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You have to keep learning if you want to become a great investor. When the world changes, you must change.
That was Charlie Munger, Warren Buffett’s long-time partner and vice chairman of Berkshire Hathaway, offering up some wise words in the company’s latest shareholder letter, published on Saturday.
The letter included more than a dozen examples of the wit and wisdom of Munger, who is expected to attend this year’s shareholder meeting.
““Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.””
And stubborn they are. Berkshire
BRK.B,
BRK.A,
has held Coca-Cola
KO,
stock in its portfolio for 35 years and is the largest investor in the company. Its other long-tenured holdings include American Express
AXP,
Moody’s
MCO,
and Globe Life
GL,
Every investor needs to be patient in a world full of “foolish gamblers” if they want to be successful, Munger said. “Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.”
At 92- and 99-years-old, respectively, Buffett and Munger say they are still open to change. “When the world changes, you must change,” quips Munger.
“Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy,” he wrote. “We were slow to recognize the change, but better late than never.”
Berkshire owns 100% of railroad operator Burlington Northern (BNSF) Railway, which it bought back in 2009.
Munger maintained that not even the investment stalwart can be right on the money all the time, saying there is “no such thing as a 100% sure thing when investing. “
“Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice,” he added.
Berkshire Hathaway reported an 8% drop in operating earnings in the fourth quarter to $6.7 billion after taxes, which took a hit from a profit decline at the railroad business and a weakening in the U.S. dollar.
Burlington Northern’s profits were down 13% in the last quarter to $1.5 billion due to higher fuel costs and lower volumes in 2022.
Munger also gave some more solemn words regarding his future. “All I want to know is where I’m going to die, so I’ll never go there. And a related thought: Early on, write your desired obituary– and then behave accordingly.”
Greg Abel, CEO of Berkshire Hathaway Energy, the company’s utility unit, is the likely successor to Buffett as CEO.
Final advice from Munger? You should be hearing dead people. “You can learn a lot from dead people. Read of the deceased you admire and detest,” he said.
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