$BABA
Why invest in China? And why Alibaba?
At 98, Munger is as sharp as ever.
His recent 2-hour sharing at $DJCO was 🔥
Talked about $BABA, $COST, $ATVI, crypto, interest rates, envy, antitrust, the great resignation, growth vs value investing and MORE.
Here are my notes:
$BABA
Why invest in China? And why Alibaba?
More than 20,000 people have viewed it in 7 days.
https://t.co/C0FNa2zhaV
While there are legitimate use cases (IMO), Munger hates the negative spillover it brings.
Japan managed to maintain low interest rates and reduce their debt without compromising their living standards.
But we're not sure if the U.S. can pull off the same trick.
Here's why:
Munger has mad concentration.
He feels that good companies are hard to come by and we're lucky if we can get 4 good assets.
IMO that extreme level of concentration isn't for most people.
Because we ain't sharp as Munger and the volatility isn't for most.
He has great admiration for the CEO.
The thesis wasn't based on the metaverse.
It was simply that the existing tailwind of the gaming industry is huge.
He would rather not weaken the top tech companies in the U.S.
And that we should be proud of these assets.
TLDR; he doesn't give a shit.
Expect sharp downswings when you are investing.
Working habits are changing & many prefer WFH arrangements.
And the government dished out too much welfare.
People work to avoid the agony that comes with unemployment.
When that is taken away, it becomes disruptive.
On why misbehaviors are so rampant in the finance and wealth management industry.
They were the fourth branch of the government and there used to be quality journalism.
Their demise was replaced by media outlets that focused on pumping out crazy headlines.
Unfortunate.. but inevitable.
It is overvalued now. But if you have a long time horizon, your returns will equal the business' return on capital (ROC).
Hence, Munger is ok with buying $COST today if he had a 30 to 50 year time horizon.
If there weren't capital gains tax, would he go to cash today?
I presume the question was asked because of the uncertain interest rate environment, inflation fears and high asset valuation.
Here's what Munger have to say:
More from Thomas Chua
Buffett's letters taught me more about investing than any business school ever could.
Even after investing for 14 years, I uncover new insights every time I reread his letters.
Recently, I reread his letters from 1977 to 2020 for a third time.
Here are my key insights:
1. Moat is NEVER stagnant
A company's competitive position either grows stronger or weaker each day.
Widening the moat must always take precedence over short-term targets.
2. Commodity businesses
A business without moat will have its returns competed away.
Regardless of improvement, your competitors will quickly copy your advantage away.
Where returns on capital is dismal, reinvestment will only destroy value.
3. The flywheel effect
Buffett was preaching about the flywheel effect before it became cool.
Back then, newspapers were similar to today's platform businesses like Amazon, Meta, and App Store.
More readers beget more advertisers beget more readers.
4. Operating leverage
Companies with high fixed costs and low variable costs will see earnings rise faster than revenue.
However, it cuts both ways.
It becomes a disaster when revenue is declining.
Check out my article on how operating leverage works: https://t.co/Nv747oBAK0
Even after investing for 14 years, I uncover new insights every time I reread his letters.
Recently, I reread his letters from 1977 to 2020 for a third time.
Here are my key insights:
1. Moat is NEVER stagnant
A company's competitive position either grows stronger or weaker each day.
Widening the moat must always take precedence over short-term targets.
2. Commodity businesses
A business without moat will have its returns competed away.
Regardless of improvement, your competitors will quickly copy your advantage away.
Where returns on capital is dismal, reinvestment will only destroy value.
3. The flywheel effect
Buffett was preaching about the flywheel effect before it became cool.
Back then, newspapers were similar to today's platform businesses like Amazon, Meta, and App Store.
More readers beget more advertisers beget more readers.
4. Operating leverage
Companies with high fixed costs and low variable costs will see earnings rise faster than revenue.
However, it cuts both ways.
It becomes a disaster when revenue is declining.
Check out my article on how operating leverage works: https://t.co/Nv747oBAK0
Having a finance degree did not make me a better investor.
Rather, I learned 10x more about investing from Twitter University.
🧵 Here are 5 threads from world-class Fintwitters.
What you learn: Build an investing checklist.
From: @BrianFeroldi, writer at Motley
What you learn: Read 10Ks like a Hedge Fund
From: @FabiusMercurius
What you learn: Perform a DCF analysis.
From: @10kdiver
What you learn: When to sell your stocks
From: @borrowed_ideas, founder at
Rather, I learned 10x more about investing from Twitter University.
🧵 Here are 5 threads from world-class Fintwitters.
What you learn: Build an investing checklist.
From: @BrianFeroldi, writer at Motley
1/ How to create an investment checklist (thread)
— Brian Feroldi (@BrianFeroldi) December 8, 2020
Checklists are an amazing, FREE, underutilized investing tool
Here's the step-by-step process for how to create your own
\u2b07\ufe0f\u2b07\ufe0f\u2b07\ufe0f\u2b07\ufe0f\u2b07\ufe0f\u2b07\ufe0f\u2b07\ufe0f\u2b07\ufe0f\u2b07\ufe0f
What you learn: Read 10Ks like a Hedge Fund
From: @FabiusMercurius
\U0001f9d0How to Read 10Ks Like a Hedge Fund\U0001f9d0
— Ming Zhao (@FabiusMercurius) May 7, 2021
\u201cFundamentals don\u2019t matter anymore!\u201d I\u2019ve heard this a lot lately on Fintwit.\U0001f644
But, for those who\u2019ve diversify beyond $GME and $DOGE, here\u2019s a primer on what metrics fundamental buy-side PMs look at and why:
(real examples outlined)
\U0001f447 pic.twitter.com/tLlNRvpnDK
What you learn: Perform a DCF analysis.
From: @10kdiver
1/
— 10-K Diver (@10kdiver) August 8, 2020
Get a cup of coffee.
In this thread, I'll show you how to do a DCF analysis.
For those unfamiliar, DCF = Discounted Cash Flow.
What you learn: When to sell your stocks
From: @borrowed_ideas, founder at
