Munger October 2018 Interview – Value investing, speculation, Chinese culture’s influence on rational investment, rational thinking and analysis

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Charlie Munger goes deep on value investing and many other topics in this new interview. Munger describes one of his greatest analysis errors of judgment which cost him dearly, so that we can avoid bias. Value investing, speculation, Chinese culture’s influence on rational investment, rational thinking and analysis, living a long healthy low stress life, Confucius and confucianism.

Charlie Munger Interview May 2018

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Charlie Munger October 2018 Interview, Chinese Have A Long Attention Span

Transcript

If you invest the way people gamble in casinos you're not going to do very well. So it's the long term investment that works best. And but if you like the action of investing and sometimes winning sometimes losing just like people like the action when they gamble in a casino those people are not my people. I like the long term investors who figure out something that's going to work over the long term and buy that and the sooner the Chinese people gamble less and invest patiently for the long term more the sooner they will do better. The world is full of foolish gamblers and they will not do as well as the patient investors. Oh I think it can be learned to some extent and to some extent you're born with it. There's a saying in America they call a long attention span.

They can keep their mind on a game or an activity for a long time until they've solved it. And the Chinese do have a long attention span and that is a hugely desirable quality because you were more likely to get the right answer if you think deeply and hard about a subject for a long time. And it's odd that people who are so good at having a long attention span like to gamble so much but is quite counterproductive. A lot of people think there is such a thing as truth in the markets. The market is going to tell you something just by bouncing around. That is not the way Berkshire Hathaway or Charlie Munger invests money. We have a view as to what the intrinsic value is what is being traded and we only buy it when we think it's worth more than we're paying. So we're trying to make a long term investment by waiting for something to be underpriced and then buying it and we don't give a damn about all these gamblers on the market. To me they're just so much froth. And that it's a foolish way to spend your time if you want to get rich.

Well the Chinese market is going to create a lot of successful investors. If you look at Hong Kong which has been full of Chinese people enmeshed in capitalist order with a good securities market that is going to spread all over China an increase in respectability in size for decades ahead. I anticipate that China's security markets and investing practices will get better and better. For a long long time there'll be fluctuations to be sure but the long term trend will be toward more achievement more respectability and higher prices. The Chinese who have gotten rich in Hong Kong over the last 50 years are not the short term traders and the gamblers. It has been the long term investors who sought out good long term investments and stubbornly held them for long periods of time and just as that worked for the Chinese and Hong Kong. It'll work for the Chinese on the mainland. It's not the short term gambling it's good it's the identifying good long term investment and sticking with it for a long time. My Berkshire Hathaway stock cost me sixteen dollars a share and it's now selling for almost three hundred thousand dollars a share. That's been a very good investment. It took a long time and it was a long term investment. I liked the people I was investing with and I like the companies I was investing in. I just sat there.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver