Charlie Munger: Portfolio Diversification

Discussion in 'Share Investing Strategies, Theories & Education' started by oracle, 25th Mar, 2019.

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  1. oracle

    oracle Well-Known Member

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    Always interesting to hear Charlie.

    Something I have heard few times now which was also mentioned in the video is to lower future expected returns. To me it seems sensible to lower return expectation. I would be happy if I can get 7% nominal returns over long time with inflation around 2.5%

    Regarding diversification. I am sticking with diversification since I do not have any edge and know my limitations when it comes to emotions and temperament.

    Cheers,
    Oracle.
     
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  2. lamecrocs

    lamecrocs Well-Known Member

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    Well, since you're now learning so much (preparing yourself). would it be fair to say that one day... when the few GREAT opportunities pop up, you would hit on them like Munger? so essentially, owning few great stocks rather than owning a heap of stocks or ETF/LIC?
     
  3. Redwing

    Redwing Well-Known Member

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    Warren Buffett says he can't beat the S&P 500 - CNN

    The world's most well-known investor says it's hard for him to do better than the broader market. So should you even try?

    Warren Buffett told CNBC on Monday that he's had a "tough time" trying to beat the S&P 500. The Oracle of Omaha, who just released his annual Berkshire Hathaway (BRKB) shareholder letter, suggested that the index is still the best way to invest in the stock market for most people. He even joked that most of the time he doesn't know how to pick individual stocks.
    Buffett told the network that his two investing gurus, Ted Weschler and Todd Combs, have each underperformed the S&P 500 during the past few years by a "tiny bit." Even so, he added that their stock picks have done better than his.

    Continues.....
     
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  4. oracle

    oracle Well-Known Member

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    I don't think so. Stock picking is hard work and requires lot of patience and right temperament without any certainty on beating the index.

    On the other hand indexing is so much simpler and easier and guaranteed to get descent return.

    Cheers,
    Oracle.
     
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  5. Fargo

    Fargo Well-Known Member

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    Nah not hard at all just read Joe Magyers News letters, glance at the Fin Review, and a little common sense though it is not very common.
     
  6. oracle

    oracle Well-Known Member

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    Let's talk in 20 years time.

    Based on above everyone should be beating the market.It's so easy...

    Poor Joe Magyers needs to run a fund to earn fees to build wealth. Apparently, knowing how to beat the market is not enough to build wealth. If I knew how to beat the market consistently over long periods of time why would I ever want the hassle of managing other peoples money and dealing with those investors?

    Good luck with your investing. I am very happy with my average market returns.

    Cheers,
    Oracle.
     
    Last edited: 7th May, 2019
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  7. SatayKing

    SatayKing Well-Known Member

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    Altruism? Something to do to fill in the day? Pay for children's school fees, violin and ballet lessons or gap year in exotic places?
     
  8. Redwing

    Redwing Well-Known Member

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    Had to see who he was :D

    Joe Magyer
     
  9. Redwing

    Redwing Well-Known Member

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  10. Redwing

    Redwing Well-Known Member

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    Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’

    The Berkshire Hathaway vice chairman has always preached the value of being prepared to pounce when there are bargains to be had. Has that time come?

    Charlie Munger is watching and waiting, too.

    Mr. Munger, vice chairman of Berkshire Hathaway Inc. and Warren Buffett’s longtime business partner, likes to say that one of the keys to great investing results is “sitting on your ass.” That means doing nothing the vast majority of the time, but buying with “aggression” when bargains abound.

    I spoke this week by phone with Mr. Munger, who turned 96 years old on Jan. 1. He sounded as sharp and vigorous as ever, and as usual he drew bright lines between what he’s fairly certain of and what he thinks belongs in the “too-hard pile”—where he and Mr. Buffett consign questions they don’t know how to answer. Overall, Mr. Munger made it clear that he regards this as a time for caution rather than action.
     
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  11. alexm

    alexm Well-Known Member

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    Are you for real? How do you know him or did I misread your post?
     
  12. Anchor

    Anchor Well-Known Member

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    @Redwing and Charlie Munger are good mates since kindy.:D
     
    Last edited: 19th Apr, 2020
  13. geoffw

    geoffw Moderator Staff Member

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    Oh wow. @Redwing is close to Charlie Munger's age? Around 96?

    He's quite eloquent for his age.
     
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  14. Nodrog

    Nodrog Well-Known Member

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    Charlie often seeks advice on Bonds from @redwing:cool:.
     
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  15. Anne11

    Anne11 Well-Known Member

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    These are gold. Thanks Redwing! I am reading Poor Charlie’s Almanac- very good read.
     
    Last edited by a moderator: 20th Apr, 2020
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  16. Redwing

    Redwing Well-Known Member

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    @Nodrog

    He and Wazza don't listen :D:D

    “At $19.9 billion, US Government bonds represent just 2.8% of Berkshire’s assets. Although that represented an increase from the 2.5% allocation in Q3, that came in lower than Q4 2017’s 3.0%, to continue a downward trend that has been in evidence since 2003.


    [​IMG]
    Source: Company accounts

     
  17. Nodrog

    Nodrog Well-Known Member

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    It seems they are:).

    Bill Bernstein has joked a couple of times about Buffet’s view on Bonds. In one of Buffets annual letters he spent nearly an entire page criticising Bonds then goes on to state that BRK was holding billions of dollars in Treasuries:rolleyes:.
     
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  18. Redwing

    Redwing Well-Known Member

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    OH well there's some solace in that he wrote that after he passes, the trustee of his wife's inheritance has been told to put 90% of her money into a stock index fund and 10% into short-term government bonds.

     
  19. Zenith Chaos

    Zenith Chaos Well-Known Member

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    On all points of that graph it doesn't add up to 100%. Where's the rest Wazza?
     
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  20. Beano

    Beano Well-Known Member

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    It's the fees :)