"What Did Charlie Munger Say on February 24?"

This article is Lu Canwei's 60th original piece.

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Recently, at the annual shareholders' meeting of the "Daily Journal" held in Los Angeles on February 24, vice chairman of Berkshire Hathaway and Warren Buffett's golden partner, Charlie Munger, made sharp comments on hot topics such as GameStop, SPACs, Bitcoin, and bubbles.

Speculation is Very Dangerous

Munger believes that speculation is very dangerous. Many investors are buying stocks frantically when they see prices rise, often using leverage, which is a very risky investment approach.

As someone who has been through this, I deeply agree. When we cannot clearly see the value of an asset, even if we make money using leverage, we won't know at what price to exit, ultimately leading to liquidation. I once saw a wealthy investor share about achieving financial freedom, thinking it was about buying low and selling high, precisely timing the market. However, the content shared was about having faced four liquidations and being heavily in debt, and later achieving financial freedom through risk control and steady investment.

GameStop is a "Horse Race Mentality"

Munger believes that GameStop represents a "horse race mentality" and encourages such gambling is extremely foolish, as it can lead to a short squeeze. Interestingly, I recently listened to Sun Ge discuss the GME short squeeze battle on CH, and his perspective was completely different from Munger's. He believes that YOLO is a new symbol for this generation of young people, akin to Buffett buying Coca-Cola back in the day. Different eras have different beliefs, representing the game between retail investors and institutions.

Often, it is not that these predecessors are unwilling to engage with new things, but rather that they are vested interests in old paradigms. They have created the current results through these beliefs. Once this is disrupted, it can shatter previous accumulations. However, some are in this environment and wish to embrace new things, which explains why some institutions choose to indirectly hold cryptocurrencies through companies like "Grayscale."

Bitcoin and Tesla: Fleas and Lice

Munger believes that long-term low interest rates have led to asset bubbles and that value investing is always relevant. He also opposes diversification, stating that owning 100 stocks is not more professional than owning 4-5 stocks. This is indeed true; the more you own, the more you dilute your focus, and the less you understand each investment.

When it comes to Bitcoin, Munger's views remain consistent.

For Bitcoin advocates, Bitcoin is digital gold. In the current context of the dollar being printed excessively, Bitcoin serves as a good hedge. It is more convenient to store than gold and has a fixed total supply.

Even though he compares Tesla to lice, it does not prevent Berkshire from buying BYD.

SPACs: Selling Dog Shit

Regarding the booming Special Purpose Acquisition Companies (SPACs) and the associated investment banks and brokers, Munger believes that investment banks will sell anything, even dog shit, as long as it sells.

Costco: More Valuable than Amazon

Munger believes that Costco is more valuable than Amazon. Costco has created a strong culture that vigorously pursues cost, quality, efficiency, honor, and benefits for multiple companies, and it has been effective.

How to Be Happy

Munger believes that the first rule for a happy life is to lower expectations. When you encounter setbacks, it’s better to take a step back and cope with them.

Indeed, if you lower your expectations, you will experience less pain. We often hope that things in life will turn out as we imagine, or wonder why others don’t understand what we’re saying and are so stubborn. Trying to change them is an unrealistic expectation. Instead, we should focus on what we can control, like ourselves. By lowering our expectations of others, we also reduce our own suffering.

When facing setbacks, think about how young you are; there will surely be greater challenges ahead. If you are overly distressed by this current setback, how will you cope with even bigger ones in the future? So, strive to cope, read more, and think more.

Learn More About Psychology

Munger believes we should learn more about psychology. By combining psychological knowledge with other knowledge, we can gain deeper insights. Indeed, many problems cannot be solved through other knowledge, but can be addressed by integrating psychology. For example, I can relate the concept of loss aversion to my daily writing. In terms of gains and losses, I instinctively feel that losses are unbearable.

Or when I don’t know what to say, I remind myself to just write a couple of sentences. Everything has a cycle; there will always be good and bad. Sometimes, even if I collect a lot of content and input a lot, I may still struggle to output. Accepting this situation, whether the content is high-quality or not, is part of what I want to express.

After all, a prostitute doesn’t lack sexual desire to take clients.

Some content referenced from Investment Workbook, author Lin Jingyang.

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