In the modern investing lexicon, there are many different 'types' of investing strategies that investors like to identify themselves with. There's growth investing, dividend investing, and growth-at-a-reasonable-price investing. Different investors often choose which strategy suits their goals, temperament and interests and go from there. It's important to say that different investors have proven successful in pursuing all of the different strategies above. Or even a combination. But for Charlie Munger, value investing is the only choice.
Charlie Munger is one of the most famous investors in the world. He has for decades played right-hand man to the great Warren Buffett in managing the investment portfolio of Berkshire Halthaway Inc (NYSE: BRK.A) (NYSE: BRK.B). And even though Mr Munger is less than a month out from his 98th birthday, he is still happy to share his wisdom.
Most recently, this came at the Sohn Hearts & Minds Investment Conference held last week. Mr Munger tuned in to the conference and gave his views on a number of issues. These included cryptocurrencies ("I'm never going to buy a cryptocurrency. I wish they'd never been invented. I think the Chinese made the correct decision, which is to simply ban them."). As well as the current state of the markets ("Overall, I consider this era even crazier than the dot-com era.").
Charlie Munger is sticking with value investing
But perhaps his most pertinent remarks came on the topic of investing itself. According to reporting in the Australian Financial Review (AFR), Munger said the following on the value investing strategies he has honed for many decades:
I think all successful investment is value investing in the sense that you're trying to get better prospects than you're paying for…
There's no great company that can't be turned into a bad investment, just by raising the price. Part of intelligent business is knowing the business that you don't want and keeping it out. I'm still looking for more value than I pay for.
But Munger did acknowledge that his and Buffett's style of investing was facing challenges in the current investing climate:
It's getting very difficult because we have a vast increase in the intellectual horsepower that's trying to get rich by owning securities… They've bid the good businesses up and up and up and up. In America, at least, almost every great business is selling 35 times earnings or more.
That might explain why Berkshire Hathaway is currently sitting in the largest pile of cash it has ever had. Buffett and Munger have previously relished deploying Berkshire's enormous funds into new investments during share market crashes, so perhaps Munger and Buffett know something we don't.
Either way, history has shown it is well worth keeping an eye on what Messrs Munger and Buffett are saying and doing at Berkshire Hathaway.
