"A number of our shareholders have written us in frustration with our lack of direct technology investments. We are all mind-numbingly aware that technology stocks comprise the current & and virtually only -- area of market excitement today and have accounted for almost all the gains in the market indexes in 1999 and 2000 to date. Some shareholders have accused us of 'smugness' in our staunch agnosticism in this area. Quite the contrary! Rather, we find it extremely daunting to analyze businesses characterized by rapid technological change with their resultant shorter periods of predictable competitive advantage. And generally these companies trade at very high valuations which implicitly assume that dramatic growth and very high profit levels will continue uninterrupted in almost flawless perpetuity, in sharp contrast to almost all economic history. That requires a sense of certainty that we simply cannot muster.

Investors abandon valuation considerations in investing from time to time. You might be interested to read the following commentary by Benjamin Graham in reviewing stock market behavior leading up to 1929: 'The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new era theory led directly to this thesis..Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell, but even upon the price at which it would deserve to sell..The results of such a doctrine could not fail to be tragic' These comments were written 66 years ago in Security Analysis, 1934 edition. Ironically enough in view of today's market conditions, the title of the chapter is 'The New-Era Theory.'"