David Prosser: No investment manageris totally infallible

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The Independent Online

Outlook Warren Buffett's investment in IBM says as much about the evolution of the world's best-known computing business as it does about the sage of Omaha himself. Mr Buffett famously eschews technology companies on the grounds that investing in businesses he doesn't understand is a recipe for disaster. But these days, IBM is not a technology company, or at least not a pure play on computing. Rather, it sees its future as a specialist consultant to organisations large and small seeking expert help with their technology requirements.

Still, with IBM's shares performing so strongly in recent years – up 28 per cent in 2011 alone – Mr Buffett's decision to buy the stock also appears to run contrary to his traditional affinity with the principles of value investment. It will be fascinating to see whether the move pays off.

If not, IBM could yet prove a rare black mark for Mr Buffett, who knows all too well that even star fund managers are only as good as their last trade. Just ask Anthony Bolton, who is arguably as close as Britain has got to producing its own Warren Buffett. Fidelity's star man must be regretting his decision to come out of retirement to run a fund specialising in China – its performance has been so poor that it threatens to mar his remarkable career track record.