Tag Archives: Warren Buffett

Warren Buffett goes Solar

The world is on the tipping point of switching to 100% solar.

This will be another huge disruption, on a similar scale to electric cars replacing gas cars. Warren Buffett is not going to miss this party.

“Warren Buffett Has Started The Biggest Energy Revolution”

Solar is now CHEAPER than fossil fuel energy.

“In most parts of the world today, solar is the cheapest source of new power generation. So why hasn’t the world switched the plug to solar just yet?”

The only thing holding back the world from going 100% solar is the battery.  “MIT researchers estimated battery costs must sink to $20 per megawatt hour if we ever want to switch 100% to solar power.”

Buffett is investing in a solar farm that will store electricity in batteries for $13 per megawatt hour (MWh). That’s $7 less than MIT’s threshold. Combined with generation, the solar farm’s electricity will cost $33 per MWh. That’s $37 less than the $70 for natural gas.

Massive change is coming.

People all over the world are going to switch to solar, not just to make the world greener, but to make their wallets greener.

“The best news for investors, we are still in the early innings of this energy revolution. While the Invesco Solar ETF rallied 51% last year, it’s still down 88% from its highs…In the grand scheme of things, it has barely budged. With so much room for growth, solar stocks could easily double, triple, quadruple, or better in the coming years.”

There are many ways to invest in solar. There are many panel manufacturers, installation companies, financiers of solar installations, solar farm companies such as Warren Buffett’s, etc. But there are mainly just two inverter manufacturers: Enphase (which I own) and SolarEdge. This is similar to smartphones where there are mainly just two smartphone makers, Apple and Samsung. Another way to play solar is with Tesla, which is making batteries for utility companies and solar roofs.

Elon Musk will Disrupt these Industries and Warren Buffett

According to Jack Rickard, Tesla will destroy these industries:

  • Gas Cars
  • Oil

According to Warren Redlich, a car-accident lawyer, Elon Musk will hurt or destroy the following industries if he makes Robo Taxis:

  • Gas Cars
  • Oil
  • Car Insurance
  • Legal
  • Healthcare
  • Railroads/Trains
  • Airlines/airplane

However, robo taxis will take another one to 10 years to come out, depending on who you believe.  The predictions above are predicated on robo taxis mostly and partly on Elon Musk’s Boring Company and SpaceX.

Among Berkshire Hathaway’s biggest holdings are:

  • Geico (car insurance)
  • Santa Fe (railroad)

Robo taxis do not even need to come out to affect Berkshire Hathaway’s stock.  If enough investors fear that robo taxis will disrupt Berkshire, it will suppress Berkshire’s stock.

I think this is why Uber and Lyft, which have been growing revenues like crazy, is in the dumps with their stocks.  I could be wrong, but I think enough investors fear that Uber and Lyft will be put out of business by robo taxis, which is why their stocks are suppressed.  Therefore, I would avoid stocks in the above industries.

Uber and Lyft are HUGE DISRUPTERS of the taxi industry.  Yet, these DISRUPTERS will be DISRUPTED.  Rarely has any disrupter been disrupted so quickly.  Cars disrupted horses.  But it will be over a 100 years before gas cars are disrupted.

If Elon Musk comes out with Robo Taxis, he will be the biggest disrupter in history and will be the real “Iron Man”.

Do Not Buy Stock Because of its Dividend


Kevin OLearyKevin O’Leary thinks the best stocks are those that pay dividends. He loves bragging about the “juicy dividends”. Here’s why he’s wrong.

Let’s say a company has $1,000 of capital deployed and it makes $200 profit (20% return).  What can this company do with the $200?  One of the following:

  1. Invest the $200 into the business, to generate more revenue and to make another $40 of profit (20% return). This will continue to increase the value of the company.
  2. Company cannot figure out how or where to invest the $200, so it gives it to shareholders, as dividend.
  3. Sit on it.

Ideally, the company should do #1.  This is what shareholders should want.  They invested in the company to get 20% return. #1 is what you see most high-growth companies doing. They re-invest all of their profits back into the company. They put the money into R&D to create new products or services. They buy more stores or factories. They put it into Marketing and Sales to get more customers. With many early phase, fast growing companies, they show little or no Net Income. This is because they plow everything back into growth, in order to make the company more valuable.

#2 is not ideal because shareholders now need to find somewhere else to invest the $200 and try to make 20% return, which is unlikely.

#3 is the worse option.  Cash loses 2% of value every year, due to inflation.

Warren Buffett has explained these three options in the past.

Carl Icahn has berated Tim Cook (Apple’s CEO) for sitting on so much cash.


Here is another example of a shareholder who is not happy with the company doing #3:

“Longtime Berkshire Hathaway shareholder sells stake, accusing Warren Buffett of ‘thumb-sucking’”

Berkshire Hathaway is sitting on $120 billion of cash and not doing anything with it. Unfortunately, Buffett is not practising what he preaches.

Warren BuffettIn Buffett’s defence, it is hard to deploy $120 billion of cash.  There are only so many good companies to buy.  The majority of companies are mediocre.  A small percentage are bad.  A small percentage are excellent.  He cannot buy small companies anymore.  Even if he buys $1 billion companies, he would have to find 120 of them.

Buffett said himself that the bigger a fund or company is, the harder it will be to maintain the same percentage return.

You should find companies that can execute #1 from above. Failing this, then invest in companies that pay dividends.