefinitely. He used real GDP growth of about 3% and a hypothesized 2% inflation rate to consider nominal growth. He explicitly said he had no particular conviction in the inflation assumption. These were inputs to an argument about possible long-run returns, not a precise forecast.
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He also considered dividends: even with them included, he argued that prospective equity returns could fall well short of what many investors had recently experienced or appeared to expect. His Fortune article opened, “Investors in stocks these days are expecting far too much, and I’m going to explain why.” That text is available as a secondary transcription, not an original Fortune-hosted page. Berkshire’s official annual-report note confirms that the article appeared in the November 22, 1999 issue of Fortune.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What Berkshire’s 1999 results do—and do not—show
Buffett reported that Berkshire’s net worth increased by $358 million in 1999, while its per-share book value rose 0.5%. He called it the worst relative performance of his tenure. That 0.5% is Berkshire’s own book-value measure, not the return on technology stocks or on the entire stock market.
For historical context, the same letter reported annual compounded growth of 24.0% in Berkshire’s per-share book value over the 35 years through 1999, from $19 to $37,987. That is a backward-looking record, not a forecast or an expected return for investors.
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No automatic conclusion about present-day technology valuations or portfolios follows from the 1999 letter. It records Buffett’s reasoning in the market context of that time: he and Munger could not identify durable technology winners with confidence, and he thought investors’ broader return expectations were too high. The remarks offer a framework for thinking about what an investor can assess and what prices may imply, but they do not establish that technology stocks are currently overvalued or predict when markets will rise or fall.
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