Charlie Munger takes a negative stance on day trading
Berkshire Vice would like tax on short-term profits
Munger still against cryptocurrencies
Berkshire Hathaway Vice Charlie Munger is usually reticent at the investment vehicle’s general meetings and leaves the speaking to his partner, star investor Warren Buffett. However, at the Daily Journal’s annual meeting, hosted by Yahoo Finance, where he is chairman of the board, he offered his opinion on a number of stock market issues.
Munger’s critique of day trading
At the Daily Journal’s annual meeting, investment legend Charlie Munger reiterated his dislike of day trading, explaining that some people use the stock market like an arcade, making it “an ideal arcade activity.” The 98-year-old said if he were “dictator for a day” there would be “some kind of tax” on short-term gains that would reduce liquidity in the stock market and separate what he calls “marriage”. By this he means that investors who focus on short-term gains and investors who want to build long-term wealth put their money in the same stock market.
The investment legend explained that the level of liquidity was much lower when he was young. “When I was at Harvard Law School, we rarely traded 1 million shares in a day; now we trade billions,” Munger told CNBC’s Becky Quick. “We don’t need someone that liquid [Aktienmarkt].” In his opinion, the current level of liquidity has created “miserable excesses and dangers for the country.” The Berkshire vice president compared the enormous amounts of money that are moved every day to “people getting drunk at a party” without discussing the consequences to think.
Munger on China, Bitcoin, ETFs and Inflation
Alongside this, Charlie Munger also spoke at the Daily Journal’s annual meeting on other topics, such as Berkshire Hathaway’s large cash reserves, China investments, cryptocurrencies, index funds and inflation.
When asked about Berkshire Hathaway’s large cash reserves, Munger replied, “The reason we don’t buy is because we can’t buy anything at the prices we’re willing to pay. It’s that simple. Other people are driving prices in the amount, and a lot of the buying isn’t being made by the people who really want to own the companies.”
Regarding investments in Chinese stocks such as BYD and Alibaba, Munger explained that China is a great modern nation. “We invested some money in China because we get more value there in terms of company strength and price certainty than in the US,” Munger told the Daily Journal of the Alibaba investment.
When it comes to cryptocurrencies, Munger again defended his position. He does not regret not having invested in cryptos such as Bitcoin & Co. but is proud to have avoided them. He described the digital coins as a kind of disease and agreed with China’s crypto ban: “I wish they had been banned immediately. I admire the Chinese for banning it; I think they were right and we were.” were wrong to allow it,” Munger said.
Munger was also critical of index funds. Their providers and those responsible for indexes have gained too much power, and he sees a shift in power that is changing the world for the worse: “We have a new bunch of rulers, and these are the people who choose the stocks in the index funds,” says Munger. About 20 percent of the US stock market is now owned by index funds.
Charlie Munger also sees inflation as a danger. “The problems we face could be worse than those Volcker dealt with and more difficult to fix,” Munger said, referring to the so-called Volcker shock of 1979-80 when the US central bank finally raised interest rates to more than 20 percent.
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