Quote of the day by Charlie Munger: ‘Big money not in buying and selling, but…’

Charles Thomas Munger, co-founder of Berkshire Hathaway alongside Warren Buffett, has a following of his own, as the late billionaire investor has left behind a treasure trove of tried and tested investing advice over the years.

Buffett (95), also known as ‘The Oracle of Omaha’ for his impeccable investment decisions over the years, himself credits Munger for a key principle on avoiding major mistakes: “Really good investment opportunities aren't going to come along too often and won't last too long, so you've got to be ready to act and have a prepared mind.”

Buying and selling is bread and butter for traders, but for investors, especially retail investors, making a few good choices and sticking with them through market upheavals is more likely to lead to gains.

However, waiting is not as simple as it seems, with stock trading available one click away on your phones and computers today, it is very tempting to make impulsive decisions, get swept away by trends and headlines or fall victim to greed and fear.

Buffet put it more bluntly in a 2018 interview with CNBC, “Some people are not actually emotionally or psychologically fit to own stocks. But I think more of them would be, if you get educated on what you're really buying, which is part of a business and the longer you hold stocks the less risky they'd be.”

Munger notes that his own experience has taught that long-term holding on stocks with solid fundamentals and sound business, will ultimately lead to good results for investors. There is also the added benefit of compound growth, value appreciation of quality assets over the long term cannot be over sold.

And over the years, Munger has also noted that it is harder to have cash on hand and “do nothing”. He made a similar remark at the Wesco Financial Annual Meeting in May 2003, noting that patience and preparedness are the two key qualities that make a good investor.

A lawyer by training, Munger helped Buffett, who was seven years his junior, craft a philosophy of investing in companies for the long term. Buffett has credited him with shaping Berkshire Hathaway’s investing style and pushing the ‘Oracle of Omaha’ away from cheap “cigar-butt” stocks toward high-quality businesses at fair prices.

Under their management, Berkshire averaged an annual gain of 20% from 1965 through 2022 — roughly twice the pace of the S&P 500 Index. Decades of compounded returns made the pair billionaires and folk heroes to adoring investors.

Munger was vice chairman of Berkshire from 1978 until the day he died at 99 in 2023. He was also among the company's biggest shareholders, with stock valued at about $2.2 billion. His overall net worth was about $2.6 billion, according to Forbes.