Let the investment legend Charlie Munger tell you. Our call of the day comes from the billionaire vice chairman of Berkshire Hathaway BRK.A, +1.92% BRK.B, +1.72%, who offered investing insights via a podcast from Acquired over dinner at his Los Angeles home. The interview published Oct. 29.
“Everybody needs some significant participation in the 12 companies that do better than everybody else and you need two or three of them at least, and if you have that mindset, Apple is a logical candidate to be on the list,” he said.
And he was also asked to divulge some secrets about making those good bets on companies, and especially now, as he says it’s so hard to find them. “When you know you have an edge, you should bet heavily.” headtopics.com
That brings him to where Walmart WMT, +1.15% has made some big errors over the years compared with Costco, the first being “too wedded to the ideas they already had” and unable to accept new ideas, he says. Walmart got into the habit of going into small towns where real estate was not worth much and keeping their occupancy costs down, and stuck to a formula, he opined.
China EV maker, BYD 002594, -2.48%, which Berkshire owns “was a miracle, but that guy works 70 hours a week and has a very high IQ. He can do things you can’t do, he can look at somebody else’s auto part and he can figure out how to make the…thing. You can’t do that.” He didn’t name names, but one assumes he’s talking about BYD’s rags-to-riches chairman Wang Chuanfu. headtopics.com
Munger called that one a “no-brainer. Something like that, if you’re as smart as Warren Buffett, maybe two, three times a century you get an idea like that. The interest rates in Japan were half a percent a year for 10 years and these trading companies were really entrenched old companies…so you could borrow for 10 years ahead all the money and you could buy the stock and the stock made 5% dividends so there is a huge flow of cash with no investment, no thought, no anything.