Legendary investor and billionaire Charlie Munger, best known as Warren Buffett's right-hand man who helped build Berkshire Hathaway, has died at the age of 99.
Munger's family told Berkshire that he "passed away peacefully this morning in a California hospital," the company said in a Nov. 28 statement.
As executive vice chairman of the Buffett empire since 1978, Munger amassed a fortune of $2.6 billion and was praised for adopting a strong investment and stock-picking philosophy during his tenure at Berkshire.
Bitcoin and cryptocurrencies were not Munger and Buffet's favorite investments, and although they once called Bitcoin (BTC) "rat poison" and "rat poison," cryptocurrency traders were still able to benefit from Munger's 60 years of investment experience. . Below are some of the investment approaches Munger uses:
Only invest if you know how
Munger said Berkshire Hathaway often categorizes stocks into one of three baskets when evaluating potential investments.
“We have to drive over three baskets. yes, no, and too difficult to understand.”
The latter may explain why Munger and Buffett never invested in Bitcoin and cryptocurrencies, but the message they take away is that they avoided investing in things they didn't know.
Buffett has previously admitted that he and Munger (both considered technology skeptics) were "too stupid" to see the potential of Amazon's e-commerce business in the 1990s and that they underestimated the company's founder, Jeff Bezos.
Nor has Berkshire invested in Microsoft or Google. “We broke it,” Munger once said, referring to the company’s decision not to invest in Google.
However, Berkshire stuck to areas it was familiar with, such as banking and food and beverage, and made huge profits by investing in Bank of America, American Express, Coca-Cola and later Apple after initially resisting decided to invest. She
Munger and Buffet also mastered the art of valuation, consulting a company's balance sheet before making an investment decision, which Munger believed at the time was the only wise way to invest.
“Every smart investment is a value investment […] To value a stock, you have to value the company.”
While blockchains and protocols often cannot be valued using a discounted cash flow model or other traditional methods, a lot of information can be gleaned from on-chain data, from the number of daily active users to transaction volume to total (relative) value . the blockchain. market capitalization) and net inflows and outflows, to name a few.
The biggest factor in investment success is temperament, not IQ
Munger has never been one to jump on a new trend, preferring to stay on the more conservative side of investing.
You said earlier that many people with “high IQs” make bad investors because they have terrible temperaments. On the other hand, “large investors” act cautiously and think carefully.
“Large investors are always very cautious. They think of everything. You need time. They are calm. You are in no hurry. They don't get upset. You simply look for the facts and find the value. And that’s exactly what we’re trying to achieve.”
“Raw and irrational emotions must be curbed,” Munger said in another comment.
Related. Bitcoin is a “disgusting” commodity that came from “somewhere,” says Charlie Munger
Munger, who has been in the investment business for more than 60 years, says patience is also key to building wealth.
“Big money doesn’t mean buying or selling, but waiting.”
Develops confidence and stomach instability.
Munger has downgraded Berkshire's investment portfolio several times over the decades, such as during the Black Friday crisis of 1987, the financial crisis of 2007-2008 and most recently during the COVID-19 pandemic.
He once pointed out that long-term investors should learn to protect their investments when adverse macroeconomic conditions lead to market downturns;
“If you are not prepared to react in the same way to a 50% drop in market prices two or three times a century, you are not fit to be a common shareholder and you deserve the poor result you will get ." ."
“There will be more times of great hardship and great recovery,” Munger said in a comment. “You just have to learn to live with them.”
Munger was born on January 1, 1924 and died 34 days before his 100th birthday.
“Without Charlie’s inspiration, wisdom and commitment, Berkshire Hathaway would not have been able to reach its current position,” Buffett said in a statement.
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