Ideas that change the world of investing Lessons from Charlie Munger
It's near the end of the year like this. In addition to being filled with an atmosphere of happiness that is about to come I think one thing that you What you will follow is a review of news and important events that happened this year from many media outlets. Channels that appear
But for the investment world This year there may be many big news events happening. But one loss that I think shakes the world of value investing quite a bit. There is news of the passing of Charlie Munger, vice chairman and co-founder of Berkshire Hathaway along with value investor Warren Buffett. It has been a model for investors around the world for decades. But if you are Grandfather Buffett's FC, you must have seen the two of them sitting together at shareholder meetings.
I think the passing of Charlie Munger's grandfather can bring many more ideas to investors. that I would like to tell you about We heard it today.
If talking about value investing The first name that pops into your head is inevitably the name of Warren Buffett, right? But do you know that it's true? Grandfather Buffett's strategy that we are adapting today. It started with a man named Charlie Munger, who is the man behind And there was a part that made him change his own investment style until it became the main investment style used today. Therefore, it can be said that Charlie Munger played an important role in making this principle of value investing come into existence. and create wealth for many people.
Now let's listen to this man's story.
Grandfather Munger was born into a middle-class family in Omaha, USA. His teenage years were similar to other children's. He worked part-time in a grocery store. Until entering university Grandfather chose to study mathematics. Before having to serve as a soldier for the nation during World War 2, later after the war ended, Grandpa Munger went to study law. and has been working as a lawyer ever since. An important turning point occurred when Grandfather Munger had the opportunity to return to his hometown of Omaha, where he met Warren Buffett.
And this was the starting point for Grandpa Munger to step into the investment world. and came full circle when Grandpa opened the investment company Wheeler, Munger and Company in 2505 (at that time Grandpa was 38 years old). Can achieve an average return of up to 19.8% per year (during the period 2505-2518), while the Dow Jones gave an average return of only 6.4% per year.
Until in 2521, Grandpa Buffett invited Grandpa Munger to take the position of Vice Chairman of Berkshire Hathaway, which Grandpa played an important part in pushing Berkshire to grow until now. The value is as high as 784,000 million US dollars.
Although Grandfather Munger's and Grandpa Buffett's investment approaches are similar, in the beginning, the guidelines for selecting stocks to invest in They are quite different. Grandfather Buffett was inspired by Benjamin Graham and had a strategy for investing in stocks that were cheap rather than the quality of the stocks.
The highlight of choosing stocks like this is that you will find stocks that are very cheap. So cheap that the price of all stocks Cheaper than book value Even though the company is closed But when the account is liquidated It can still create profits for those who invest.
Therefore, Grandpa Buffett's strategy for choosing stocks to invest in the early days was to buy stocks at very cheap prices. without giving importance to The quality of the business is very good.
Unlike Grandpa Munger, who used to be a lawyer. and used to act as a lawyer for a business that was about to go bankrupt Let him know A business without quality will be very difficult to recover from. Therefore, he believes that it is better to invest in quality businesses.
Even if you have to pay a higher price. Of course, it clearly goes against Grandfather Buffett's initial investment strategy. And even though the two of them are close But of course, changing someone's investment mindset is difficult.
chocolate shop A turning point in the investment world
The important turning point of this story is not A tour of the amazing chocolate factory But it is a tour of the company. It is a chocolate shop called See's Candies. It is this company's shares that Grandpa Munger and Grandpa Buffett have referred to as 'dream stocks' to this day. Grandpa Munger came across the business See's Candies, whose main business is selling chocolate.
With the strength of the business that has growing income, has good profits, has no debt and is able to increase product prices. Because consumers are attracted to both the taste Brand and product quality It's said to be very attractive to Grandpa Munger, but See's Candies is not the type of stock that Grandpa Buffett chooses to invest in. Due to the relatively high stock price
So what will make Grandpa Buffett change?
Grandfather Munger took Grandpa Buffett to visit See's Candies Company to try some chocolate. and truly understand the See's Candies business Because in Grandpa Munger's eyes at that time, he saw See's Candies as a stock that could be held as a long-term investment and had the potential to grow strongly in the future.
Until Grandpa Buffett finally agreed to invest in See's Candies stocks and made returns for them as high as 80 baht! or 8,000% over a period of 47 years of investing. After that, Grandpa Buffett gradually changed his investment approach. From previously focusing on 'cheap price' to paying attention to 'Business quality' has become even more of a good stock investing strategy. at a reasonable price As at present
Grandfather Buffett once spoke about this event, saying, “Charlie pulled me in the direction that I began to look at. I understand that it would take a lot of energy to change my investment mindset, which was completely influenced by Graham, but Charlie was able to do it. with the power of his own brain.”
Thoughts from a man who is a role model in the investing world
Grandpa Munger led Grandpa Buffett to look at the quality of businesses that have the potential to grow in the future. More than just looking at the price Looking back in today's investment world, you will encounter situations where The stock's price may fall and you don't dare buy it for fear that the price will go down even further. Or, if the stock's price starts to rise, you don't dare buy it for fear that the price at that time will be too high.
If you just look at the price, you may not know what decision to make. Instead, you look at the quality or fundamentals of that stock first. How likely is it to grow in the future? Then go and see if the current price is appropriate or not.
One of Grandpa Munger's thoughts: “Having some kind of emotional background is more important than having a brain. You need to control your irrational, fleeting emotions.” It's like investing. That if you can't control your sudden, unreasonable emotions. Makes selling good quality stocks The price fell because of some temporary situation. Or being greedy and buying stocks without careful analysis. Until you get stocks with poor quality but very expensive prices, causing losses until you finally have to leave the market. End the path to reach the set goal.
Therefore, unless you have good investment strategies and knowledge, Mindfulness or emotional control is equally important. in long-term investment That success is not measured by just buying cheap and selling expensive. But it is a journey towards the goals that are set in the future without giving up or abandoning the investment path. Throughout the 99 years of the man named Charlie Munger, he may not be the oldest person in the world. But it cannot be denied that he is a person who is very grateful to investors around the world...
Before leaving today I would like to take the opportunity that we are entering a new year. Sending you best wishes. Everyone will find happiness and happiness from now on. And for the investment world next year and the years after, I would like to leave you with one more lesson from Grandfather Charlie Munger, one of the investors who has experienced the most changes in the world.
“You have to learn all the time. If you want to be a good investor When the world changes You have to adapt as well.” Charlie Munger
I hope to be an example and an inspiration to you all. Face the investment world strongly in the coming years. Happy New Year 2567.
