A Little Wisdom From Warren Buffett’s Partner in Crime, Charlie Munger


Your words are important when you are 97 years old, playing Wall Street games and succeeding.

They carry even more Weight when you have been Warren Buffett’s business partner since 1978.

Think about this when you hear Charlie Munger say that today’s stock market is “even more crazy than it was in the dot-com era.” “There is no great company that can’t turn into a bad investment just by raising the price.”

He had some harsh words for cryptocurrencies like Bitcoin and went to the point of praising China for trying to sniff them.

It’s easy to downplay all of this as an old man yelling. Although not recorded in the interview record, Munger may have also commented on the need for a nearby hooligan to get off the lawn.

However, there are some stupid chunks of truth to ignore here.

Charlie Munger knows that price isn’t everything

In the beginning, Munger is there when he says that even the greatest companies are terrible investments if you pay them a lot.

This does not mean that every stock you own must be a screaming bargain. Buffett, a partner of Manger, one of the largest value investors, abandoned deep value investing decades ago. say it: “It’s much better to buy a great company at a fair price than to buy a great company at a great price.”

It’s okay to pay a premium for great growth stocks. But price is important.

There is a point where the price is too high and it makes no sense. This is one of the reasons why value is one of our six investment factors. Green Zone Fortune..I want to buy stocks with strong growth and momentum that too Transaction at a reasonable price.

Those opportunities still exist. However, there is a slight shortage these days.

Crazy Market and Kryptos

Munger is also in the spotlight when he says the market today is even crazy than it was in the dot-com era in the late 1990s. But this needs a little explanation.

At the time, investors were paying extraordinary premiums for tech stocks with uncertain futures, many of which were angry with the 2001-03 tech bust.

Today, many of the most crazy stocks are profitable beyond imagination and own the world’s dominant business.

Indeed, Apple Inc. (Nasdaq: AAPL) Boasts a market capitalization of $ 3 trillion. However, it also grew profits with a 28% clip and enjoyed a large profit margin.

But for all Apple, Amazon, or Microsoft largely Not surprisingly, Tesla, which trades 330 times more profitably and has a market capitalization of $ 1 trillion, is almost unprofitable.

I disagree with Manger’s view of cryptocurrencies like Bitcoin and Ethereum.

And then there is the cipher.

Unlike Munger, I find a lot of value in cryptography and believe in the concepts behind it.

I think blockchain is a great model for public databases. I think larger and more stable crypto will ultimately be a saver of choice for inflation-sensitive investors who are looking at the Federal Reserve and other central banks to a healthy degree. Skepticism.

But when the puppy-themed meme coin, the Shiba Inu, rises 8 million percent in the first 10 months of 2021, all these discussions are thrown out of the window. I have a pet of the same breed. It’s the degree of madness that makes dot-com mania in the 1990s look really wise and wise.

Bystander cash

I have some suggestions on how to invest in this environment.

First, take a look at Buffett and Manger. They sell everything at Berkshire Hathaway and don’t run towards the hills.But those people that is I have a little more cash than usual for $ 149 billion. It may make sense for us to keep a little more cash in reserve than usual.

But you need to earn returns so you don’t lose to inflation. Therefore, it makes sense to keep in mind the short term of 2022 by devoting at least part of the portfolio to short-term trading strategies rather than buying, holding and expecting the best.

With my buddy Money & Market Chief Investment Strategist Adam Odel has covered you with his premium trading research services. Wednesday wind and rain..

Every week, Adam recommends trading on Monday, and his readers go out again on Wednesday after 48 hours. click here Find out how to make this short-term strategy part of your 2022 trading game plan.

For safe benefit

Charles Sizemore_Sig

Charles Size More

Co-editor, Green Zone Fortune

Charles Size More Is a co-editor of Green Zone Fortune Specializes in income and retirement topics. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

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