Collection: Charlie Munger - #1 'Munger on Value Investment'



In the past, you’ve referred to value investors as a group of cod fishermen and suggested that they’d maybe fish in a different pond. Conversely, you’ve also discussed how over a long enough time frame an investor’s realised return would mirror the business’s return.

So given that many of the highest quality businesses are in the U.S., wouldn’t some of our time be best focused on analyzing the quality of the businesses here in the U.S.?

And I understand that the odds offered on the bet matters a lot so I’d be curious to hear in your mind how you weigh the quality of the horse versus the odds offered on the horse. Thank you.


Well, both are important. But basically, all investment is value investment in the sense that you’re always trying to get better prospects than you’re paying for.

But you can’t look everywhere at once any more than you can run a marathon in twelve different states at once. So you have to have some system of picking some place to look which is your hunting ground – but you’re looking for value in every case.

And what is interesting to me is I don’t agree with you. I think the strongest companies are not in America. I think the Chinese companies are stronger than ours and they’re growing faster. I have investments in them and you don’t. (Laughter) And I’m right and you’re wrong. Well, you can laugh but I just spoke a simple truth.

Li Lu is here. I just saw his face in the audience. He’s the most successful investor in the whole damn room. Where does he invest? China. And boy was he smart to do that. Is he good at it? It really helps if you know which hunting ground to look in. In fact, we all do better when we go hunting where the hunting is easy.

I have a friend who’s a fisherman. He says: “I have a simple rule for success in fishing. Fish where the fish are.” You want to fish where the bargains are. It’s that simple. If the fishing is really lousy where you are, you should probably look for another place to fish.

Anybody else?



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