Charlie Munger (Trades, Portfolio) is widely regarded as one of the greatest investors of all time. The chairman of the Daily Journal (DJCO, Financial), vice-chairman of Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) and good friend of Warren Buffett (Trades, Portfolio) shares his views on a variety of investing-related topics every year at the Daily Journal's annual meeting.
At this year's Daily Jouranl meeting, Munger was grilled on a variety of topics from Bitcoin to China and even day trading. The original interview is over 2.5 hours long; here are my key takeaways.
1. Investing in China
China has been making headlines recently as the government cracks down on big tech monopolies and data security issues, causing many international investors to be fearful of the Chinese market in general.
Munger responded to investor concerns about China with bullish optimism on the prospects of the Chinese economy, citing the huge population and advances in technology. With regards to China-U.S. tensions, Munger said he wishes for good relations between the two countries.
As a classic value investor, Munger stated that better value could be found in China than in the west: “The Companies we invest in are stronger relative to their competition and priced lower… that’s why we are in China.”
Perhaps Munger's most famous investment in China is the stake in Alibaba (BABA, Financial) that he established for the Daily Journal's portfolio. Munger has been increasing his stake in Alibaba stock as its price has been falling. The value of this holding now stands at a whopping $71 million.
2. Is Bitcoin just speculation?
In the past, Munger has equated Bitcoin to “Rat Poison," stating, “It’s like somebody is trading turds and you feel left out."
Asked about the popularity of Bitcoin in the 2022 Daily Journal meeting, Munger confirmed that his stance on Crypto has not changed, saying, “Of course I hate it... It’s an ideal currency if you want to promote extortion or kidnapping.”
He went on to praise the Chinese government for banning Crypto.
3. Day trading is the same as gambling
Munger has previously been very negative on day trading. Day trading has gained even more popularity in the current record-breaking U.S. bull market, especially with apps like Robinhood (HOOD, Financial) making it easy for anyone to trade stocks.
“If I was the benign dictator of the world, I would make it infeasible to make short term gains in securities,” Munger opined. “It mixes a legitimate activity, capital raising for enterprise, with a gambling casino. Those two when mixed create a speculative mess."
4. How to invest during inflation?
Munger was asked to compare the current high inflation to that of the 1970’s. On this topic, he said, "The troubles that come to us could be worse than what Volcker was dealing with, and harder to fix... The conservative assumption for investors that in the next 100 years… the currency is going to zero.”
Munger was asked what individual investors should do to prepare for inflation. In response, he disclosed that his family owns shares of Berkshire, Costco (COST, Financial), the Daily Journal and some Chinese stocks via his friend and Li Lu (Trades, Portfolio) at Himalaya Capital Management. "It may be that you have to choose the least bad of a bunch of options," Munger said about investing in this inflationary environment.
5. Gaming growth
Munger was asked about the recent Activision Blizzard (ATVI, Financial) trade by Berkshire Hathaway, which has since entered into a deal to be acquired by Microsoft (MSFT). He responded simply, “I think gaming is here to stay”
6. Will climate change really be that bad?
Munger is well-known for having a contrarian stance on global warming. In fact, he's the opposite of concerned about it, a stance that he reinforced at the recent Daily Journal meeting:
“I would be surprised if Global Warming is as bad as some people say it will be... The temperature of the earth went up 1 degree centigrade in 200 years… a hell of a lot of coal and oil was burned during that time.”
This may seem counter-intuitive, and Munger is far from being a scientist of any sort, so investors may want to take his opinions on this subject with a few grains of salt. Regardless, from a practical standpoint, people will almost certainly continue burning fossil fuels for energy until they become scarce enough to be more expensive than renewable energy.
Final thoughts
It's clear that, despite being 98 years old, Munger is still as switched on and up to date with current affairs as ever. His unfiltered, no-nonsense approach is a breath of fresh air in a world of politicial correctness, even if you don't agree with everything he says.
