Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Charlie Munger: Crypto creators ‘thinking about themselves’
Known for his clever wit and open frankness, investment guru Charlie Munger, reinforced his value style of investing by comparing today’s markets with that of the Dotcom boom while supporting China’s recent expansion. At the same time, voicing his concerns on the growing use of cryptocurrency, which he says should banned. Munger appeared in good spirits when he spoke at the 2021 Sohn Hearts & Minds Conference discussed everything from climate change to trade.
Addressing Australian investors at the Sohn Hearts and Minds conference on Friday, the 97-year-old Munger isn’t worried about the current trade tensions with the US and China and thinks both should concentrate on patching things up. “Both China and the US will be smart enough to see that. I think we’ll reach an acceptable relationship. Nothing may be more crazy if China or the US doesn’t get along with the other. It would be absolutely insane for either country to do anything but emphasis that they get along with the other,” says Munger.
And Australia too has been a big beneficiary of this relationship in the past. “I think it’s a huge blessing for Australia economically, that China has risen so fast… Australia can encourage both the US and China to be more reasonable.”
Berkshire has investments in China which include car manufacturer BYD and Costco. Munger is an avid fan of Costco and commends their ability in keeping customers. Munger says, “knowing the part of a business you don’t want, and keeping it out,” is key. People will shoplift and write bad cheques. Using a membership system, keeps them out. When comparing to the country’s top retailer, Munger believes Amazon may have more of a fear from Costco than the other way around. “Costco, could become a huge internet player, people trust it.”
In renewable energy, Munger says “I would be in favour of using a lot more renewable energy, wind and solar, even if there weren’t a global warming problem. Saving hydrocarbons for future generations instead of blowing them in one blast, I think would be a very smart thing to do even if there weren’t a global warming problem.”
In respect with cryptocurrency Mr Munger says, “well as you all know, I’ve never been a fan of cryptocurrency. I admire the Chinese, they made the correct decision to ban them.” He said would not participate in an “insane cryptocurrency booms…but would rather invest in things that good for me, not things that are bad for me. Believe me, the people who are creating cryptocurrencies are not thinking about the customer, they are thinking about themselves”
Munger’s best advice to investors is to concentrate more on what can go wrong, or what can go right. “I concentrate on both,” says Munger as he lists down ten events that are likely to do the most damage and I then avoid those ten things. If you think that way, you’ll be able to avoid those ten and do less damage than the ordinary social scientist is trying to be involved in.”
