• Munger criticizes the investment managers’ lack of knowledge and lack of courage
• Stubborn inflation, high interest rates, tough competition: Munger expects bad times on the stock markets
• Extremely similar criticism to Buffett: There are a lot of people who “do stupid things”
Charlie Munger doesn’t have a great need for harmony. The Berkshire Hathaway VP is outspoken, always outspoken in his harsh but mostly wise opinions that draw a lot of attention in the investment community. It’s no wonder that Munger is always listened to – the 99-year-old has repeatedly demonstrated an enormous acumen for all developments on the capital markets in his long investment career. This time he is going to court with the well-respected asset managers.
“astrologers pulling money out of customers’ pockets”
In an interview with the Financial Times, Munger said investment managers are nothing more than “fortune tellers or astrologers who pull money out of their clients’ pockets”. He also sees an increasing “glut of investment managers, which is bad for the country”. Munger believes that most financial advisors and money managers claim they can beat the market to attract clients, but end up putting their money into simple indexes to avoid big losses. “In other words, no one can stand to stand out from the crowd in terms of results for fear of losing their fees, and so they all end up doing the same thing,” he says. “It’s a bit ridiculous. The world is a bit ridiculous,” is Munger’s sharp verdict.
Munger: Long-term profits on the stock markets are becoming increasingly difficult
In general, Munger sees many changes in the investment landscape and believes young people will find it increasingly difficult” target=”_blank”” to amass significant wealth.
He therefore attributes Berkshire Hathaway’s tremendous success to the very favorable conditions on the capital markets that have prevailed over the past few decades. “Broadly speaking, Berkshire’s success is a result of low interest rates, low stock valuations and ample opportunity.” “We (Berkshire Hathaway, ed.) were a creature of a specific time and a perfect set of opportunities,” he said. According to Fortune, the stock market doyen goes on to say that he lived in a “perfect time to be a common stock investor.”
In the future, however, investors’ opportunities will be significantly more limited due to persistent inflationary pressure, higher interest rates, higher share valuations and greater competition. “It’s become very difficult to get anything like the wins we used to have,” he pointed out during the Financial Times interview, noting that “just when the game is getting harder, more and more people are trying to to play it”. Accordingly, the stock exchange reminds Munger more and more of a casino in which every participant wants to earn big money as quickly as possible through ultra-risky bets without much background knowledge. “We have people who know nothing about stocks and are advised by stockbrokers who know even less,” says Munger, who increasingly sees a “casino operation”.
Is there a credit crunch in the US housing market soon?
In addition, Munger warns of a crisis in the US real estate market in view of the numerous bad loans. Investors will not be making any big profits with real estate in the foreseeable future due to the recent extremely high real estate prices and the increased interest rates. The real estate credit system that has been built up in recent years is therefore on shaky ground, according to Munger.
Buffett Agrees With Munger: There Are A Lot Of People ‘Doing Stupid Things’
Interestingly, the “Oracle of Omaha” personally made similarly negative comments about the financial industry at the Berkshire AGM. Warren Buffett said there are many people in the investment industry who cannot be trusted. “I would say in the 58 years that we’ve been running Berkshire, the number of people doing stupid things and doing big stupid things has risen sharply,” said the CEO of investment holding Berkshire Hathaway. “The reason they’re doing this is because, to some extent, it’s a lot easier to get money from people than it used to be,” the legendary value investor said.
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