During his recent interview with AFR following his personal investment in Australian company Stonehouse Corporation, Charles Munger explains why inflation, like the weather, should be largely ignored. Here’s an excerpt from the interview:
The business partner of Berkshire Hathaway chairman Warren Buffett, Munger’s investment philosophy is to look beyond the short-term economic fluctuations and target excellent businesses for long-term ownership.
“I don’t pay much attention to macroeconomic trends,” he says.
“Like the weather, I just ignore the weather. I just try to invest whatever capital I have as best I can and take the results as they fall. I just seize whatever opportunities I can and I hope I get my share.”
“I’m just trying to invest my own money and Berkshire’s money sensibly. All these people that are blabbering on television don’t think the way that I do.”
Inflation and aggressive central bank interest rate rises are the top concern of many global investors, but the 98-year-old is not overly concerned.
“I’m always aware of it, but it doesn’t stop me from operating,” Munger says.
“I’m 98½ years of age, and I’ve seen a lot of inflation. I intend to live through inflation. I’ve lived through a lot of it already in my long life. It doesn’t discourage.”
Munger says inflation is “always with us in an episodic way”.
“That’s what modernity causes. So, eventually, I assume every currency in the world will go down to nothing. That’s my basic cynical view.”
Nevertheless, Munger acknowledged that interest rate rises would have a significant impact on stock prices and business valuations.
Yet, his outlook is largely unmoved by the recent correction in the US sharemarket.
“The stockmarket’s always having plunges up and down,” he says.
You can read the entire discussion here:
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