During his recent interview with FT, Charles Munger discussed a number of issues including the trouble with banking, commercial property loans, great returns are a thing of the past, why there’s a lot of agony out there. Here are some highlights from the interview:
In Good Times You Get Into Bad Habits
“It’s not nearly as bad as it was in 2008,” the Berkshire Hathaway vice-chair told the Financial Times in an interview. “But trouble happens to banking just like trouble happens everywhere else. In the good times you get into bad habits . . . When bad times come they lose too much.”
It’s Not That Damned Easy To Run A Bank Intelligently
“Berkshire has made some bank investments that worked out very well for us,” said Munger. “We’ve had some disappointment in banks, too. It’s not that damned easy to run a bank intelligently, there are a lot of temptations to do the wrong thing.”
There’s A Lot Of Agony Out There
“A lot of real estate isn’t so good any more,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centres, a lot of troubled other properties. There’s a lot of agony out there.”
Every Bank In The Country Is Way Tighter On Real Estate Loans
“Every bank in the country is way tighter on real estate loans today than they were six months ago,” he said. “They all seem [to be] too much trouble.”
A Perfect Period To Be A Common Stock Investor
“We were a creature of a particular time and a perfect set of opportunities,” said Munger, adding he had lived during “a perfect period to be a common stock investor”.
He and Buffett had benefited “by and large [from] low interest rates, low equity values, ample opportunities”, he said.
Buying Great Companies At A Cheap Price Happens Rarely
“It’s the nature of things that a very intelligent man working hard maybe gets three, four, five really good long-term opportunities of buying great companies at a cheap price,” he said. “It happens rarely.”
Great Returns Are A Thing Of The Past
“It’s gotten very tough to have anything like the returns that were obtained in the past,” he said, pointing to higher interest rates and a crowded field of investors chasing bargains and looking for companies with inefficiencies.
“[At] the exact time that the game is getting tougher we’ve got more and more people trying to play it,” he said.
On his own imprint on the world, Munger said: “I would like my legacy to be a more relentless determination to develop and use what I call an uncommon sense.”
You can read the entire interview here:
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