Home -> Law Blog Directory -> Patent Law Blogs -> IPBiz

Patent Law

: IPBiz

What would Buffet say about patent valuation?

By Lawrence B. Ebert, Esq.

What would Warren Buffet say about patent valuation?

In a piece on yahoo finance titled: Business Musings From Woodstock for Capitalists, one has the following text:

Messrs. Buffett and Munger made clear their complete disdain for the use of higher-order mathematics in finance.

"There is so much that's false and nutty in modern investing practice and modern investment banking, that if you just reduced the nonsense, that's a goal you should reasonably hope for," Mr. Buffett said. Regarding complex calculations used to value purchases, he said: "If you need to use a computer or a calculator to make the calculation, you shouldn't buy it."

Said Mr. Munger: "Some of the worst business decisions I've ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you, but it doesn't. They teach that in business schools because, well, they've got to do something."

Mr. Buffett said: "If you stand up in front of a business class and say a bird in the hand is worth two in the bush, you won't get tenure....Higher mathematics may be dangerous and lead you down pathways that are better left untrod.

IPBiz notes that "being highly cited" might get one tenure, but the underlying "back scratching" that goes on in citations is one reason NOT to use it in valuing patents.

See also

http://ipbiz.blogspot.com/2005/12/valuation-of-patents.html

http://ipbiz.blogspot.com/2008/11/on-myth-in-ip-valuation.html

http://ipbiz.blogspot.com/2009/01/chesbrough-and-open-innovation.html

Intangible valuation myths - an author responds

Full post as published by IPBiz on May 04, 2009 (boomark / email).