Finance
9 Jun 2023
Renowned investor and billionaire Charlie Munger has shared his views on the current economic situation. He also explained his investment philosophies on inflation, energy and crypto.
Charles T. Munger, the eternal sidekick of star investor Warren Buffett and vice-chairman of Berkshire Hathaway, has just invested (privately) an undisclosed sum in an Australian investment company called Stonehouse Corporation. He took the opportunity to share his views on the current state of the global economy with the Australian media outlet Financial Review.
"Inflation, I've seen it all before".
Although the world is currently concerned about inflation, which is running at rates not seen in the Western economic powers for more than forty years, it does not frighten Charlie Munger. "I'm always aware of it, but that doesn't stop me from operating," he explains. "I'm 98 and a half years old, and I've already seen a lot of inflation. I intend to survive this one. I've been through a lot in my long life. That doesn't discourage me.
As an investor, he pays less attention to macro-economic factors such as inflation, he explains. "It's like the weather, and I ignore the weather. I just try to invest the capital I have as best I can and take the results as they come. I take every opportunity I can and hope to get my share."
However, he argues that despite the bargain prices the stock market is offering at the moment (and which are partly due to inflation, we might add), Berkshire can't find anything worth buying. And that's despite the fact that investors are currently pumping a lot of money into the company to buy just that.
Oil, yes...
The nonagenarian continues his considerations on the economy with his thoughts on oil and energy. As far as oil is concerned, he doesn't think the world will be able to get rid of it any time soon. We will continue to use it for decades to come, he claims. "I think we're going to be using fossil fuels for a long time to come because we have to... We're not going to get rid of fossil fuels, we're just going to use less of them," he says.
This vision is reflected in Berkshire Hathaway's investments. Since the beginning of the conflict in Ukraine, the company has considerably increased its stake in the oil group Occidental Petroleum. Following a recent purchase of 12 million shares, the company now owns 18.7% of the oil group. But this is not the only oil-related asset in its portfolio: Berkshire Hathaway also holds a good number of shares in Chevron, which is its fourth largest asset.
... crypto is a no-no
He also takes a hard look at cryptocurrencies. His lack of affinity for digital currencies is an established fact, he compared them to an STD earlier this year, for example. Here again, he advocates avoiding them. "Never touch them. Never buy them. Let them pass. I think it's almost senseless to buy these things or trade in them. I simply avoid them as if they were an open sewer full of evil organisms. I avoid them completely and I recommend everyone to follow my example," he says.
"I think anyone selling this stuff is either delusional or evil," Munger adds. "I won't touch crypto. I'm not interested in undermining the national currencies of the world". For him, cryptos are worthless because they are based on nothing, unlike company shares which are based on the value of the company and what it produces. For crypto defenders, Munger (and Buffett, who doesn't skimp on superlatives to demonise crypto either), has no idea what cryptocurrencies are.