Charlie Munger Once Explained Why He And Warren Buffett Refuse To Short Stocks — And It Started With Latter's Tendency To Invest In 'Lousy Companies'
Charlie Munger once revealed that Berkshire Hathaway's (NYSE:BRK) (NYSE:BRK)long-standing aversion to shorting stocks came from Warren Buffett's early experience investing in what he called "lousy companies" — and from a shared belief that investing should be both profitable and pleasant.From Cigar Butts To Quality BusinessesIn the 2017 HBO/Kunhardt Film Foundation documentary "Becoming Warren Buffett," Munger reflected on Buffett's evolution as an investor.He said the Buffett "made millions and millions of dollars value investing in lousy companies that he bought very cheaply."In Buffett's early years, following mentor Benjamin Graham's cigar butt philosophy, he often purchased struggling businesses trading below their working capital, earning steady but uninspiring returns, said Munger.However, Munger said the experience was hardly enjoyable. "It's unpleasant to watch lousy companies you don't like," he explained, noting that both he and Buffett found more satisfaction in backing strong, well-run firms. "It's much more fun to watch somebody you like and admire succeeding than watching some jerk half-mismanage some company that's very cheap," he added.That realization also shaped their decision to avoid shorting stocks altogether. "It’s ...Full story available on Benzinga.com
