The Real Money is in Great Companies - Charlie Munger's Investment Philosophy | Final Interview with CNBC 2023 【C:C.M 327】

[Transcript]

BECKY QUICK: A lot of what you do though also is picking your shots. I mean, I think you call it, “Sit on your ass investing.”

CHARLIE MUNGER: Yeah, sure.

BECKY QUICK: Where you wait for the big, fat pitches to come in, you don’t do a lot over time. Because —

CHARLIE MUNGER: Yeah, that’s correct.

BECKY QUICK: — you don't want taxes to whittle down or anything else along the way.

CHARLIE MUNGER: No. And — It's very obvious that every intelligent person ought to do that. And a lot of the intelligent people have figured it out. If you go into the decisions that the teaching profession makes with its IRA money and its pension money, where it gets any choice. A lot of it is indexed and a lot of it is invested in shrewd.

Shrewd investments held for a long time. So a lot of what I do is being done now, and that wasn't true when I was young. I couldn't just look at somebody else and see something. I saw some people who'd gotten rich by holding a few good things.

BECKY QUICK: So you think it's harder to make money now?

CHARLIE MUNGER: Well, that's a very interesting question, and it's a very important question.

And of course it's harder. It's so much harder you can't believe it. The people that have found it harder are the people that made Warren so rich, Ben Graham and his colleague, Dodd, in a damn adjunct course at Columbia.

What Ben Graham did that was so interesting is that he taught that you should find a few good things and stay with them for a very long time. But a long time to him was a few years. It wasn't a few decades.

And he did that for like 40 or 50 years in a little investment partnership with incentives and so on. And his investors, who were by and large not very rich, did very well with him. After he got his share, they got a good cut that was higher than what other people got after fees. And so he delivered a valuable product.

And he taught you, you got any things, it could be a lousy business but they were cheap enough, they're still all right if they had enough assets per share. So you’re getting at least twice as many assets as you were paying for. And he just floated around for the best available stuff among companies, good and bad. That was his system. And he had worked for 50 years. His clients had good returns.

Well, after he became so famous, partly with the help of Warren Buffett and Warren Buffett's success, everybody tried to do the same thing. And of course, as everybody crowded in, trying to be a little Ben Graham, it got more and more competitive. And that's what's happened now.

And the low-hanging fruit that Ben Graham had a lot of because of the Great Depression has gone away. And if you just try and float from one undervalued, bad business into another, and pay all the costs, it just doesn't work well enough for the people to actually put up the money to be worth bothering with. That's the way it works now. But at Graham's time, it was the best way there was.

BECKY QUICK: Well, your upgrade on that was to just look for good businesses.

CHARLIE MUNGER: I saw immediately that Graham was wrong.

BECKY QUICK: Right. And you looked for —

CHARLIE MUNGER: The real money was in the really great companies, which carried you up and up and up and up and up.

Source: https://youtu.be/H5Oom5Rjp_Y?si=ZEkkZkAN6WyOWcl9

[YAPSS Takeaway]