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Charlie Munger explains why he and Buffett have changed their minds about tech and airlines
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Loading...Berkshire Hathaway’s Warren Buffett and Charlie Munger used to think the airline industry was a “joke” and now they own billions of dollars worth of airline stocks.
They also used to shy away from technology companies. Now they own more than $7 billion worth of Apple.
On Tuesday, Berkshire Hathaway (BRK-A, BRK-B) revealed that it boosted its positions in airlines stocks including, American Airlines (AAL), Delta (DAL), and United Continental (UAL). Berkshire also disclosed a large position in Southwest (LUV). Collectively, Berkshire’s positions in airline stocks were worth more than $9.2 billion.
Berkshire also added another 42.1 million shares of Apple (AAPL), bringing its total investment to 57.4 million shares, or 1.09% of the company’s stock.
At the 2017 Daily Journal Meeting (DJCO) in Los Angeles, Munger explained how he and Buffett have changed with age.
“Warren learned better over time, I’ve learned better. The nice thing about the game we’re in is you can keep learning and we’re still doing it,” Munger, 93, said.
He acknowledged that they used to think the airlines were a joke, same as they once did about the railroads. He added that “something similar” is happening to the airline business.
Munger went on to explain how the investment business has gotten harder.
“In the old days, I frequently talk to Warren about the old days, for years and years and years what we did was shoot fish in a barrel. It was so easy we didn’t want to shoot fish while they were moving. We waiting until they slowed down and shot at them with a shot gun. It’s gotten harder and harder. Now we get little edges. It isn’t any less interesting. And we do not make the same returns we made when we’d pick this low hanging fruit off trees that offered a lot of it.”
He continued: “[Buffett’s] changed when he buys airlines and he’s changed when he buys Apple. Think of the hootie we’ve done over the years… ‘Worst business in the world is airlines.’ What do we? We appear in the press with Apple and a bunch of airlines. I don’t think we’ve gone crazy. I think the answer is we’re adapting to a business that’s gotten much more difficult.”
Munger doesn’t think investing today is a “cinch.” But he thinks the odds are a “little bit” in their favor.
He concluded with some classic Munger wisdom.
“I used to say, ‘you have to marry the best person that will have you.’ That’s a rule of life. You have to get by on the best advantage you can get. Things have gotten so difficult in the investment world.”
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