Here’s What Investing Legend Charlie Munger Just Said About the Stock Market

  • Charlie Munger, the famous investor and vice-chairman of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), recently shared his opinions on everything from Bitcoin to SPACs
  • Munger isn’t a fan of the growing influence of WallStreetBets on the stock market
  • He is still a firm believer in value investing as a long-term strategy for building wealth

Charlie Munger recently spoke at the Daily Journal Corporation‘s (NASDAQ:DJCO) annual shareholder meeting, and he didn’t hold back his opinions on current stock market trends.

In the video below, we’ll take a look at five notable Munger quotes from the meeting, including why value investing won’t go out style and how investors should approach diversifying their portfolio.

Narrator: Charlie Munger, the famous investor and vice-chairman of Berkshire Hathaway, recently spoke at the Daily Journal Corporation’s annual shareholder meeting, of which Munger is chairman of the board. 

Known for his bluntness, the legendary investor spoke on everything from GameStop‘s recent share price run-up, to Bitcoin’s value, and the rise of special purpose acquisition companies (SPACs). Let’s look at five things Munger said about current investing trends.

Number one, some investors are just gambling right now. When asked about the rise of GameStop’s stock and the growing influence of WallStreetBets, Munger compared it to gambling. 

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“That’s the kind of thing that can happen when you get a whole lot of people who are using liquid stock markets to gamble the way they would bet on racehorses,” he said. 

Number two is that SPACs are very speculative. Munger didn’t hold back his opinion about SPACs, publicly traded companies that are set up specifically to merge with private businesses. 

Munger referred to SPACs as “crazy speculation in enterprises,” and added that “The investment banking profession will sell s— as long as s— can be sold.”

Number three is that Bitcoin and Tesla are overvalued. When asked which is crazier: Bitcoin’s price reaching $50,000 or Tesla‘s rising market cap, Munger quoted author Samuel Johnson, saying, “I can’t decide the order of precedency between a flea and a louse.”

Munger said that Bitcoin is “an artificial substitute for gold” and said that the Daily Journal won’t follow Tesla’s move to buy the cryptocurrency. 

Number four is that value investing will never go out of style. Munger thinks some people misunderstand value investing as chasing after lousy companies that have lots of cash on hand. “I don’t define that as value investing,” he said. 

To Munger, quote, “All good investing is value investing. It’s just that some people look for value in strong companies and some people look for value in weak companies.”

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And number five is to diversify your portfolio, but don’t overdo it. Munger says that he’s more comfortable owning a few stocks that he knows something about, rather than owning too many. “I think it’s much easier to find five than it is to find a hundred,” he said.

Munger added, “In wealth management, a lot of people think that if they have 100 stocks, they’re investing more professionally than they are if they have four or five. I regard this as insanity, absolute insanity.” 

Munger’s opinions aren’t shared by all investors, but his strategy of investing in great companies over the long-term is still as relevant as ever. Whatever your investing style and experience, we can all learn something from Charlie Munger.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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