Why does Munger like China

邹咏翰
2022-01-06

1. Munger almost doubled $Daily Journal(DJCO)$ DailyJournal's investment in $Alibaba(BABA)$ $Alibaba(09988)$ Alibaba based on the latest disclosure. Alibaba is now 28% of Daily Corp's portfolio value. This is one big bet on probably the most targeted company in China right now. Opinions were split if this was a right move among the investors.


2. Why did Munger believe in China to such a degree? There could be a few reasons.


3. First, Chinese culture aligns with his view of life. He gave an interview with Hong Zhou Kan in 2018 and he shared that Warren Buffett and him, act with Confucian values. Come to think of it, it is true. They act modestly even though they are rich. Buffett stays in the same house for decades and doesn't drive Bentley or sail a yacht. Munger hasn't been seen with luxurious toys too.


5. Munger often sounds like a very principled grandpa, criticising the bad behaviour of others. On cryptocurrency, he said, "I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization". On the US stock markets, he said, "I consider this era even crazier than the dotcom era." Referring to Elon Musk, "I don’t want my personal life to be [around] a bunch of guys who are living in a state of delusion, who happen occasionally to win big. I want the prudent person."


6. On the other hand, he applauded many of the actions that the Chinese government has taken. On banning cryptocurrency in China, "I admire the Chinese, I think they made the correct decision, which was to simply ban them." He also said stopping and silencing Jack Ma was the right move. This shows his preference of a paternalistic approach in stemming bad behaviours - the principled grandpa.


7. So you can say that he believes in acting good to get good results. And his definition of good is based on values close to Confucianism.


8. Second, he believes that the Chinese government will not kill its own enterprises. He said China "lifted 800 million people out of poverty fast. And there was never anything like it in the history of the world... So my hat is off to the Chinese. And I think they will continue to allow people to make money. They've learned it works."


9. Combining both points together, Munger believes that the regulatory moves are necessary to rein in excess. At the same time, it would not be stifling long term sustainable growth. It's like caning the kid when he misbehaves and not about destroying the kid's future.


10. Thirdly, he believes China offers the best long term returns. He has been saying this on different occasions, "the best companies in China are selling cheaper than the best companies in the United States." He even said "the strongest companies in the world are not in America, I think Chinese companies are stronger than ours and are growing faster."


11. "The first rule of fishing is fish where the fish are." He believe China is currently where the fish are.


12. Will he be right? Only time will tell.

大公司头条
大公司又发生了什么事,收购、合作、入股?来这里关注最重要的商业新闻和公司动向吧
免责声明:上述内容仅代表发帖人个人观点,不构成本平台的任何投资建议。

精彩评论

  • qingg123
    2022-01-06
    qingg123
    There are not so many reasons.. Munger's purchase of Alibaba stock is entirely due to the fact that after Ali's share price plummeted in 2021, the current investment value has been highlighted. Both Munger and Buffett have one thing in common. They like to buy stocks at a discount. Buying now is definitely a once-in-a-decade opportunity.
  • keepcalm
    2022-01-06
    keepcalm
    In my opinion, the rise of U.S. stocks for many years in a row means that a deep adjustment may occur at any time. The Federal Reserve has already released the signal that it will raise interest rates in 2022. If we don't choose to sell high-valued stocks now, we will only have huge losses on the books. Alibaba's share price will still fall with the decline of US stocks.
  • maroketo
    2022-01-06
    maroketo
    Investing in Chinese companies means investing in the future. Munger did nothing wrong. Similar to Alibaba's business, Amazon's market value far exceeds Alibaba's. Amazon is overvalued by Wall Street too much at present, which is why the share price of this company is not as good as other FAANG stocks in 2021.
  • falleno
    2022-01-06
    falleno
    Will Munger's investment in Alibaba be the same as Buffett's investment in Apple?
  • waipoin
    2022-01-06
    waipoin
    This marks the beginning of the reversal of Alibaba's share price.
  • RudolfKennedy
    2022-01-06
    RudolfKennedy
    Buffett and Munger-these two 90-year-olds are very wise.
发表看法
10