Value Investing, Videos

Munger: It’s The Long Term Investment That Works Best – Building Wealth

Charlie Munger‘s insights on business and life are unique, rare, and correct with unusual consistency. Speeches and writings made long ago stand up in their logic and validity today as much as when they were written, given their basis in the deeply fundamental wisdom of the world.

Charlie Munger, long term investment

Adopting the “Munger” approach to thinking is difficult, as is imitating any genius, but utilizing its core tenets will very quickly begin to remove the cobwebs from your mind. When asked his secret to success, Munger once answered simply “I’m rational.”

Charlie Munger: It’s The Long Term Investment That Works Best – Building Wealth

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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 by 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 go 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 which is quite counterproductive to 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 in 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 capitalist order with a good securities market that is going to spread all over China and 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 that's good it's the identifying good long term investment and sticking with it for a long time. 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 and 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 for more than 50 years and lo and behold it's worked out very well and. There are lots of stories like that Lulu and I have been investing together in China for 13 years 15 years and we have bought a lot of securities and we sold very few have not made very many bad investments. It's they've been small and not very many. I don't have any bad investments needed it has lead to basically them Unger's have three stocks. So this to be Berkshire. We've got Costco and we have an investment in a Lewis Partnership.

Three things I'm well along in my ninety fifth year. Three things you don't need to own a lot of different things to get rich. The New York Times just don't ever ask me why are these people.