Warren Buffett explains “circle of competence” as to invest money into what you can comprehend, and that’s apparently why he tried to avoid tech stocks for decades as he didn’t understand them clearly. But now Buffet’s bet on Apple Inc. and pre-IPO stake are finally paying off a great deal – and yes, investing in IBM is still considered a big mistake.

In August, Buffett invested $6.7B in Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, which was considered to be his highest bets outside the USA. According to The Economist, Japanese Trading Houses are infamous for being complicated providing minimum transparency to their shareholder structures, even though they are carried out in several kinds of businesses. And the $510B Berkshire Hathaway attained 5% stakes in each and every one of them, giving him competitive advantages as well as efficient returns.

Buffett may have invested in them because of their relative cheapness but the performance of the trading houses have been sketchy over the last few years as they ruthlessly compete with one another to get to the top. And, The Economist, again, says that their unreliable business strategies makes it harder for people to trust their risky tactics.

Now, there could be 2 explanations as to why Buffett, even after considering all the available data, is investing in them:

1)      It was seen in Japan that developing shareholder-friendliness improved corporate governance as well as raised productivity with better dividends and elevated cash positions.

2)      All the trading houses Buffett is investing in have energy businesses which fits perfectly with his future plans as their ideologies may match with those of Berkshire Hathaway Energy.

These bets are thought to have the potential to pay off if Yoshihide Suga, Prime Minister of Japan, can continue his antecedents’ corporate amendments with the end of the pandemic increasing the country’s demand for energy.