Charlie Munger on value investing, horses, hunting grounds, fishing and gratification

Charlie Munger, the billionaire investor, friend and colleague of Warren Buffett, gave sage advice to help investors, and more normal folk, last week at the 2020 AGM of the Daily Journal Annual Meeting. Here is a some of it:

​Value investing and fishing
Question: In investing, I’m curious to know how you weigh the quality of the horse versus the odds offered on the horse.

Charlie's answer: Both are important. Basically, all investment is value investment in the sense that you’re always trying to get better prospects than you’re paying for. But you can’t look everywhere at once anymore than you can run a marathon in 12 different states at once.
And so, you have to have some system for picking some place to look, which is your hunting ground. But you’re looking for value in every case.

I think the strongest companies are Chinese. It really helps if you know which hunting ground to look in. In fact, we all do better if we hunt where the hunting is easy.
I have a friend who is a fisherman. He says, ‘I have a simple rule: fish where the fish are’. You want to fish where the bargains are, that’s simple.
If the fishing is lousy where you are, you’ll look for somewhere else to fish.

Immediate gratification is the way to ruin.
Deferred gratifiers do better over the long pull than these impulsive children that have to spend money on Rolex watches or some other folly.

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