Musk v. Buffett: Candy clash exposes differences in investment philosophy
After Elon Musk badmouthed Warren Buffett’s investment theory of “moats,” the babbling billionaires exchanged remote jabs in a public fight about candy this past week.
The playground boxing match showcased two big egos in opposite corners of the ring — and their fundamental differences in investment style.
WTF is a moat and why does Elon think it’s lame?
An economic moat is the competitive advantage that separates a particular business from the pack, a term popularized by Buffett — and a requirement for any business that wants his investment.
“Moats are lame,” Elon told investors on an earnings call last week, “What matters is the pace of innovation.”
Warren B — owner of See’s Candies — wouldn’t take Musk’s mockery, saying “Elon may turn things upside down in certain areas [but] I don’t think he’d want to take us on in candy.”
Musk later unleashed a Tweet-storm sarcastically describing plans to “build a moat & fill it w candy… Berkshire Hathaway kryptonite.”
Two billionaires, polar opposite investment strategies
Buffett invests in stable, near-monopolies over decades (4, in the case of See’s) — stark contrast to Musk’s investment in rapid-fire innovation to disrupt established industries.
The bickering between the Obi-Wan-like Berkshire Hathaway investor and the upstart Tesla founder highlights a broader debate about the merits of risky short-term innovation vs. oligopolistic long-term competitive advantage.
But by the close of trading yesterday, both billionaires were doin’ alright — Tesla was up 2.95% and Berkshire Hathaway was up 1.03%.