Investing in Wonderful Businesses at Fair Prices

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Investing in wonderful businesses at fair prices is a more sustainable investment strategy compared to buying fair businesses at wonderful prices. While purchasing cheap businesses worked for Buffett initially, Munger believed that buying great businesses at fair prices allowed for scalability. An early example was Berkshire's acquisition of Seas Candy in 1972 for $25 million, which yielded over $2 billion in profits from a purchase multiple of six times earnings.

On today’s episode, Clay shares a tribute to Charlie Munger since we just crossed what would have been his 100th birthday on January 1st, 2024.

Charlie Munger was vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett. Buffett described Munger as his closest partner and right-hand man. At the time of his death, Munger had an estimated net worth of $2.6 billion.

Charlie has had an enormous impact on the value-investing community, and this episode is dedicated to him to honor his contributions to the community and his worldly wisdom.

IN THIS EPISODE, YOU’LL LEARN:

00:00 - Intro.

02:11 - The importance of simplicity in investing and life.

03:17 - The three foundational principles to how Buffett and Munger invest.

08:27 - Why Charlie focused on minimizing standard stupidities to win in life.

14:37 - Munger’s lessons on living a meaningful and fulfilling life.

20:02 - How Munger used his setbacks in life as opportunities to learn and grow as an individual.

23:43 - Munger’s thoughts on the shortcomings of GAAP accounting.

26:23 - The tremendous importance of incentives.

33:26 - How Charlie helped Warren Buffett become a better investor.

42:48 - An overview of Charlie’s investment in Costco and his admiration for the business.

52:12 - The top investment lessons from studying Charlie Munger.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
Check out What I Learned About Investing From Darwin.
Learn more about the Berkshire Summit by clicking here or emailing Clay at clay@theinvestorspodcast.com.
William Green’s podcast interview with Mohnish Pabrai, Tom Gayner, Joel Greenblatt, & Chris Davis. | Youtube Video.
Related Episode - TIP494: The Worldly Wisdom of Charlie Munger | YouTube Video.
Related Episode - TIP571: Charlie Munger & The Psychology of Human Misjudgment. | YouTube Video.
Related Episode - TIP492: The Best Investor You've Never Heard Of (Nick Sleep) | YouTube Video.
Related Episode - TIP569: An Investor's Guide to Clear Thinking w/ Chris Mayer. | YouTube Video.
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Check out the books mentioned in the podcast here.

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