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Crypto, stocks ‘crazier than the dotcom era’: Munger

Jonathan Shapiro and Tom Richardson
AFR
 • 
Dec 3, 2021

CRYPTO, STOCKS ‘CRAZIER THAN THE DOTCOM ERA’: MUNGER

Legendary investor Charlie Munger said levels of excess in the stockmarket are crazier now than they were in the dotcom era as he doubled down on his disdain for cryptocurrencies while praising China’s effort to stamp out excessive speculation.

The 97-year-old investor and polymath who has been the trusted sidekick of Warren Buffett for decades shared his thoughts on markets, investing and geopolitics in a wide-ranging interview broadcast as part of the Sohn Hearts & Minds Investment Conference.

He said the current environment was “more extreme” than anything he had ever experienced.

“The dotcom boom was crazier on the valuations even than we have now but overall, I consider this era even crazier than the dotcom era,” he said.

“You have to pay a great deal for good companies and that reduces your future returns,” he told Dr Mark Nelson of Sydney hedge fund Caledonia, who conducted the interview for the charity conference.

MUNGER PRAISES AUSTRALIAN DEMOCRACY

In a soliloquy-infused speech covering investing, politics, leadership and psychology, Munger concluded with some views on the evolution of constitutional democracy and the rule of law.

“Australia’s been very lucky the way things developed,” he said. “I think Australians can be pretty damn proud of themselves.”

He also praised Victorian-era English constitutional democracy as “simply incredible”.

“Now every democracy’s trying to be more and more direct,” he said. “The most successful sub-parts of modern democracy are not democratic at all. Mayo Clinic, Harvard University, Catholic Church, they’re not democracies. Our most admired institutions are not democracies. It’s only a few places that have made democracy work well and one of them is Australia and another is the United States.”

CRYPTO SHOULD BE BANNED, MUNGER SAYS

Munger has hit out at the trend towards cryptocurrencies and praised China for banning them, accusing the cryptocurrency industry of being self-serving and in it for itself, not customers.

“I wish they’d never been invented,” he says of cryptocurrencies. “And again I admire the Chinese, I think they made the correct decision, which was to simply ban them. In my country, English-speaking civilisation has made the wrong decision, I just can’t stand participating in these insane booms, one way or another.

“It seems to be working; everybody wants to pile in, and I have a different attitude – I want to make my money by selling people things that are good for them, not things that are bad for them.

“Believe me, the people who are creating cryptocurrencies are not thinking about the customer, they’re thinking about themselves,” he says.


MUNGER BACKS RENEWABLE ENERGY – GLOBAL WARMING OR NOT

Charlie Munger has told the Sohn conference he’s a backer of renewable energy.

“I would be in favour of using a lot more renewable energy from wind and solar, even if there were no global warming problem,” Munger says.

“I think saving the hydrocarbons for future generations instead of blowing them all in one big blast, I think would be a very smart thing to do even if there were no global warming. So, I love the fact that we’re rapidly reducing the burning of coal and the burning of gasoline and diesel … and replacing them with electricity from renewable sources.

“I think that’s a smart thing for the world to be doing and it would be smart even if there were no global warming.”



COSTCO 'A COMPETITOR FROM HELL'

Charlie Munger has labelled Costco as a potential competitor from hell for Amazon during a bullish pep talk for investors on the giant US grocery retailer.

“Amazon may have more to fear from Costco than the reverse,” he says. “I think Costco will eventually be a huge internet player. People trust it, they have enormous purchasing power to reduce prices, they’re into very efficient forms of distribution. Who would you like least to compete with in the world of the future? It’d be the sentence from hell if I had to compete with Costco.”

Munger also praises Amazon founder Jeff Bezos as one of the best business leaders of his generation.

“He’s a very brilliant man, and he’s worked very hard and he’s somewhat fanatic and of course he’s had a remarkable result,” he says.

“And he caught a big wave on purpose, and played it harder than almost anybody else and so an interesting example of a Lollapalooza effect is Jeff Bezos. Now he wouldn’t have been so successful if there hadn’t been an internet wave for him to ride, but there was an internet wave and when he saw it, he got aboard, he threw aside everything else in his life and just headed for the top of that wave and he’s been surfing ever since.”

This article was originally posted by The AFR here.

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