Investing wisdom from Warren Buffett and Charlie Munger

Buffett explained that one of his fundamental qualifications with Bitcoin and other cryptocurrencies is that the assets aren’t productive like farmland or other real estate, leaving the billionaire investor unsure of what to do with Bitcoin. Munger put it more bluntly.

“In my life, I try and avoid things that are stupid and evil and make me look bad in comparison with somebody else,” he said. “Bitcoin does all three.”

“In my life I try and avoid things that are stupid, and evil and make me look bad in comparison with somebody else…Bitcoin does all three.”

Charlie Munger

politics and business

Businesses and executives have increasingly been forced to navigate thorny political issues in recent years. And while Buffett has spoken up for political candidates and campaigned for Hillary Clinton, he’s notably taken a step back on certain hot topics recently. It comes down to the limited upside of wading into controversy, Buffett said.

“I don’t put my citizenship in a blind trust when I take the job as CEO of Berkshire,” Buffett said. “But I’ve also learned that you can make a whole lot more people sustainably mad than you can make temporarily happy, by speaking on any subject, and on certain subjects, they will take it out on our companies.”

While other investors may take different paths, Buffett seemed keen to not let his personal opinions impact the more than 370,000 employees that Berkshire businesses employ.

Attendees find their seats during the Berkshire Hathaway annual meeting in Omaha on Saturday.Credit:Bloomberg

“I’ve decidedly backed off,” he said. “I don’t want to say anything that will get attributed basically to Berkshire and have somebody else bear the consequences of what I talk about.”

Staying healthy

Buffett and Munger had some harsh words about the state of the current stock market, with the pair repeatedly comparing it to a casino. Buffett felt the sting of volatile markets in the first quarter. Net earnings dropped more than 53 per cent, due in part to the swings in the company’s $US390 billion stock portfolio. Still, Buffett hasn’t been deterred. Berkshire bought a net $US41 billion of stocks during the first three months of the year, the most in data going back to 2008.

“Markets do crazy things and occasionally Berkshire gets a chance to do something,” Buffett said. “It’s not because we’re smart. It’s because the only thing I say we’re qualified on is that I think we’re sane. And that’s the main requirement in this business.”

For his part, Munger said there’s not enough sanity in the market.

“It’s almost a mania of speculation that we now have,” Munger said. “We have computers with algorithms trading against other computers. We have people that know nothing about stocks being advised by stock brokers who know even less.”

Right-timing

Buffett has eked out a 20.1 per cent compounded annual gain in Berkshire stock from 1965 to 2021, compared to the 10.5 per cent climb in the S&P 500 Index during the same period. But investors parsing Buffett’s tips and tricks shouldn’t worry about timing the market.

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“We haven’t the faintest idea what the stock market is going to do when it opens on Monday. We never have had,” Buffett said. “We have not been good at timing. We’ve been reasonably good at figuring out when we were getting enough for our money.”

He expressed his long-held preference for investing in stocks over bonds, with an emphasis on betting on US companies.

“It’s amazing how hard people make what a simple game that is,” Buffett said.

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