For those who didn’t know, Charlie Munger passed away at the age of 99 about a week ago. Known for his wisdom and many quips (think the Yogi Berra of investing), Charlie was more than just Warren Buffett’s colleague and right-hand man in running Berkshire Hathaway, he is credited by Warren himself for vastly influencing his own investment philosophy and ultimately for the immense success that is Berkshire Hathaway. Why I care on a personal level is because as the famed “father of value investing” Benjamin Graham was for Warren Buffet, Warren and Charlie are for me. Their investing acumen and IQ are obviously world class, but they say themselves this is not the key to their success rather it’s their Temperament.
I wrote in a previous market piece about the technology that is Chat GPT by a company called (I can resend if anyone would like), so I thought I’d both offer a reminder of what truly interesting technological times we live in by again highlighting this tech and provide a deeper explanation of Charlie’s investing approach…..
Me: Write a financial market perspective based on current market events but referencing the investing attitude of Charlie Munger. Use a Charlie Munger quote.
Chat GPT: After taking literally 3 seconds (seems to be getting even faster) Chat GPT writes a piece I liked but didn’t fully resonate with.
Me: “Write a better one” 😊
Chat GPT: Another 2 seconds go by…..
“In the ever-evolving financial landscape, investors often grapple with the allure of short-term gains versus the enduring rewards of a patient, long-term approach. Charlie Munger, the astute investor, and partner to Warren Buffett, once imparted, "The big money is not in the buying and selling, but in the waiting."
Munger's wisdom extends beyond the day-to-day market fluctuations and resonates with the profound rewards of a sustained commitment to stock market investing over time. His life, intertwined with the success of Berkshire Hathaway, stands as a testament to the enduring benefits of steadfast patience in the world of equities.
Over decades, Munger's disciplined adherence to a long-term perspective has not only weathered market storms but has also reaped the compounding benefits of time. The slow and steady approach allowed him to witness the transformational growth of investments, emphasizing the wealth-building potential that lies in patiently holding onto fundamentally sound stocks.
This quote reflects Munger's belief in the power of time as a compounding ally, a force that magnifies the returns of those who patiently stay invested. His life's journey underscores the idea that while market fluctuations are inevitable, the real wealth creation emerges from the ability to endure short-term volatility with an unwavering focus on the long-term horizon.
Munger's legacy, intertwined with the success of Berkshire Hathaway, serves as a reminder that the most significant gains in the stock market often materialize for those who are willing to wait and allow their investments to grow organically over time. It's an invitation for investors to shift their gaze from the frenetic pace of daily market activities to the enduring benefits that unfold when one embraces the patient path in the realm of stock market investing.”
Regarding the market itself and our portfolios….
As I type these words, the stock market as represented by the S&P 500, is positive over 18% this year so far. Not quite at the all-time highs set back in December of 2021 but it has been a nice return, nonetheless. Predictions of catastrophe again wrong, economic depressions wrong, heck even recession talk is waning. At our firm, we are in the camp that investing is akin to hitting a baseball. To “keep your eye on the ball” is to keep your investing eye on the actual companies. We care about the value of companies, their fundamental valuations, their prospects for growth and the “moats” they’ve built around their business A LOT more than we care about the day-to-day clucking of the squawking heads on TV trying to justify their existence with “hot takes”.
For our portfolios themselves it’s largely been a year of minor changes. We know the companies and funds we own, and we actually like them. Some have done more than their fair share of helping our portfolios participate positively during this 2023 year so far and others we feel will have their day. Not to say we don’t expect to make more changes in 2024 than we did in 2023 but those decisions will be made with a similar approach as Mr. Munger who quipped "All intelligent investing is value investing—acquiring more than you are paying for. You must value the business to value the stock. Value investing is simple, but not easy."
Oh and that picture at the top of the article? That’s a new feature as well from several companies, Open AI being one of them, where like the Chat GPT feed above you can now use AI to Create Images. I used the term “portrait of Charlie Munger as done by Rembrandt”. Then I selected a “cinematic” lighting style, a “bright mood”, and waited about 5 seconds for the image generator to spit out 5 images I could consider.
We hope everyone has a great holiday season and we sincerely thank you for the trust placed in our firm. We don’t take the responsibility lightly.
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