In his recent Daily Journal shareholder meeting, Charles Munger discussed a number of topics including Robinhood, SPACs, Bitcoin, market speculation, interest rates, and why value investing will never go out of favor. Here’s an excerpt from the meeting:
Munger: Well that is easy. Value investing, the way I regard it, will never go out of style because value investing the way I conceive it is always wanting to get more value than you pay for when you buy a stock, and that approach will never go out of style.
Some people think that value investing is you chase companies which have a lot of cash and they’re a lousy business or something but I don’t define that as value investing.
I think all good investing is value investing. It’s just that some people look for values in strong companies and some look for values in weak companies, but every value investor tries to get more value than he pays for.
What is interesting is that in wealth management a lot of people think that if they have a hundred stocks they’re investing more professionally than they are if they have four or five. I regard this as insanity, absolute insanity. I find it much easier to find four or five investments where I have a pretty reasonable chance of being right that they’re way above average.
I think it’s much easier to find five than it is to find a hundred. I think the people who argue for all this diversification, by the way I call it diworseification, and which I copied from somebody, and I’m way more comfortable owning two or three stocks which I think I know something about and where I think I have an advantage.
You can watch the entire meeting here:
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