Berkshire Hathaway's Charlie Munger discussed his outlooks on the economy, oil, renewable energy and cryptocurrency after his recent personal investment in an Australian investment company.
Billionaire investor Munger who has worked alongside with Warren Buffett for several decades, discussed his views with the Financial Review in Australia.
A vice chairman of Berkshire Hathaway, Munger invested in Stonehouse Corporation, a Melbourne-based investment company, because its founder is a "soulmate" to the conglomerate, he said. The investment amount was not disclosed.
Stonehouse Corporation, an investment company that has flown under the radar, is operated by Charles Jennings, an American who lives in Australia. His strategy has been to mirror the conglomerate's policy of buying and holding businesses for several years.
The right-hand man of Buffett, Munger made the investment with his own personal wealth because Jennings operates in a similar fashion to Berkshire's employees.
Why Oil Is Not Going Away
Berkshire Hathaway now owns a 18.7% stake in Occidental, adding another 12 million shares in July and also owns a stake in oil producer Chevron (CVX) - Get Chevron Corporation Report), now the fourth largest holding owned by the conglomerate.
The global economy will be dependent on fossil fuels for several decades, Munger said.
"I think we’re going to be using fossil fuels for a long time ahead because we have to...We’re not going to get rid of fossil fuels, we’re just going to use less of them," he said.
But Munger is a fan of adding renewable energy to the mix.
"And I also think more of the world’s power generation will come from renewables," he said. "Both things are going to happen."
Outlook on the Economy, Inflation
Inflation does not play a factor in Munger's investment strategy.
"I’m always aware of it, but it doesn’t stop me from operating,"he said. "I’m 98½ years of age, and I’ve seen a lot of inflation. I intend to live through inflation. I’ve lived through a lot of it already in my long life. It doesn’t discourage."
Munger largely ignores current macroeconomic trends when he is making decisions on investments.
"I don’t pay much attention to macroeconomic trends," he said. "Like the weather, I just ignore the weather. I just try to invest whatever capital I have as best I can & take the results as they fall. I just seize whatever opportunities I can & I hope I get my share."
Berkshire's Investment Thesis
Berkshire has been known for maintaining high levels of cash reserves.
The recent levels of cash at Berkshire were not accumulated because "we were anticipating a big decline where you can spend it," Munger said.
The cash reserve levels rose because investors were eager to deploy their capital.
"We accumulated the cash because things got so competitive and prices for good businesses ... we couldn’t find any good buy," he said.
Crypto: 'Never Buy It'
Munger has always been brutually honest about his disdain for investing in cryptrocurrency, stating in the past that the digital currencies are fraudulent and deemed bitcoin to be a "noxious poison" as well as "stupid and "immoral."
Sellers of bitcoin and other virtual coins are not trustworthy and the digital currencies are a “mass folly,” he said.
"I think anybody that sells this stuff is either delusional or evil,"Munger told the Financial Review. "I won’t touch the crypto. “I’m not interested in undermining the national currencies of the world.”
He advises investors to avoid them.
"Never touch it," he said. "Never buy it. Let it pass by. I regard it as almost insane to buy this stuff or to trade in it. I just avoid it as if it were an open sewer, full of malicious organisms. I just totally avoid and recommended everybody else follow my example.”
Investing in the stocks of companies that generate a profit is a better strategy.
"Stocks have a real interest in real businesses," he said. "Crypto is an investment in nothing and the guy who’s trying to sell you an investment in nothing says, ‘I have a special kind of nothing that’s difficult to make more of. I don’t want to buy a piece of nothing."