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Charlie Munger has died

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Re: Charlie Munger has died

#141

Post by xanderlewis »

paulpauper wrote: post #102
mkl wrote: post #85

Earlier quoted context omitted.

No 99-year-old is "well" in absolute terms. A 99-year-old US man has only about a 66% chance of reaching 100: https://www.finder.com/life-insurance/odds-of-dying . A 95-year-old man has about a 16.5% chance of reaching 100, so he'd already done pretty well.

I wonder what killed him aside just being really old. he died at a hospital and not at home, so something must have happened. his last media appearance was on the 17th of nov 2023.

I doubt it’s anything dramatic. Stubbing your toe on a table leg could probably kill you when you’re 99.

Re: Charlie Munger has died

#142

Post by evolve2k »

diarrhea wrote: post #83
chollida1 wrote: post #55

Earlier quoted context omitted.

> Every financial advisor and 401k plan recommends index funds by default, and it is how the vast majority of people and organizations store their wealth. It doesn't need any more cheerleaders or icons. It had simply become synonymous with investing at large. This is passive investing, not value investing. Value investing is very much active investing, otherwise how would you select the undervalued assets? Value inve…

How is that different from just… normal investing?

Former Financial Advisor [This is not personal financial advice]:

Stock prices go up and down, but usually your goal is to buy stocks low and sell them high.

Growth investing looks to trending sectors and companies and lets say 'bets' on a certain future playing out and thus being good for certain companies.

Value investing is an investment strategy where you deep dive on the financial fundamentals of a company and determine your own measure of worth, or what is sometimes called a fundamental value. In essence your own financial calculations give you a fundamental value that you think the stock is "actually" worth.

Having done this for a number of companies you then keep track of the market, and when, and only when, the stock price drops below your own fundamental value price then you buy.

Munger and Buffet would pair this approach to also planning to hold the stock for the long term and see themselves as owning part of the business over many years.

Often a stock might drop when the growth story turns against it (eg. AI is more exciting than crypto stories now), and this is likley when Value investors would get into a stock as it was now below their fundamental valuation and hence predicted on their models to go back up over time.

Mutual fund managers can often be classified as having a value or growth or index approach (and others). And for most normal investors it's usually good advise to take advantage of diversification and back a few different approaches in building a long term focussed portfolio.

Re: Charlie Munger has died

#143

Post by phone8675309 »

graphe wrote: post #92
bagful wrote: post #80

Earlier quoted context omitted.

A man who fell to his own hubris?

Would you say that about Stanley Kubrick who died even younger and wanted exacting specs? https://old.reddit.com/r/StanleyKubrick/comments/11dqr7m/_/j... If it's from rich people it's hubris. If someone less famous who got what they wanted it's cool.

Yes

Re: Charlie Munger has died

#144

Post by phone8675309 »

paulpauper wrote: post #117
carabiner wrote: post #67

Also responsible for the windowless college dorm: https://news.ycombinator.com/item?id=29038356

I don't understand the outrage over this. Are windows a major selling point of dorm rooms? When I was in college i don't recall dorm windows being that important. I was studying or elsewhere most of the time anyway.

[flagged]

Re: Charlie Munger has died

#145

Post by andrewmutz »

chollida1 wrote: post #55
paxys wrote: post #46

Earlier quoted context omitted.

You have to remember that Bogle/Munger/Buffet all gained prominence when value investing wasn't a thing and investing of any kind was wildly out of reach for the common man. Today anyone can go online and buy VTI in minutes. Every financial advisor and 401k plan recommends index funds by default, and it is how the vast majority of people and organizations store their wealth. It doesn't need any more cheerleaders or i…

> Every financial advisor and 401k plan recommends index funds by default, and it is how the vast majority of people and organizations store their wealth. It doesn't need any more cheerleaders or icons. It had simply become synonymous with investing at large. This is passive investing, not value investing. Value investing is very much active investing, otherwise how would you select the undervalued assets? Value inve…

The term "value investing" is confusing because it is used in two different ways:

The first way it's used is to describe buying stocks that are cheap relative to their current financial characteristics (price to book, price to earnings, price to FCF, etc). This approach is usually contrasted with "growth", which would refer to investing in companies with a compelling thesis and bright future ahead of them.

A second way the term "value investing" is used is to describe the approach of Buffett/Munger where the investor compares the current price to the present value of the future cash flows and seeks a margin of safety above that.

You can do passive investing in the first approach. Just go buy ETFs that weight towards value metrics, like Vanguards $VTV value ETF. You can't really do passive investing in the second approach, aside from investing money in the funds of people who do that for you.

Re: Charlie Munger has died

#146

Post by DennisP »

paxys wrote: post #104
chollida1 wrote: post #55

Earlier quoted context omitted.

> Every financial advisor and 401k plan recommends index funds by default, and it is how the vast majority of people and organizations store their wealth. It doesn't need any more cheerleaders or icons. It had simply become synonymous with investing at large. This is passive investing, not value investing. Value investing is very much active investing, otherwise how would you select the undervalued assets? Value inve…

Value investing is a strategy. Index funds are a vehicle. The two can and do coexist, even more so than any other such pair because their risk profile (conservative) and time horizon (long term) are so well aligned.

Exactly. What makes it index investing is low fees and simple, objective stock selection without human judgement. There are various well-studied criteria for value stocks.

An S&P500 index does stock selection too, it's just picking large-cap stocks instead of value stocks.

Re: Charlie Munger has died

#147

Post by spfzero »

nradov wrote: post #131
truculent wrote: post #54

Earlier quoted context omitted.

Value investing is “an investment paradigm that involves investing in stocks that are overlooked by the market and are being traded below their true worth”. Correct me if wrong, but I don’t think index funds come under that paradigm.

I think the larger point is that public capital markets have become steadily more efficient. There are no "value stocks" anymore because nothing is overlooked by the market, those old opportunities have been arbitraged away. Modern computing systems have made it practical to look at every stock every day, so all stocks now trade at their "true worth" because all publicly available information gets instantly priced in…

As a counter-argument, you usually need to read a lot into the reported numbers, for example read the 10K notes for multiple years in the past. That's the only way to know that the 3B in assets showing up on the balance sheet for "goodwill", to use one easy example, are not really worth 3B. There are many more-nuanced factors that work alike. The reported numbers are what the accountants think might fly under GAAP, and the accountants work for the CEO, who has a say in the accounting "intent".

To test whether markets are perfectly efficient, just look for large movements over time. If a stock goes up 20% in a year, the market might have undervalued it last year, or is overvaluing it this year. It's unlikely the it was correctly valuing it at both times. In the absence of a Covid-19 pandemic, act of god, etc. of course.

You could say that the market just takes "investor sentiment" into account, and is therefore still efficient. But value investing is a strategy that looks for misplaced investor sentiment and exploits it. If that's the way you define an efficient market, than I'd say an efficient market is no obstacle to a value investor.

Re: Charlie Munger has died

#150

Post by DennisP »

nradov wrote: post #131
truculent wrote: post #54

Earlier quoted context omitted.

Value investing is “an investment paradigm that involves investing in stocks that are overlooked by the market and are being traded below their true worth”. Correct me if wrong, but I don’t think index funds come under that paradigm.

I think the larger point is that public capital markets have become steadily more efficient. There are no "value stocks" anymore because nothing is overlooked by the market, those old opportunities have been arbitraged away. Modern computing systems have made it practical to look at every stock every day, so all stocks now trade at their "true worth" because all publicly available information gets instantly priced in…

The efficient market hypothesis has been dogma for about half a century, but there's a lot of academic research showing that value and various other factors outperform anyway. There are all sorts of structural and psychological reasons they might persist; e.g. a short-term bias among fund managers, who tend to lose investors if they underperform a few quarters.

The research does say that value doesn't work quite as well as it did decades ago.

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