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The most important lesson I learned from Charlie Munger has nothing to do with money

Nov 29, 2023

Good morning! 👋

Federal Reserve Governor Christopher Waller said the bank’s current monetary policy appears sufficient to help cool inflation.

Naturally, the bulls have taken that as a reason to yell “Charge!”

I hope you’re on board, for two reasons:

The markets are poised to charge violently higher. There may be $100T on the sidelines, perhaps more. (Watch)
The world’s best companies continue to put up great numbers, and their share prices reflect that—as should your brokerage statement.

Here’s my playbook.

The most important lesson I learned from Charlie Munger has nothing to do with money

Charlie Munger, Warren Buffett’s sidekick of 50+ years, died peacefully in a California hospital yesterday at the age of 99. He’s best known for his take on investing, but the single most important lesson I learned from him had nothing to do with money.

Munger’s optimism made him tick, especially when it was dished out with a slice of wit.

On competency, which he called a relative concept… “What I needed to get ahead was to compete against idiots. And luckily, there’s a large supply.”
On being profitable versus being right… “Warren, if people weren’t so often wrong, we wouldn’t be so rich.”
And on mixing something bad with something good and the inherent need to distinguish between the two… “If you mix raisins with turds, they’re still turds.”

R.I.P., Mr. Munger—thank you for giving me the guidance a young punk clearly heard.

MYPOV: Does Munger’s death make Berkshire a sell? No, but it does bring another stock to mind. Munger held on to one stock personally after Berkshire sold out all 4.3 million shares in 2020. OBAers following along as directed own it with good reason. It’s returned 504.02% over the past decade and remains a rock-solid retailer. One of the very best, actually. Upgrade to Paid

Energy mergerfest continues—here’s why it matters

CNBC is reporting that Elliott Investment Management has taken a $1 billion stake in crude refiner Phillips 66 while also seeking as many as two board seats at a time when Phillips 66 is underperforming its peers. (Read)

Good!

Mergers are a sign that the stronger money is on the move and powerful reinforcement that your investing dollars should be too. Particularly since this news comes on the back of two prior mergers we’ve discussed recently, Chevron and Hess, as well as ExxonMobil and Pioneer.

Elliott says Phillips has 75% upside if it executed on CEO Mark Lashier’s goals.

Hmmm.

Calls, LEAPS, and just plain ol’ 66 stock could be interesting.

Keith’s Quick Tip: You hear me talk frequently about how the strong feed when the weak retreat; this is yet another example of that happening. Start looking for suitors if a company falls on hard times because the odds are, one will surface if the company in question is worth it. If not, avoid it like the plague.

GM’s buyback makes me do a double take

CEO Mary Barra wants you driving GM, and she’s made a hard pitch to Wall Street that includes cutting capital spending, a $10B buyback, and a dividend hike. (Read)

Gutsy!

GM faces rising labour costs, the EV market isn’t proving as easy to crack as once thought, and every dollar taken away from capital spending risks flattening future sales.

I’m tempted to short it or buy putskies because something just doesn’t sit right.

I couldn’t have said it better myself

Former Google honcho Eric Schmidt finally weighed in on the OpenAI saga, saying simply, “You don’t fire a Steve Jobs.” (Read)

I agree.

Visionary leaders build great companies, particularly when they’ve got the smarts to execute.

That’s why I place a huge premium on who’s running which companies. It’s also why I will not hesitate to buy or sell a stock based on a change in CEOs. Meta’s a great example of a company I will not own as long as El Zucko is in the driver’s seat.

The fact that Microsoft CEO Satya Nadella brokered Altman’s return to OpenAI speaks volumes.

If you’ve ever wanted to use a supercomputer, here’s your chance

NVIDIA and Amazon are teaming up to make the mother of all supercomputers with Project Ceiba. The new JV will apparently combine the former’s AI and chip-making expertise with the latter’s cloud infrastructure. (Read)

I’m super excited, and for selfish reasons.

We use AWS nightly to process our stock market analysis. And we’re just 1 of an estimated 1 million active users who may potentially gain access as a result of this collaboration.

Imagine what happens when other small companies unlock the data they’re using to drive everything from digital biology to climate predictions from their garages… ahem, global HQs.

I cannot overstate the potential.

Google, Apple, Amazon, Microsoft, Dell, Mattel, Amazon, and Walt Disney ALL began in garages.

MyPOV: Developments like this frequently precede a rash of new technologies, which is why buying into funds that specialize in pre-IPO investments now could be worth the effort.