Charlie Munger: It’south ‘accented insanity’ to think owning 100 stocks instead of 5 makes you a better investor

Julia La Roche

Investing icon Charlie Munger, Berkshire Hathaway’s (BRK-B, BRK-A) vice-chairman and Warren Buffett’due south long-time business partner, says his type of value investing will “never go out of mode.”

“Because value investing — the way I conceive information technology — is e’er wanting to become more value than y’all pay for when you purchase a stock, and that approach will never get out of style,” Munger said on Wednesday at the Annual Meeting of Shareholders of the Daily Periodical Corporation (DJCO), where he serves as chairman of the board.

Co-ordinate to Munger, some think that value investing means chasing companies with a lot of cash but run a lousy business.

“[I] don’t define that every bit value investing,” he added. “I think all good investing is value investing. It’southward just some people expect for values in strong companies and some look for values in weak companies. But every value investor tries to go more than value than he pays for.”

‘Diworsification’

Munger observed that in the wealth management space “a lot of people remember if they have 100 stocks they’re investing more professionally than they are if they have four or v.”

“I regard this as insanity. Absolute insanity,” Munger said.

“I recollect it’s much easier to detect 5 than it is to discover 100,” the 97-yr-old investor argued. “I think the people who contend for all this diversification, past the way, I call information technology ‘diworsification,’ which I copied from somebody. And I’m style more comfortable owning 2 or iii stocks which I think I know something near and where I call back I take an advantage.”

Vice Chairman of Berkshire Hathaway, Charlie Munger attends the annual Berkshire shareholders meeting in Omaha, Nebraska, May 3, 2019. (Photo by Johannes EISELE / AFP)
Vice Chairman of Berkshire Hathaway, Charlie Munger attends the annual Berkshire shareholders coming together in Omaha, Nebraska, May iii, 2019. (Photo by Johannes EISELE / AFP)

Afterwards in the coming together, when asked how he advises universities and charitable institutions to manage their endowments, Munger shared that ane charitable endowment where he’south had “some influence for a very long fourth dimension” has a “agglomeration of hotshot financiers in every branch of wealth management there is” on its board. According to Munger, that institution has 2 assets in its endowment account — a large interest in Li Lu’south express partnership and a Vanguard index fund.

“And the issue of holding those two positions, we have a mode lower cost than everyone else and we make more money than practically everybody else,” he said. “So you now know what I do in charitable institutions. By the way, that’s non the normal effect in America. The wealth management industry has a crisis on its easily. They really need the world to stay the style it is, and that isn’t necessarily right for its customers.”

Shares of Daily Journal closed up 1.4%, or $four.lxx, to finish Wednesday at $351.


Julia La Roche is a correspondent for Yahoo Finance. Follow her on



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