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Charlie Munger Goes Off... and more
In a surprise to no one, chairman Charlie Munger came out spitting fire at yesterday’s Daily Journal annual meeting. Munger might prefer the role of laconic sidekick with Berkshire Hathaway, but he takes center stage at the Daily Journal.
For two hours, the 98-year-old Munger answered questions from all corners. And, as always, his answers did not disappoint.
“I’m proud of the fact I’ve avoided [investing in] it. It’s like some venereal disease or something. I just regard it as beneath contempt.”
“Inflation is a very serious subject. You could argue it is the way democracies die.”
“It’s the biggest long-range danger we have, apart from nuclear war.”
On Bobby Kotick, Activision-Blizzard’s embattled CEO:
“I like Bobby Kotick a lot. I consider him one of the reasonable people in [the gaming] field. I don’t think he personally tolerated a lot of crazy misbehavior [at Activision].”
“You don’t need all this damn diversification. You’re lucky if you’ve got four good assets.”
“If you’re trying to do better than average, you’re lucky if you have four things to buy. To ask for twenty is really asking for egg in your beer.”
On investing in tech:
“Warren [Buffett] and I have come to tech like some newborn infants that are dragged there. We’ve had to come because reality has dragged us there. Tech is here to stay.”
On the secret of happiness:
“I always say the same thing — realistic expectations, which are low expectations. If you have unreasonable demands on life, you’re almost like a bird that’s trying to destroy himself by bashing his wings on the edge of the cage.”
“You want to have reasonable expectations and take life’s results, good and bad, as they happen with a certain amount of stoicism.”
And there’s lots more to unpack in future issues, including Munger’s decision to double (or triple) down on Alibaba and his comments about fiat currency heading to zero. The man is never boring.
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Munger also shed some light on recent stock moves at Berkshire Hathaway, which were revealed this week in the company’s 13F filing.
Berkshire remained a net seller of equities in Q4 2021, notably trimming positions in pharmaceutical stocks like AbbVie and Bristol-Myers Squibb.
“I don’t see how, from the outside, you can see what pharmacy is going to invent the new drugs that have the patents and last twenty years,” said Munger. “I don’t think Berkshire knows which drugs are going to succeed in the future.”
The big surprise was a $975 million investment in gaming giant Activision-Blizzard. Not exactly an earth-shattering insight, but this sounds more like a Ted Weschler or Todd Combs move. Whoever pulled the trigger did so with impeccable timing, as Microsoft announced plans to acquire Activision (at a big premium) shortly after.
And Warren Buffett’s on-again/off-again fling with Chevron continues. Berkshire increased its stake in the energy multinational by 33% last quarter, after heavy selling earlier in 2021. Uncharacteristically mercurial behavior from the Oracle.
Meta Platforms (the company formerly known as Facebook) entered 2022 with $38.79 billion authorized for share repurchases. With $FB now down around $215, that money could be put to very good use.
Too many companies “waste” buybacks by repurchasing shares at inflated prices, instead of biding their time and pouncing during a downturn. Meta would be wise to seize this golden opportunity to deploy cash (and boost shareholder returns) while its stock languishes near multi-year lows.
For more on the company’s recent travails (and Wall Street’s apparent overreaction), check out my take on Meta’s meltdown from earlier this month.
Disclosure: This is not financial advice. I am not a financial advisor. Do your own research before making any investment decisions.