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.
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.
When citing Munger’s most important lessons, multiple shareholders on the floor recalled a key early disagreement between Munger and Buffett.
“I learned that it’s better to buy good businesses at fair prices than pretty bad businesses at really great prices,” said Jerone Gillespie of Maryland. “I think that’s the same thing that Warren Buffett said was one of the most important lessons that he learned from him.”
Gillespie is spot on. For Buffett, a disciple of value investor Benjamin Graham, intelligent investing meant buying companies that were trading at a discount to their intrinsic value. Munger convinced Buffett to change his tack.
“Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices,” Buffett recalls Munger telling him in 1965. “In other words, abandon everything you learned from your hero, Ben Graham. It works but only when practiced at small scale.”
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.
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