RIP Charlie

1 min
read
December 4, 2023
Print Friendly and PDF
Print Friendly and PDF
Back

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent”

- Charlie Munger

In a world of short term noise, meme stocks and leveraged trades, where the Billionaire Investor crowd almost all run short term trading strategies or systematic quant funds, Charlie Munger stood out with his partner Warren Buffet as one of the few genuine long term investors. Famously dismissive of the Efficient markets Hypothesis, his aphorisms and sometimes caustic opinions on other parts of financial markets are being, rightly, revisited this week with his passing. I have often noted the advice that “if you want to sound smart at a conference, quote Warren Buffet”, but always added my own twist - “if you want to sound really smart, quote Charlie Munger”. It was Charlie who persuaded Warren to swap from a philosophy of finding fair companies at wonderful prices to finding wonderful companies at fair prices and also his idea to buy into insurance companies to benefit from a pool of permanent capital, allowing them the luxury of being long term investors with “a holding period of forever”.

However, my favourite lesson from Charlie Munger is the notion of ‘Inversion’. As he put it, instead of thinking ‘How can I help India? (his example), I think how could I really mess it up? And then I don’t do that.’ It’s simple but perfect.

Ironically, perhaps, as the new era of cash at a proper level makes people reconsider the point and underlying purpose of trading versus investing, the many obituaries to Charlie this week have brought the experience and wisdom of one of the great investors into deserved prominence for the next generation.

RIP Charlie.


Continue Reading

Lightning Strikes and Butterfly WIngs

In the internet boom investors chased stocks like Nokia, Ericsson and Cisco to crazy sales multiples that required growth to be not just good, but parabolic to deliver any returns. A small disruption to those expectations led to a profit warning and a crash in the market. AI is the new 'internet' and investors are once again chasing picks and shovels. However, when a market is putting China stocks on less than 1x sales due to 'concerns over China/Taiwan while simultaneously paying 40x sales for a company where half its customers and all its manufacturing is done in the region, there is something of a disconnect in the risk management.

Market Thinking February 2024

The Bond markets have curbed some of their enthusiasm over rate cuts while momentum stays with US tech. Japan and EM ex China continue to behave well, although China continues to behave like a bear market, This has little to do with fundamentals like value or earnings and more to do with perceptions of risk and uncertainty that are driving liquidity flows. However, we would note that the stock market is not the Bellweather of the Economy that it is in the US and that intervention will take place only for stabilisation. They do not believe in the so called Fed put, or the wealth effect.

You're now leaving the Market Thinking website

Please note that you are about to leave the website of Market Thinking and be redirected to Toscafund Hong Kong. For further information, please contact Toscafund Hong Kong.

ACCEPT