2011: What sector would Buffett like to add to his circle of competence?

AUDIENCE MEMBER: Caroline Tile (PH), Boston, Massachusetts.

Mr. Buffett and Mr. Munger, if you were going to live another 50 years, and we sincerely hope you do, and could add one additional sector or asset class to your circle of competence, which sector would it be and why?

WARREN BUFFETT: Well, that’s a very good question, and I particularly like the preamble. (Laughter)

Well, you would — you would certainly pick a sector that’s large, because it isn’t going to make any difference to Berkshire if we get to be experts on some tiny little industry or business.

I would say that — that, you know, it would have to be something in the — this isn’t going to happen — but if I could really become expert — and I mean really expert, knowing more than most — almost anybody else about the subject — in the tech field, you know, I think that that would be terrific.

It isn’t going to happen, but it’s going to be a huge field.

There are likely to be, you know, a few enormous winners, a lot of disappointments. So that the ability to pick the winners, you know, is far disproportionate to the ability to pick the winners, we’ll say, among integrated major oil companies where they’re all equated in price.

You’re not going to have a big edge in trying to pick Chevron against Exxon against Continental and Occidental, and you name it.

But the degree of disparity in results among larger tech companies in the future is likely to be very, very dramatic. And if I had the skills where I could pick the winners there I would do a lot better than if I had the skills to pick the winners in the major integrated oil field.

You probably will have better luck with Charlie on this one because he knows a lot more about a lot of industries than I do. Charlie, what’s your answer?

CHARLIE MUNGER: Well, it would either be tech or energy. And I think that we’re the wrong people to develop the expertise. (Laughter)

I think if we were going to do it, it would have already happened.

WARREN BUFFETT: Yeah.

CHARLIE MUNGER: I do think we might identify someone else who has abilities that we lack. That’s been very hard for us but — (Laughter)

WARREN BUFFETT: We’re not going to tell you. (Laughs)

CHARLIE MUNGER: But we’ve done a little better lately.

WARREN BUFFETT: That’s a good question.