You saw the stock market declining, so you bought the dip. The next day you saw the market rising, so you decided to book profits in your trade. While following such a strategy might give you momentary happiness, but does this strategy work in the long term? Not always and this is not how smart people make big money. Late legendary investor Charlie Munger had himself said so.
Warren Buffett's business partner and the longtime Vice Chairman of Berkshire Hathaway - Munger – passed away in November 2023, but his astute words continue to reverberate with the investing community. Munger had often spoken about patience when it comes to real wealth creation.
Munger’s astuteness can be gauged from the fact that since he joined Berkshire Hathaway, the company’s stock zoomed a massive 396,182% from 1978 through 2023, according to Bespoke.
So what can you learn from his famous quote on patience when it comes to building wealth and making big money?
Wealth Wisdom of the day by Charlie Munger: ‘Big money is not in buying and selling. But in…’
“The big money is not in the buying and selling, but in the waiting,” late Charlie Munger has famously said, stressing on the need for staying in the game for the long run. The quote might seem short and simple, Munger conveyed something rather deep with this. If you constantly go after fast gains, you would not be able to enjoy the magic of compounding.
Real wealth is generally built slowly, through years of hard work, discipline and time – just like what Munger and Warren Buffett themselves did.
To jog your memory, a SEBI study had revealed that 93% of individual traders incurred losses in equity F&O trading between financial year 2022 and FY 2024. Not just this, but their aggregate losses exceeded a whopping Rs 1.8 lakh crores over the three years of the study.
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However, if you put just Rs 5000 monthly via SIP in an equity mutual fund for 20 years, you would have invested Rs 12 lakh. Now, considering that you get a return of 12% and you don’t even increase your investment amount, your corpus would grow to nearly Rs 46 lakh. This is what power of compounding can do!
This clearly indicates that the strategy of long-term investing works more often than not.
Charlie Munger net worth: How did he make his money?
The late investor and Berkshire Hathaway Vice Chairman was worth $2.2 billion, according to Forbes’ 2023 Billionaires Net Worth list. Munger is known to have left the University of Michigan to become an Army meteorologist during World War II.
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Before meeting Warren Buffett in 1959, Charlie Munger got a degree from Harvard Law School. He joined Berkshire Hathaway in 1978, and continued to work there until his death in November 2023.
You might think that someone with a massive net worth like Munger would have invested across assets. However, almost all of Munger’s family’s net worth was juts in 3 investments, he had himself revealed at a conference in 2017. These were - Costco Wholesale, Himalaya Capital, and Berkshire Hathaway.
