This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Investing Lessons From Charlie Munger

By James Roberts

Consider this comment: “We have great shorts that are setup to make us money, but finding great longs has proven to be much more difficult in recent months. We have been working overtime looking for long candidates and have a few promising leads.”

Those words are from a hedge fund manager of a long/short hedge fund with a great record since 2007. In contrast, I believe the StockDiagnostics portfolio is always able to find a bunch of stocks that are “relatively” attractive to buy.

Not many managers claim to be market timers, nor do I. Berkshire Hathaway’s (BRK.B) Warren Buffett does not claim to be a market timer, either. Buffett’s right-hand man, Charlie Munger, is the controlling stockholder and investment decision maker for Daily Journal (DJCO). The journal publishes legal notices of real estate foreclosures (a booming business during the great recession).

He tries to let the public know as little as possible about his investments through DJCO. Nevertheless, it is quite apparent that he held a lot of cash until mid 2009 when he loaded up on Wells Fargo (WFC), and a little more U.S. Bancorp (USB).

While the prospects for the Daily Journal suggest lower earnings are in prospect, the share price of DJCO has more than doubled since 2009 reflecting the increased value of DJCO’s investment holdings.

Fortunately, foreclosures are becoming less numerous. Munger was either very lucky or followed his methods closely resulting in purchasing stocks near the bottom. In my opinion, the bank stocks that he purchased such as Wells Fargo (WFC) and Goldman Sachs (GS) have proven to be a good hedge against Daily Journal’s newspaper publishing business.

I am sure that a few investors have seen the wisdom of having Munger on their investment team resulting in higher prices for thinly traded DJCO.

The recent poor relative performance of alternative investments like long/short hedge funds was featured in a recent Bloomberg Businessweek cover story.

Being cautious does not win many friends during a bull market, and that is what we are enjoying. Many market observers believe that the market is not currently an earnings driven market, rather it is being fueled by capital infusions from disillusioned investors fleeing the bond market.

If that is the case, dividends are an important consideration these days. One of our recent purchases was Raytheon (RTN).

The investments discussed are held in client accounts as of July 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

James Roberts

James Roberts

I am an individual investor with a background in research and analysis. I worked as a research analyst for a

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%
YHOO $27.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs