The Hindu Business Line : Investment Nuggets

Charlie Munger, Warren Buffet's right-hand man in Berkshire Hathaway is as adept as Buffet at investing, and shares his simple non-nonsense approach to stocks. His views on investing and on the stock markets tend to be just as forthright as Buffets' own. Here are a few samplers:

"In many corporations, there is an obsession with meeting quarterly earnings targets. To do so, they'd fudge a little, sell stock at a capital gain, sell a building or two... Then, if that was not enough, they would engage in channel stuffing — if you were selling through a middleman, you could unload your product at the end of the quarter and make the current quarter look better but, of course, the next quarter would be worse. For many major pharmaceutical, consumer products and software companies, at the end of quarter, this was very common. That is pretty well over. A few public hangings will really change behaviour."

"If you are going to be an investor, you are going to make some investments where you do not have all the experience you need. But if you keep trying to get a little better over time, you will start to make investments that are virtually certain to have a good outcome. The keys are discipline, hard work, and practice. It is like playing golf — you have to work on it."

"Over many decades, our usual practice is that if (the stock of) something we like goes down, we buy more and more. Sometimes something happens, you realise you are wrong, and you get out. But if you develop correct confidence in your judgment, buy more and take advantage of stock prices."

"Some people seem to think there is no trouble just because it has not happened yet. If you jump out the window at the 42nd floor and you are still doing fine as you pass the 27th floor, that does not mean you do not have a serious problem. I would want to address the problem right now. They'd better face it."

"Personally, I think Berkshire will be a lot bigger and stronger than it is. Whether the stock will be a good investment from today's price is another question. The one thing we've always guaranteed is that the future will be a lot worse than the past."