Collection: Charlie Munger - #217 'DON'T Hold Cash and Wait for Better Conditions'
[Transcript]
BECKY QUICK 00:00
Frank Wang from Houston writes in and says, "if taxes were not an issue, what are your thoughts on going to cash today and waiting for better opportunities to deploy that cash over the next 12 months? Is it a sensible idea in your mind?"
CHARLIE MUNGER 00:15
In my whole adult life, I’ve never hoarded cash, waiting for better conditions. I’ve just invested in the best thing I could find. And I don’t think I’m going to change now.
And the Daily Journal used up its cash. Now, Berkshire has excess cash. Quite a bit of excess cash. But it’s not doing that because it knows how to time investments. He just can’t find anything he can stand buying.
So we don’t have a solution to your problem. We’re just coping with it as I’ve described.
BECKY QUICK 00:58
VJV writes in on that very point, "given the valuation and market correction in early 2020, why is Berkshire not picking up or adding any new companies to its profile? Is the management getting too conservative with M&A? Of course, kudos to the team and picking up Apple shares a couple of years back. That’s paying off for sure."
CHARLIE MUNGER 01:16
No, the reason we’re not buying is that we can’t buy anything at prices we’re willing to pay. It’s just that simple.
Other people are bidding the price up. And a lot of the buying is not done by people who really plan to own them. A lot of it is fee-driven buying. Private equity buys things so they can have more fees by having more things under management.
Of course, it’s a lot easier buying something when you use somebody else’s money. We’re using our own money, or at least that’s the way we think of it.
And so, but we're not –
By the way, it’s not a tragedy that Berkshire has some surplus money they’re not investing. And you can argue with the little Daily Journal, what a good thing it was we had 30 million extra coming in from a foreclosure boom and that we invested it shrewdly. It gives us a lot of flexibility. And by the way, that piled-up money helps us in wooing these governmental bodies we’re selling the software to.
We look more responsible with the extra wealth, and we are more responsible with the extra wealth.
But if – The shareholders who are worried about the future because it looks complicated and difficult, I want to say to them what my old torts professor said to me. He’d say, “Charlie, tell me what your problem is and I’ll try and make it more difficult for you.” (Laughter)
And he did me a favor by treating me that way. And I’m just repeating his favor to you. When you’re thinking the thoughts you’re doing, at least you’re thinking in the right direction. You’re worried about the right things — all you people that are worried about inflation, the future of the Republic, and so forth.
(Source: https://youtu.be/8RxLj9OVqLo)
[YAPSS Takeaway]
At any given time, if you find an investment better than your current holdings, just invest in it. If you don't find any, just keep looking and holding the cash until you find one.
