Munger on market swings: 'As Kipling said, treat those two imposters just the same'

·Assistant Editor
·3 min read

Speaking at the Daily Journal's annual shareholders meeting, Berkshire Hathaway (BRK-B) Vice Chairman Charlie Munger offered some wisdom for investors amid the recent volatility in markets.

“If you’re going to invest in stocks for the long term or real estate, of course there are going to be periods when there’s a lot of agony and other periods when there’s a boom,” the 98-year-old billionaire said. “And I think you just have to learn to live through them.”

Munger cited the poem "If—" by Nobel Prize-winning writer Rudyard Kipling to highlight his point.

“As Kipling said, treat those two imposters just the same,” Munger continued. “You have to deal with daylight and night. Does that bother you very much? No. Sometimes it’s night and sometimes it’s daylight. Sometimes it’s a boom. Sometimes it’s a bust. I believe in doing as well as you can and keep going as long as they let you.”

Joseph Rudyard Kipling (30 December 1865 Ð 18 January 1936) was an English short-story writer, poet, and novelist. He wrote tales and poems of British soldiers in India and stories for children. He was born in Bombay, in the Bombay Presidency of British India, and was taken by his family to England when he was five years old. Kipling's works of fiction include 'The Jungle Book' (1894), 'Kim' (1901), and many short stories, including 'The Man Who Would Be King' (1888). His poems include 'Mandalay' (1890), 'Gunga Din' (1890), 'The White Man's Burden' (1899), and 'IfÑ' (1910). He is regarded as a major innovator in the art of the short story; his children's books are enduring classics of children's literature. (Photo by: Pictures From History/Universal Images Group via Getty Images)
Joseph Rudyard Kipling (30 December 1865 Ð 18 January 1936) was an English short-story writer, poet, and novelist. (Photo by: Pictures From History/Universal Images Group via Getty Images)

Here's the relevant stanza from that poem:

Kipling's poem
Kipling's poem "If—". (screenshot/poets.org)

'Welcome to adult life'

That doesn't mean investing is easy: Munger, Warren Buffett’s long-time business partner and purveyor of pithy opinions, also posited that investing has become more difficult.

“I think the investment world is plenty hard, and in my lifetime, 98 years, it was the ideal time to own a diversified portfolio of common stocks that updated a little by adding the new ones that came in like the Apples and the Alphabets and so forth,” Munger said. "And I’d say people got maybe 10% or 11% if you did that very intelligently before inflation, and maybe 9% after — 8 or 9%. That was a marvelous return."

The investing legend continued: "No other generation in the history of the world ever got returns like that. And I don't think the future is going to give the guy graduating from college this year nearly that easy an investment opportunity. I think it’s going to be way harder."

Charlie Munger speaking at the Daily Journal annual shareholders' meeting. (Yahoo Finance)
Charlie Munger speaking at the Daily Journal annual shareholders' meeting. (Yahoo Finance)

All things considered, according to Munger, any investor should stick to their circle of competence.

"I think some people are gifted enough that they can invest in hard-to-value, difficult things," he said. "Other people, I think, would be very wise to have more modest ambitions in terms of what they choose to deal with. So I think you have to figure out your level of skill or the level of skill your adviser has, and that should enter the equation. But to everyone who finds the current investment climate hard and difficult and somewhat confusing, I would say: Welcome to adult life."

More Munger from The Daily Journal's shareholders meeting:

Grace is an assistant editor for Yahoo Finance.

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