I read somewhere that Buffett avoids any industry that is subject or likely to be subject to government regulation. This is why Buffett avoids utilities. The same reasoning could apply to tobacco and Microsoft, though in the case of tobacco I think he avoids it to preserve his personal reputation (which "takes a lifetime to build and just 5 minutes to destroy") and in the case of Microsoft, he avoids hi-tech in general.
As Warren says "he knows the boundaries of his knowledge and operates withing those boundaries" (might not have the quote exactly). In order to value a business one needs to have enough knowledge not just the raw numbers and history.
I would not know how to evaluate silver prices to any degree, yet Warren is comfortable enough that he has an idea about the future value to determine the odds are on his side. I worked in technology for over fifteen years and can determine the value on SOME technology stocks. And therefore have made the odd investment and still holding.
The point is two individuals may be very good at investing and evaluating businesses, yet sometimes one person can evaluate a business while the other person cannot evaluate the same business (then some businesses just can't evaluated). One must understand the limitations of their knowledge and work within those boundaries.
Thanks for your input. From a purely academic standpoint, studying the dynamics of the tobacco industry in relation to investing is interesting. On one side you have financially strong & undervalued companies. On the other side you have the anti-tobacco movement. Right now the battle lines are forming. Smith Barney has a 12 month target of $55 vs. $40 today. Oh, well.