Alongside the annual Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) shareholder meeting, the Daily Journal (DJCO, Financial) annual meeting has become an essential event in the calendar for value investors around the world.
Presided over by the company's chairman, Charlie Munger (Trades, Portfolio), the Daily Journal annual meeting has become a place for investors to seek out the knowledge of this fascinating and successful investor.
Unlike the Berkshire annual meeting, at the Daily Journal meeting, Munger gets all the airtime, whereas Buffett is the star of the show at Berkshire's annual gathering.
At this year's Daily Journal meeting, which was held on Feb. 24, Munger talked on a selection of different topics, covering everything from his investment in Wells Fargo (WFC, Financial) to the speculative trading frenzy in retail stocks.
Munger didn't pull any punches when it came to discussing the trading frenzy that has taken over parts of the market recently.
He criticized Robinhood and other trading platforms that have helped gamify investing and noted that sometimes the market goes through periods with large amounts of speculation. The best way to deal with this speculation, the billionaire investor said, was to "ride them out."
He also advised investors to avoid following the crowd with borrowed money: "A lot of them crowd in to buying stocks on frenzy, frequently on credit, because they see that they're going up, and of course that's a very dangerous way to invest."
"I think civilizations would be better without it [specualtive trading]. Nobody should believe that Robinhood's trades are free," Munger stated. He added that the trading app's practice of selling order flow was "dishonorable," and it was a "dirty way to make money."
Selling order flow wasn't the only Wall Street practice Munger spoke out against. He also stated his negative views on Special Purpose Acquisition Companys or SPACs.
"Crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble," he said. "The investment banking profession will sell sh*t as long as sh*t can be sold. I think it must end badly, but I don't know when."
Munger also expressed his views on what he thought it took to be a great investor, saying "I think people have the theory that any intelligent, hard-working person can be a great investor... I think any intelligent person can get to be a pretty good investor and avoid certain obvious traps... But I don't think everybody can be a great investor, or a great chess player... I think some of these things are very difficult."
The billionaire went on to add that sometimes, for people who are not willing or able to dedicate enough time and effort to becoming good investors, it might be better to outsource the investment management function to someone who knows what they're doing:
"It's a mistake for investment management to hire armies of people to make conclusions. Better off to concentrate your decision power in one person... and choose the right person...I don't think it's easy for ordinary people to become great investors."
One of the most revealing comments Munger made at the meeting was the declaration that even at 97, he was still learning every day. This is one of the investor's most outstanding qualities. The investment world is always changing and developing, and one has to change and adapt to the different environments one faces.
With nearly 100 years of experience in life under his belt, Munger knows that all too well. It could be easy to rest on his laurels and let the world pass him by, but that's what has made the investor so successful and well respected—the ability to keep learning and developing. Even if investors hold different views to the billionaire, this quality should never be disregarded.
Disclosure: The author owns no share mentioned.
Read more here:
- Charlie Munger on Why He Still Holds Wells Fargo
- Warren Buffett on the Difference Between Price and Value
- Graham and Keynes: Challenge What You Know to Grow
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