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- Charlie Munger blasted speculators, crypto, and the Fed during Daily Journal’s annual meeting.
- Warren Buffett’s right-hand man praised Costco, touted Chinese stocks, and offered investing advice.
- The 98-year-old predicted the passive-investing boom would have dire consequences.
Charlie Munger bemoaned the rampant speculation in the stock market, compared cryptocurrencies to sexually transmitted infections, and predicted the Federal Reserve’s loose monetary policy would end in disaster during Daily Journal‘s annual meeting on Wednesday.
The 98-year-old investor is best known as Warren Buffett’s business partner and the vice-chairman of Berkshire Hathaway. He trumpeted Costco, defended his China bets, and rang the alarm on the passive-investing boom during the event, which was livestreamed by Yahoo Finance.
Here are Munger’s 16 best quotes from the Daily Journal meeting, edited for length and clarity:
1. “Certainly, the great short squeeze in Gamestop was wretched excess. Certainly, the bitcoin thing is wretched excess. I would argue venture capital is throwing too much money too fast, and there’s a considerable wretched excess in venture capital and other forms of private equity.”
2. “We have a stock market which some people use like a gambling parlor. If I were the dictator of the world, I would have some kind of a tax on short-term gains that made the stock market very much less liquid, and drove out this marriage of gambling parlor and legitimate capital development of the country. It’s not a good marriage, and I think we need a divorce.”
3. “What we’re getting is wretched excess and danger for the country. Everybody loves it because it’s like a bunch of people getting drunk at a party; they’re having so much fun getting drunk that they don’t think about the consequences. Eventually, there will be considerable trouble because of the wretched excess, that’s the way it’s usually worked in the past. But when it’s going to come, and how bad it will be, I can’t tell you.”
4. “I certainly didn’t invest in crypto. I’m proud of the fact that I’ve avoided it. It’s like some venereal disease or something. I just regard it as beneath contempt. Some people think it’s modernity, and they welcome a currency that’s so useful in extortions and kidnappings, tax evasion and so on. I wish it had been banned immediately. I admire the Chinese for banning it. I think they were right and we have been wrong to allow it.”
5. “There’s never been anything quite like what we’re doing now. We do know from what’s happened in other nations, if you try and print too much money it eventually causes terrible trouble. We’re closer to terrible trouble than we’ve been in the past, but it may still be a long way off.” (Munger was discussing the Federal Reserve’s expansionary monetary policy.)
6. “If you’re trying to do better than average, you’re lucky if you have four things to buy. To ask for 20 is really asking for egg in your beer. Very few people have enough brains to get 20 good investments.” (Munger was cautioning against portfolio diversification.)
7. “If you’re going to invest in stocks for the long term, or real estate, of course there are going to be periods when there’s a lot of agony, and other periods there’s a boom. Sometimes it’s night, and sometimes it’s daylight. Sometimes it’s a boom, and sometimes it’s a bust. I believe in doing as well as you can; keep going as long as they let you.”
8. “I don’t have a one-size-fits-all investment. I think some people are gifted enough that they can invest in hard-to-value, difficult things. Other people would be very wise to have more modest ambitions in terms of what they choose to deal with. To everyone who finds the current investment climate hard and difficult and somewhat confusing, I would say, ‘Welcome to adult life.'”
9. “Costco is going to be an absolute titan on the internet because they have curated products that everybody trusts, and huge purchasing power on a limited number of stocking units. I wish everything else in America was working as well as Costco does. Think what a positive thing that would be for us all.”
10. “The directors’ table in the Heinz corporation costs $600,000. The goddamn directors table. The directors’ table in Costco costs about $300. They’re different places, different ethos.”
11. “In China, the companies we invest in are stronger relative to their competition, and priced lower. We get more strength per dollar invested. That’s why we are in China.”
12. “We’ve had this enormous transfer of voting power to these passive index funds. That is going to change the world. I don’t know what the consequences are going to be, but I predict they will not be good. I think the world of Larry Fink, but I’m not sure I want him to be my emperor.”
13. “That poor, pathetic architect who criticized me is just an ignoramus. He can’t help himself. I guarantee the one thing about him, he’s not fixable.” (Munger was commenting on the backlash he faced over a virtually windowless college dorm he designed.)
14. “The world is not driven by greed, it’s driven by envy. The fact that everybody is five times better off than they used to be, they take it for granted. All they think about is somebody else is having more, and it’s not fair that he should have it and they don’t.”
15. “I always say the same thing: realistic expectations, which are low expectations. If you have unreasonable demands on life, you are almost like a bird that’s trying to destroy himself by bashing his wings on the edge of the cage. You really can’t get out of the cage. It’s stupid. You want to have reasonable expectations and take life’s results, good and bad, as they happen with a certain amount of stoicism.” (Munger was asked about the secret to living a happy life.)
16. “It isn’t that we want to be the guru for the world or something. We used to know all of the shareholders, and we felt that as they only come in once a year, we ought to at least stand here and answer questions. And there was a market for it so we kept doing it. Warren and I are artificial, accidental gurus.” (Munger was reflecting on why he and Buffett take questions at their shareholder meetings.)
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