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Investment icon Charlie Munger, vice president of Berkshire Hathaway (BRK-B, BRK-A) and long-time business partner of Warren Buffett, says his type of value investing “will never go out of fashion. never”.
“Because value investing – as I see it – always wants more value than what you pay for when you buy a stock, and this approach will never go out of fashion,” Munger told the annual meeting Wednesday. shareholders of the Daily Journal Corporation (DJCO), where he is Chairman of the Board.
According to Munger, some think that value investing means chasing companies with a lot of cash, but run a lousy business.
“[I] don’t define it as a value investment, “he added.” I think every good investment is a value investment. It’s just that some people look for values in strong companies and others look for values in weak companies. But every value investor tries to get more value than he pays. “
“Diworsification”
Munger observed that in the field of wealth management, “a lot of people think that if they have 100 stocks, they invest more professionally than they are if they have four or five.”
“I consider this madness. Absolute insanity, ”Munger said.
“I think it’s a lot easier to find five than to find 100,” argued the 97-year-old investor. “I think people who are arguing for all of this diversification, by the way, I call it ‘diworsification’, which I copied from someone. And I’m a lot more comfortable owning two or three stocks that I think I know something about and where I think I have an advantage.
Later in the meeting, when asked how he advises universities and charities to manage their endowments, Munger shared that a charitable endowment over which he had “some influence for a very long time” has a ” group of leading financiers in all branches of wealth management. there is ”on his tray. According to Munger, this institution has two assets in its endowment account – a large stake in Li Lu’s limited partnership and a Vanguard index fund.
“And the result of these two positions, we have a much lower cost than anyone and we make more money than pretty much anyone,” he said. “So now you know what I do in charities. By the way, this is not the normal result in America. The wealth management industry is facing a crisis. They really need the world to stay the way it is, and that’s not necessarily good for their customers. “
Shares of the Daily Journal closed up 1.4%, or $ 4.70, to end Wednesday at $ 351.
Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.
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