Charlie Munger lived a colorful life.

Charlie Munger lived a colorful life.

I was a successful lawyer, I was running several other businesses, and I made a lot of money from the real estate development business.

Munger retired from the practice of law at the age of nearly 50 and entered the investment industry. At that time, his life expectancy was less than 70, so it was a new challenge after retirement. As a result, after living another 50 years, a new challenge after retirement became more than half of his career.

However, even though they are Mr. Buffett and Mr. Munger, their wealth gap is more than 20 times. It is estimated that Mr. Munger was wealthier than Mr. Buffett even until the 1960s. Why was the difference?

First of all, Munger had too many properties. In the 1970s, when Munger liquidated his investment association, he was said to be worth $2 million in shares and $3 million in multiple properties. Buffett, on the other hand, had all his fortune in Berkshire Hathaway. Berkshire was one of the stocks with the biggest increase in its stock price over the past 50 years. If Munger also sold real estate and increased his stake in Berkshire, the unit of his wealth would have been different.

And Munger didn’t make much money in the 1970s. The 1973-1974 U.S. stock market was a record-setting decline. Unfortunately, Munger loses a lot in that period of time when he borrows money as collateral for stocks and invests in stocks. If he had cash at that time, it was a great opportunity to make a lot of money.

Of course, I left out the contribution, such as, “Why is Munger poorer than Buffett?” I don’t think it’s a suitable topic to write in memory of the deceased.

This month’s coffee pot theme is Charlie Munger’s life and investment.

Investments similar to Buffett but different from Munger’s. The reason why the style is different is because the process of living is different. Buffett and Munger, who spent half his life investing, have various experiences. Investment styles must be different. What do investment masters like Howard Max and Warren Buffett have in common?

White American… (No)

I think the investment of the masters is easy and intuitive.

For example? Warren Buffett started buying Japan’s top five trading stocks in 2020. Berkshire Hathaway issued yen-denominated bonds in the 0% range in Japan and used them as funds for trading stocks with a market dividend of around 5%. He borrowed money at 0% and bought a 5% coupon. Even if the trading stock is halved, the principal can be restored with dividends in 10 years. In addition, the Japanese trading stock was less than 1 times the net asset value (PBR) per share, but the operating profit was good. Although the stock price could fall, the possibility of bankruptcy or halving was extremely low. Intuitively, it is a highly likely game.

In an October investor note, Howard Max also hit the nail on the head. Why do you do hard stocks when high-yield bonds pay more than 8% interest? Even the (U.S.) stock index isn’t cheap? Sell all your stocks and just buy high-yield bonds.

November’s Coffee Pot contribution transcribed the teachings of Howard Max. Read Howard Max’s common-sense and intuitive advice. And let’s take a look at how many investors have suffered losses from hard labor.

Investors with an 8% required rate of return just need to buy high-yield funds or ETFs. Depending on market conditions, the rate of return may rise or fall, but there is little possibility of losing principal by buying 8% bonds that do not have a long maturity.

But most investors do somersault on a single rope. They predict the timing of the recession, they predict the timing of the rate cut. If you get it all right, you could make a profit as much as Warren Buffett.

You don’t have to make it difficult to invest. If you let go of your greed and focus on realistic returns, you can become mostly rich in the distant future. The reason why investments fail is because you rush to become rich quickly.

A link to the November contribution is in the comments.