Charles Munger: Daily Journal Annual Meeting 2020: Fish Where The Fish Are, And That’s Not The U.S!

This week Charles Munger spoke at the Daily Journal Annual Meeting 2020. During the meeting Munger was asked a question from our very own Bill Brewster, co-host on the VALUE: After Hours Podcast with Tobias Carlisle, and Jake Taylor. Here’s Bill’s question:

(50:37) Bill Brewster: Mr Munger, Bill Brewster here thanks for doing this. In the past you’ve referred to value investors as a group of cod fishermen and suggested that they may be fish in a different pond. Conversely you’ve also discussed how over a long enough time-frame an investors realized return would mirror the businesses return. So, given that many of the highest-quality businesses are in the U.S wouldn’t some of our time be best focused analyzing the quality of the businesses here in the U.S, and I understand that the odds offered on the bet matters a lot. So I’d be curious to hear in your mind how you weigh the quality of the horse versus the odds offered on the horse? Thank you.

And here is Munger’s response:

Charles Munger: Well both are important but basically all investment is value investment in the sense that you’re always trying to get better prospects than you’re paying for. But you can’t look everywhere at once, anymore than you could run a different marathon in twelve states at once.

So you have to have some system of picking someplace to look which is your hunting ground but you’re looking for value in every case. What is interesting to me is you talk about the U.S. I don’t agree with you. I think the strongest companies are not in America. I think the Chinese companies are stronger than ours and they’re growing faster. I have investments in them and you don’t. (Laughter). And I’m right and you’re wrong.

Well you can laugh but I just spoke a simple truth. Li was here, I saw his face in the audience. He’s the most successful investor in the whole damn room. Where does he invest? China, and boy was he smart to do that, and is he good at it.

Oh it really helps if you know which hunting ground to look in. Fact, we all do better hunting where the hunting is easy. I have a friend who’s a fisherman he says, “I have a simple rule for success in fishing. Fish where the fish are.” You want to fish where the bargains are. That simple. If the fishing is really lousy where you are you should probably look for another place to fish.

You can watch the entire meeting here: