Tuesday, March 22, 2011

Invest only in what you understand: Warren Buffett

US billionaire investor Warren Buffett, whose group recently entered the Indian insurance market, on Tuesday said he was looking at investments in large countries like India, but rued the existing foreign investment caps in sectors like insurance. He said the company would look at investing in businesses where there is future.

Speaking to reporters on his maiden visit to India, Buffett said he did not consider India as an emerging market any more and even the US would benefit from rise of countries like India and China.

For Indian investors seeking a word of financial wisdom from Warren Buffett, regarded as world’s most successful investor, his advice is: “Invest in what you understand...don't go outside your circle of confidence...don't just buy and sell”.

Buffett's investments have mostly been in the US, but countries like China, Japan, Israel and South Korea have also attracted him in the past.

About India, where his presence is comparatively minuscule and includes recent tie-up with Bajaj Allianz for distribution of motor insurance products, Buffett said that he was looking at investments in large countries like India.

(Also read: Buffett praises Ajit Jain; adds to Indian-origin successor rumour)

Berkshire Hathaway, the conglomerate chaired by Mr Buffett, recently forayed into the Indian non-life insurance sector as a corporate agent of Bajaj Allianz General. India currently allows only 26 per cent foreign investment in insurance business, but a proposal is underway to hike it to 49 per cent.

Mr Buffett is in India as part of his philanthropic initiatives and is also expected to look at possible investment opportunities in the country.

As part of its India entry, the American conglomerate has incorporated Berkshire India to sell and distribute general insurance products in India. Recently, insurance regulator IRDA gave approval for the on-line corporate agency set up by Berkshire in India, the second country after the US to have such an entity by Buffett. The agency, where Allianz holds 20 per cent share, will have a capital of more than Rs. 22 crore.

Berkshire Hathaway is a sprawling conglomerate that has interests in various businesses, including property and casualty insurance and reinsurance, finance, manufacturing, and retailing.