{"id":7984,"date":"2023-11-01T08:36:58","date_gmt":"2023-11-01T08:36:58","guid":{"rendered":"https:\/\/infundpros.com\/business\/awfully-easy-money-charlie-munger-praises-warren-buffetts-big-bets-on-japan\/"},"modified":"2023-11-01T08:36:59","modified_gmt":"2023-11-01T08:36:59","slug":"awfully-easy-money-charlie-munger-praises-warren-buffetts-big-bets-on-japan","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=7984","title":{"rendered":"\u2018Awfully easy money\u2019: Charlie Munger praises Warren Buffett\u2019s big bets on Japan"},"content":{"rendered":"
\n

\n Warren Buffett\u2019s decision to invest billions of dollars into Japan was \u201ca no-brainer\u201d that felt like a gift from God, according to his business partner.\n <\/p>\n

\n \u201cIt was awfully easy money,\u201d Charlie Munger, Buffett\u2019s longtime lieutenant and vice chair of Berkshire Hathaway (BRKA), said in an interview with the Acquired podcast released this week.\n <\/p>\n

\n \u201cIt was like having God just opening a chest and just pouring money into it.\u201d\n <\/p>\n

\n In the summer of 2020, Berkshire revealed it had bought stakes of about 5% in each of Japan\u2019s top five trading companies. In total, the American industrial and insurance conglomerate invested $6.7 billion at the time, while telling shareholders it could hold and increase the size of those holdings over the long run.\n <\/p>\n

\n This year, as Japan\u2019s stock markets rocketed to 33-year highs, <\/strong>Berkshire disclosed it had in fact doubled down, taking its stakes in each company to an average of more than 8.5%. <\/strong> The US giant still has room to run, as it has previously stated it could eventually raise its stakes of each firm to 9.9%.\n <\/p>\n

\n Japan\u2019s Nikkei and Topix indexes are each up more than 20% so far this year.\n <\/p>\n

\n The firms <\/strong>backed by Berkshire \u2014 Itochu, Marubeni, Mitsubishi Corporation, Mitsui & Co., and Sumitomo \u2014 are known as \u201csogo shosha\u201d or general trading companies in Japan. They play a vital role in the country\u2019s economy, dealing in a wide range of industries, including energy, technology and manufacturing.\n <\/p>\n

\n Munger described the investment opportunity as a rare chance to get in on stable assets with huge cash flow and very little risk. \u201cSomething like that \u2014 if you\u2019re as smart as Warren Buffett, maybe two, three times a century, you had an idea like that,\u201d said the 99-year-old.\n <\/p>\n

\n Berkshire was able to pull off its biggest bet outside the United States because of Japan\u2019s historically low interest rates, the executive explained. That meant the conglomerate could borrow money cheaply as far as 10 years in advance, and use the funds to buy stocks with 5% dividends, he said.\n <\/p>\n

\n \u201cThese trading companies were really entrenched, old companies, and they had all these cheap copper mines and rubber plantations, and so you could borrow [easily],\u201d Munger added.\n <\/p>\n

\n He suggested that Berkshire was in a unique position to borrow at a low interest rate because of its strong credit rating. Other companies \u201ccouldn\u2019t get it,\u201d he said. \u201cBut Berkshire, with its credit, could. The only way you could get it was to be very patient and just pick away at little pieces at a time. It took forever.\u201d\n <\/p>\n

\n Now, the conglomerate has invested at least $10 billion, according to Munger.\n <\/p>\n

\n Buffett\u2019s decision to invest in Japan has buoyed optimism about prospects in the world\u2019s third largest economy. The legendary investor has previously cheered \u201cthe future of Japan,\u201d casting more attention to the country from other foreign backers.\n <\/p>\n

\n In his wide-ranging interview, Munger weighed in on investments elsewhere in Asia.\n <\/p>\n

\n BYD, the Chinese electric vehicle maker that counts Berkshire as a longtime investor and competes fiercely with Tesla (TSLA), is a \u201cmiracle,\u201d he mused.\n <\/p>\n

\n \u201cBut that guy works 70 hours a week and has a very high IQ. He can do things you can\u2019t do,\u201d said Munger, in an apparent reference to BYD\u2019s billionaire founder and chairman Wang Chuanfu.\n <\/p>\n

\n Outside \u201cone or two\u201d automakers that have excelled in electric cars, Munger said he was not a fan of trying to pick winners in <\/strong>the sector, revealing that he had lost money on an investment in South Korea\u2019s Hyundai Motor.\n <\/p>\n

\n Beyond the market leaders, \u201cI just don\u2019t even look at the auto industry,\u201d he added.\n <\/p>\n

\n Munger also stuck to Berkshire\u2019s position on Taiwanese chipmaker TSMC (TSM), saying he would prefer \u201csomething with a real consistent brand of its own, like Apple.\u201d The iPhone maker has long been one of Berkshire\u2019s top holdings, which was worth $177.6 billion as of the second quarter.\n <\/p>\n

\n Earlier this year, in a rare reversal, Berkshire said it had dumped its entire stake in TSMC, after the \u201cOracle of Omaha\u201d expressed unease about its homebase of Taiwan and geopolitical tensions. The semiconductor giant is considered a national treasure in Taiwan, and its presence is seen as providing a strong incentive to the West to defend the island against any attempt by China to take it by force.\n <\/p>\n

\n And despite the troubles bedeviling the world\u2019s second largest economy, Munger gave it a thumbs up, saying: \u201cThe Chinese economy has better future prospects for the next 20 years than almost any other big economy.\u201d\n <\/p>\n

\n China\u2019s leading companies are \u201cstronger and better\u201d than leading companies virtually anywhere else, while being available \u201cat a much cheaper price,\u201d he added. \u201cSo naturally, I\u2019m willing to have some China risk in the Munger portfolio.\u201d\n <\/p>\n

\n However, looking at the investment landscape more broadly, Munger suggested the days of finding easy opportunities had dwindled. In the early days of Berkshire\u2019s operation, \u201cthere was a lot of low-hanging fruit,\u201d he said.\n <\/p>\n

\n \u201cYou don\u2019t have any low hanging fruit that is easy right now.\u201d\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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