Value Investing in One Paragraph
According to Charlie Munger
The following clip is from my Libertalia Investing Course. The entire 12-week course is available at the $10/month tier (which you can cancel anytime). A loose transcript of the video appears below, in case you prefer to read instead of watch. Enjoy!
This quote is only a few lines long, but it actually captures everything about value investing packed into a single paragraph.
Let me give you the context.
Warren Buffett and Charlie Munger held annual meetings for shareholders where anyone could ask them questions. These eventually became widely attended events, with recordings dating back to the 1990s. At one of those meetings, someone asked Charlie:
“Can you summarize what you and Warren are really looking for in investments? What’s your checklist?”
And Charlie, in classic fashion, boiled it down into just a few powerful ideas. Here’s what he said:
"We have to deal in things we are capable of understanding. Once we're over that filter, we need a business with intrinsic characteristics that give it a durable competitive advantage. Then, of course, we would vastly prefer a management team with a lot of integrity and talent. And finally, no matter how wonderful it is, it isn't worth an infinite price—we need a price that makes sense and gives us a margin of safety, considering the natural vicissitudes of life."
That last phrase - "natural vicissitudes of life" - is classic Charlie. He’s simply acknowledging that unexpected things happen. Life is uncertain. So, we invest accordingly.
He closes by saying:
"It's a very simple set of ideas. Most brilliant things are simple. But that doesn’t mean it’s easy."
That’s the brilliance of value investing. It is simple, but not easy.
DISCLAIMER!
Remember: This is not financial advice! I am not a financial advisor and have not considered your personal financial situation as your fiduciary. All content shared, including analysis, the Libertalia Investing Course, and discussion is for general information, educational and entertainment purposes only.
Please note that any opinions expressed here—whether by me or other participants—are solely our personal views. They should not be construed as specific financial or investing advice. Every investor's situation is unique, and you should always conduct your own research and/or consult with a licensed financial professional before making any investment decisions.
I own shares in IMKTA, GRUSF, EVVTY, PAYC, DIS, FLWS, FND, GOOGL, HHH, HPQ, LULU, LVMUY, NTDOY, OXY, POOL, PYPL, UBSFY, CZBS, DRREF, and SEG. Any mention of these or other stocks is not an endorsement to buy, sell, or hold. I may buy or sell any of these positions (or others) at any time for any reason.
Investing involves risk, including the loss of principal. Past performance does not guarantee future results.