Collection: Charlie Munger - #120 'Why Did Warren Buffett Move On From Cigar Butt Investing?'


Video Link: https://youtu.be/UKL3SAMZPME


In this episode, Charlie Munger was asked why did Warren Buffett move on from 'Cigar Butt' investing to 'Quality Business' Investing?


In this episode, you’ll learn:

  • Why did Warren Buffett move on from cigar butt investing?

  • The limitation of cigar butt investing.

To check out all Collection: Charlie Munger <click here>

[Transcript]

(Source: https://finance.yahoo.com/news/influencers-transcript-charlie-munger-105001910.html)

ANDY SERWER 00:00

It's my understanding, Charlie, that you were instrumental in helping Warren get away from focusing on the "cigar butt" form of investing and looked more towards companies that – I guess you could call them branded companies.


CHARLIE MUNGER 00:12

Better businesses.


ANDY SERWER 00:14

Better businesses, right?


CHARLIE MUNGER 00:15

Yes.


ANDY SERWER 00:16

How did you help him make that decision?


CHARLIE MUNGER 00:20

Well, it was probably obvious. And he'd made so much money in the other technique that it was hard for him to leave something that worked so well. But it was not going to scale. So when he started looking for investment values in great businesses that were temporarily under pressure, it changed everything for the better. Now we can scale up to the big time.

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