
Charlie Munger, Warren Buffett's right-hand man for almost six decades, was an astute investment guru in his own right, passing on plentiful investing knowledge to upcoming investors. After World War II, Buffett, who had learnt from Benjamin Graham, the prominent father of worth investing, perfected the art of selecting bargain stocks. However, Munger was the one who encouraged him to look into quality companies, which enabled Berkshire Hathaway to become a conglomerate of insurance, railroads, and consumer goods industries. One of the finest instances of this was Berkshire's purchasing of See's Candies in 1972 beneath Munger's influence, at a price way beyond what Buffet was happy with. "It's not that entertaining to buy a business that you really hope this sucker liquidates before it is ruined," Munger declared in1998.
Back-pedaling from the type of investment strategy typically found in textbooks, Munger disagreed with diversification, or amalgamating a wide array of investments in a portfolio to reduce risk. Actually, the Berkshire vice chairman referred to it as "senseless" to teach that people must diversify while investing in commonplace stocks. "One of the senseless things that's taught in modern university schooling is that maximum diversification is completely necessary in investing in common stocks ...That is an insane idea," Munger said in Berkshire's conference this year. "It isn't that simple to have a vast quantity of great possibilities that can be easily identified. So, if you only have three, I'd rather be in my top ideas rather than my worst," Munger added.
Much like Buffett's theory of the "circle of proficiency," Munger thought that clever investors should concentrate on areas within their expertise and strength to evade making errors. "We're not too brilliant, but we know the limit of our intelligence ... That is an awfully vital element of useful intelligence," Munger said. Munger really valued the authority of influential brands and faithful customers. He said one of the finest investments of his entire life was Costco Wholesale Corporation, which he had put his money in prior to the retailer joining forces with Price Club in 1993. "I have a friend who says the first law of fishing is to fish in where the fish are. The second law of fishing is to always remember the first law. We have gotten adept at fishing in where the fish are," the then-93-year-old Munger told the thousands of people in attendance at Berkshire's 2017 meeting.
The investing sage felt that in investing, it pays to wait. Munger suspected that the key to stock-picking success is occasionally doing nothing for years and when the time is right to act with "aggression." "The major money is not in the buying and selling, but in the waiting," Munger once said. He added he liked the term "assiduity" due to "it means sit down on your ass until you do it."
The conglomerate was often asked of its gigantic cash hoard and the lack of trades, when interest rates were close to zero. To defend Berkshire's inactivity, Munger often praised the advantages of staying on the sidelines and waiting for the right opportunity.
Munger proclaimed that there are worse situations than having too much cash -- something he wouldn't want to return to. With current short-term interest rates now above 5%, Berkshire's large cash stockpile is earning a noteworthy return.As someone who was highly critical of cryptocurrency, Munger firmly condemned it as a "malicious combination of fraud and delusion" and called it a "turd" and "worthless, artificial gold." Furthermore, he decried the concept of individuals making money from simply creating a new financial product from nothing.Munger additionally expressed his disdain for commission-free trading apps as they often ignite speculative trading activity by novice investors, such as the meme stock craze occurring in 2021.
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