Buy Great Companies that Goes Up and UP and Sit on Your A$$ Investing | Charlie Munger | 2023

Picking your shots. I mean, I think you call it "sit on your ass" investing. The investing where you find a few great companies and just sit on your ass because you've correctly predicted the future. That is what it's.

It's very nice to be good at. A lot of what you do, though, also is picking your shots. I mean, I think you call it "sit on your ass" investing, where you wait for the big fat pitches to come in. You don't do a lot over time because that's correct; you don't want taxes to whittle down or anything else along the way.

No, and it's very obvious that every intelligent person ought to do that, and a lot of the intelligent people have figured it out. If you go into the decisions that the teaching profession makes with its IRA money and pension money, where it gets any choice, a lot of it is indexed. A lot of it is invested in shrew investments held for a long time.

So, a lot of what I do is being done now, and that wasn't true when I was young. I couldn't just look at somebody else and see some... I saw some people who had gotten rich by holding a few good things. So, you think it's harder to make money now?

Well, that's a very interesting question, and it's a very important question. And of course, it's harder. It's so much harder, you can't believe it. The people that have found it harder are the people that made Warren so rich: Ben Graham and his colleague Dodd in a damned adjunct course at Columbia.

And by the way, Graham was invited into three different economic departments at Columbia on the full tenure track and turned him down. He was that good at literature and math and so forth, both which is rare. Ben Graham was interesting; he was polyglot like the Davises in a different way, and the same thing also somewhat musical and, and, and so something a dancer. He liked to dance, well left out of me.

Anyway, what Graham did that was so interesting is that he taught that you should find a few good things and stay with them for a very long time. But a long time to him was a few years; it wasn't a few decades. He did that for like 40 or 50 years in a little investment partnership with incentives and so on.

His investors, who are by and large not very rich, did very well with him. After he got his share, they got a good cut that was higher than what other people got after fees, and so he delivered a valuable product. He taught you, you got in things that could be a lousy business, but they were cheap enough; they were still all right if they had enough assets for share.

So, you're getting at least twice as many assets as you were paying for, and he just floated around for the best available stuff among companies, good and bad. Yeah, that was his system, and he worked for 50 years. His clients had good good returns.

Well, after he became so famous, partly with the help of Warren Buffett and Warren Buffett's success, everybody tried to do the same thing. And of course, everybody crowded in trying to be a little Ben Graham. It got more and more competitive, and that's what's happened now.

The low-hanging fruit that Ben Graham had a lot of, because of the Great Depression, has gone away. If you just try and float from one undervalued bad business into another and pay all the costs and forth, it just doesn't work well enough for the people to actually put up the money to be worth bothering with.

That's the way it works now. But in Graham's time, it was the best way there was. Well, your upgrade on that was to just look for good businesses. I saw immediately that Graham was wrong, right? And you look for, and you had the real money was in really great companies, right? Which carried you up and up and up and up and up.

All intelligent investing is value investing. You have to acquire more than you really pay for, and that's a value judgment. But you can look for more than you're paying for, and a lot of different ways you can use filters to sift the investment universe.

If you stick with stocks that can't possibly be wonderful to just put away in your safe deposit box for 40 years but are underpriced, then you have to keep moving around all the time. As they get closer to what you think the real value is, you have to sell them and then find others.

So, it's an active kind of investing: the investing where you find a few great companies and just sit on your ass because you've correctly predicted the future. That is what it's very nice to be good at.