3 lessons from Charlie Munger that will make you a better investor

This year’s annual meeting of Berkshire Hathaway shareholders kicked off with a video tribute to Berkshire vice chairman and Warren Buffett right-hand man Charlie Munger, who passed away last year at age 99.

The acerbic Munger had enough zingers to fill a lengthy reel to the delight of the tens of thousands of shareholders who piled into the CHI Health Center in Omaha, Nebraska on Saturday.

On speculative internet stocks: “If you mix raisins with turds, they’re still turds.”

On his outlook for the future: “If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation.”

Cue the laughter.

Of course, Munger wasn’t just a quick wit. He was also a serious thinker considered one of the true great financial minds that investors the world over hoped to learn from.

On the floor with thousands of shareholders on the afternoon before the meeting, I asked the most important lesson they’d learned from the late billionaire. A few common themes emerged.

In a word, patience

When asked the top lesson he learned from Munger, Luis Lozano of Cancun, Mexico gave a one-word answer: patience.

Dean Miller of Monticello, Minnesota was willing to elaborate just a bit. “Probably, the biggest thing is just patience. It’s that time in the market,” he told me. “And then not taking a quick gain, and then hold out for longer for a better gain. Mostly patience for the long haul.”

Munger was well known for waiting — not only when it came to building wealth, but for finding attractive investing opportunities.

“We wait for no-brainers. We’re not trying to do the difficult things,” Munger said at the 2002 meeting. “And we have the patience to wait.”

When it came to investing in what he viewed as great companies, Munger shared Buffett’s view that your best move as an investor is holding for the long term.

“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever,” Buffett wrote in his 1988 letter to shareholders.

Buying great companies, rather than great values

Avoiding losers — and cryptocurrency

Munger was famous for attributing Berkshire’s investing success — as well as his own — to avoiding major mistakes.

And when it came to investments he saw as losers, one piece of advice in particular rings in the mind of many Berkshire shareholders like Mary Ankenbrand of Omaha: “Never to invest in bitcoin”

Indeed, some of Munger’s distaste for cryptocurrency inspired some of his most colorful commentary over the years.

“To me it’s just dementia. I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting,” he said at the 2018 shareholder meeting. “It’s like somebody else is trading turds and you decide, ‘I can’t be left out.'”

For Munger, any investment that didn’t have identifiable intrinsic value wasn’t worth buying.

“It’s stupid because it’s very likely to go to zero,” Munger said at the 2022 meeting.  

Want to make extra money outside of your day job? Sign up for CNBC’s new online course How to Earn Passive Income Online to learn about common passive income streams, tips to get started and real-life success stories.

Plus, sign up for CNBC Make It’s newsletter to get tips and tricks for success at work, with money and in life.

Living on $37K a year playing Dungeons & Dragons in Salt Lake City

Source link

Related Posts

European banks in Russia face ‘awful lot of risk’, Yellen says

U.S. Secretary of the Treasury Janet Yellen speaks while presiding over a meeting of the Financial Stability Oversight Council at the Treasury Department on May 10, 2024 in Washington, DC. …

Read more

What Porsche Teen’s Grandfather Told Driver After Crash

The crash that took place late on Saturday night left two young engineers dead Pune: The grandfather of the 17-year-old, whose late-night drunken drive in a Porsche, left two 24-year-old…

Read more

FDA panel votes against Novo Nordisk’s weekly insulin in type 1 diabetes patients

A view of the logo of Novo Nordisk at the company’s office in Bagsvaerd, on the outskirts of Copenhagen, Denmark, March 8, 2024.  Tom Little | Reuters Advisers to the…

Read more

Lok Sabha Election 2024 Phase 6: Delhi, Haryana Vote Today In Penultimate Phase: 10 Points

Lok Sabha Election 2024: Election will be completed in 486 of the 543 Lok Sabha seats today. New Delhi: Voting will take place in 58 seats across seven states and…

Read more

Stock market today: Live updates

Traders work on the floor of the New York Stock Exchange during morning trading on May 24, 2024 in New York City.  Michael M. Santiago | Getty Images Stocks ticked…

Read more

India Great Took Pay Cut To Work For BCCI, Now Reluctant To Apply For ‘Taxing’ Coach’s Job: Report

VVS Laxman‘s reluctance to become the Indian team’s head coach is an open secret but with the former batting stalwart’s stint as NCA’s ‘Head of Cricket’ ending in…

Read more

Leave a Reply