Charlie Munger

Charles Munger: One Filter That’s Very Useful For Investors

During the 1997 Berkshire Hathaway Shareholder Meeting, Warren Buffett and Charlie Munger were asked their thoughts on calculating intrinsic value. Here’s Munger’s response:

Q3 hedge fund letters, conference, scoops etc

Charlie Munger

I would argue that one filter that’s useful in investing is the simple idea of opportunity cost.

If you have one opportunity that you already have available in large quantity and you like it better than 98% of the other things you see, you can just screen out the other 98% because you already know something better.

So that people who have a lot of opportunities tend to make better investments than people that don’t have a lot of opportunities, and people who have very good opportunities, and using a concept of opportunity costs, they can make better decisions about what to buy.

With this attitude you get a concentrated portfolio which we don’t mind.

That practice of ours, which is so simple, is not widely copied. I do not know why. Now it’s copied among the Berkshire shareholders. I mean all you people have learned it but it’s not the standard in investment management, even at great universities and other intellectual institutions.

If we’re right why are so many eminent places so wrong?

You can watch more of the presentation here:

(Source:YouTube)

For more articles like this, check out our recent articles here.

Article by The Acquirer’s Multiple


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Sign up for ValueWalkPremium today and get our exclusive content for 35% off.

Use coupon code vip19 or click on the button below

Limited time offer only ENDS 12/31/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others

 

0