On Internet Speculative Stocks: “If you mix raisins with poop, they’ll still be poop.”
On his outlook for the future: “If I can be optimistic when I’m about to die, then 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 and is considered one of the great financial minds that investors around the world hoped to learn from.
As I spoke to thousands of shareholders the afternoon before the meeting, I asked them what was the most important lesson they learned from the late billionaire. Some common themes emerged.
When asked what the most important lesson he learned from Munger, Luis Lozano of Cancun, Mexico, answered with one word: patience.
Dean Miller of Monticello, Minnesota, was willing to explain a little. “Probably, the most important thing is patience. It’s time in the market,” he told me. “And then not making quick gains, then holding on longer to make better gains. And mostly patience in the long term.”
Munger was known for waiting, not only when it came to building wealth, but also finding attractive investment opportunities.
“We wait for intuition,” Munger said at the 2002 meeting. “We’re not trying to do the hard things.” “And we have the patience to wait.”
When it comes to investing in what he considered great companies, Munger shared Buffett’s view that your best move as an investor is to hold out for the long term.
“When we own parts of outstanding companies with outstanding management, our preferred holding period is in perpetuity,” Buffett wrote in his 1988 letter to shareholders.
In citing Munger’s most important lessons, many of the contributors in the room pointed to the key early disagreement between Munger and Buffett.
“I’ve learned that it’s better to buy good businesses at fair prices than to buy really bad businesses at really great prices,” said Jerron Gillespie of Maryland. “I think that’s the same thing that Warren Buffett said was one of the most important lessons he learned from him.”
Gillespie is spot on. For Buffett, a disciple of value investor Benjamin Graham, smart investing meant buying companies that were trading at a discount to their intrinsic value. Munger convinced Buffett to change his style.
“Warren, forget about buying another company like Berkshire. But now that you control Berkshire, add to it great companies bought at fair prices and stop buying fair companies at great prices.” Buffett remembers Munger telling him in 1965. “In other words, unlearn everything you learned from your hero, Ben Graham. It works but only when practiced on a small scale.”
Munger famously attributed Berkshire’s investment success—as well as his own personal success—to avoiding critical mistakes.
And when it comes to investments, he sees them as loss-making, and one piece of advice in particular resonates with many Berkshire shareholders like Mary Ankenbrand of Omaha: “Never invest in Bitcoin.”
In fact, Munger’s distaste for cryptocurrencies has inspired some of his most colorful comments over the years.
“For me, this is just dementia,” he said at a conference in 2018. “I think for people who are professional traders and getting into crypto trading, it’s disgusting.” Shareholders meeting. “It’s as if someone else is trading in excrement and you decide, ‘I can’t be left out.'”
For Munger, any investment that does not have a definite intrinsic value is not worth buying.
“It’s stupid because it’s very likely to go to zero,” Munger said at the 2022 meeting.
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“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”