market folly

Charlie Munger of Berkshire Hathaway and Li Lu of Himalaya Capital were recently interviewed a few months ago with Chinese media: Weekly on Stocks.  If you're unfamiliar, Lu is Munger's investing partner in China, where he has been investing for 15 years.  We've also posted Li Lu's interview up in a separate post.

Here are a few excerpts from the interview, with full videos below.


Charlie Munger Interview With Weekly on Stocks

Munger's opinion on Chinese securities:  "For investors, having more value means buying the best company in China or buying the best company in the United States. Comparing the two securities markets in China and the United States, I think the current price of the best companies in China is cheaper than the best companies in the United States. Therefore, Chinese people do not have to go abroad to find good investments, and there are many opportunities in their own countries. There are some very good companies in China and the prices are very reasonable."

When asked if he can name specifics:  "Hey, we can't tell you (laughs). In short, the Chinese market is increasingly open to foreign investors, with more and more participation from abroad, and the market is becoming healthier. These are all very good and will eventually drive up market prices."

On whether Berkshire's circle of competence is expanding with recent tech investments:  "At present, it is difficult for Berkshire to find good and low-priced investment products in the US market. We have hardly found anything suitable. All in all, you can also say that Apple is an electronic consumer goods company. Warren said that we may know more about consumer electronics than computer science, which is why Berkshire bought Apple stock.  Also emphasize another reason why we do this. If you want to be a good investor, you must keep learning. In the process of continuous learning, the situation is changing, the reality is changing, our investment will change, and we will not be self-sufficient."

Will they make more tech investments going forward?  "We don't know everything, we don't know how to understand, we only do what we know. The only company we have announced that has already invested is Apple. I think Warren said that we know Apple better than other companies. We can't know everything, so we invest in investing in assets that we can find to provide good value.  Take a look at our investment in airlines. In the past few decades, we have been joking with investment airlines. Warren has a lot of jokes in this area.  But suddenly, we bought stocks of each airline, because the airline's stock price has fallen sharply, it is so cheap, very potential. The conditions have changed and we are all willing to own airline stocks.  Like airlines, Warren and I don't like railroad stocks for decades. After a few decades, we began to buy shares in the railway, because the world has changed and the technology has changed. In the end, there are only four large railway companies. Finally, we bought the largest and most complete railway company among the four.  We changed because the world has changed. This is our investment logic. When the reality changes, shouldn't your thoughts change?"

Embedded below are the videos:

Charlie Munger Interview Videos

Video 1
Video 2
Video 3


Be sure to also check out the separate Li Lu interview we posted here.

The transcript of Munger's interview (in Chinese) is here.  H/T to @TaoValue for posting the videos.