What is On Charlie Munger’s Mind?

Spotlight on Charlie Munger

We’ve seen the name Charlie Munger in the news a lot lately, so we thought we’d take a deep dive to discover who he is and what he stands for. Mr. Munger has worn a lot of professional hats in his storied lifetime: Second Lieutenant in the U.S. Army Air Corps, attorney, investor, real estate developer, architectural designer, businessman, chairman, philanthropist.

Mr. Munger, 97, is probably best known for his current role as vice chairman of Berkshire Hathaway (BRK-B, BRK-A) and business partner of Warren Buffett. Munger helped shape Warren Buffet’s investment style and advocates for holding shares of “wonderful businesses” for the long term until they have had the opportunity to achieve their true intrinsic value. Munger is also the chairman of the Daily Journal, which operates a legal newspaper in California and sells software to court systems. Munger has been dispensing investment advice for decades. Shareholders flock in droves to his shareholder meetings to hear his insights and absorb the morsels of wisdom and investment advice he shares.

At the Daily Journal’s annual meeting on February 24, 2021, Munger offered the following thoughts:

•  The recent frenzy over GameStop’s (GME) stock “can happen when you get a whole lot of people who are using liquid stock markets to gamble the way they would in betting on race horses.” According to Munger, “[t]he frenzy is fed by people who are getting commissions and other revenues out of this new bunch of gamblers. And of course, when things get extreme, you have things like that short squeeze.”

•  Investing in 100 stocks does not make you a better wealth manager than someone who invests in 5 stocks. Munger reports he is “way more comfortable owning two or three stocks which I think I know something about and where I think I have an advantage.” In fact, he advises one of his charitable endowments to hold just two assets in its endowment account. “And the result of holding those two positions, we have a way lower cost than anybody else and we make more money than practically everybody else.”

•  He is not particularly fond of special purpose acquisition companies (SPAC), stating, “I think this kind of crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble.” Read more: SPACs – A Blank Check Company

•  Bitcoin is “too volatile … to serve well as a medium of exchange” and assured investors that the Daily Journal would “not be following Tesla into bitcoin.”

•  He admires the first prime minister of Singapore for taking “over a malarial swamp, with no army … And pretty soon, he turned that into this gloriously prosperous place.” In fact, Munger has a bust of Lee Kuan Yew in his home.

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Click here for more information about Munger, including inspiring quotes and various articles and books.

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