The Wolf Den #858 - Nothing Beats Having a Great Partner
R.I.P. Charlie Munger
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In This Issue:
Nothing Beats Having a Great Partner
Bitcoin Thoughts And Analysis
Altcoin Charts
Rate Cut Anticipation Fuels Continued Rally
The SEC Is Getting Its Ducks In A Row
Bitcoin Is Destroying The Planet
Pando Asset Joins The Race
ALERT! Buy Bitcoin Mining Stocks - Find Out Why! l Mike Alfred
Nothing Beats Having a Great Partner
I learned about Charlie Munger's passing after spending substantial time on yesterday's Tether intro, which turned out to be a blessing in disguise. The timing prompted me to delve deeper into Munger's life, leading me to dedicate a more substantial portion of this newsletter to honor the legend.
Before proceeding, I want to acknowledge that Charlie Munger held beliefs contrary to the principles upheld by this newsletter. Yet, it's undeniable that Munger's life offers profound lessons, and his unwavering abilities serve as an exceptional example worth learning from and celebrating.
As evident from the title, my intention today is to pay tribute to Charlie Munger's life by drawing on the wisdom and kindness conveyed by Warren Buffett in his 2022 annual shareholder letter that released earlier this year. In this letter, Buffet wrote about his relationship with Munger—something every investor should read.
Before delving into the contents of this letter, it would be remiss not to provide a brief overview of Charlie Munger for those unfamiliar with him. I'll keep this concise, as the primary focus today is on the meaningful insight shared in the annual letter immediately following the summary.
Charlie Munger, born on January 1, 1924, in Omaha, Nebraska, displayed early signs of intellectual curiosity and independence. At the age of seven, he started selling packs of gum, and by the time he was eleven, he was running a successful business selling magazines. His academic journey led him to the University of Michigan, where he studied mathematics and later attended Harvard Law School. Charlie Munger’s first encounter with Warren Buffet was at a dinner party in 1959, Munger was 35 years old, and Buffet was 29 years old.
In the investment world, Munger gained prominence as the Vice Chairman of Berkshire Hathaway, working alongside Warren Buffett. His distinctive approach, often characterized by a focus on long-term value investing and the cultivation of a broad mental toolkit, contributed significantly to the success of Berkshire Hathaway. Beyond finance, Munger is recognized for his intellectual breadth, incorporating ideas from various disciplines such as psychology, economics, and biology into his decision-making framework. His lifelong commitment to continuous learning and integrity has left an indelible mark on both the business world and the field of investment.
Above all else, Munger was the best partner, friend, and confidant Buffet could have ever asked for, which leads me to my favorite part of today’s newsletter—the letter I mentioned earlier. Inside of the annual shareholder letter, Buffet dedicated a segment to Munger titled, "Nothing Beats Having a Great Partner."
I could paraphrase the contents, but it wouldn’t do it justice, enjoy.
Charlie and I think pretty much alike. But what it takes me a page to explain, he sums up in a sentence. His version, moreover, is always more clearly reasoned and also more artfully – some might add bluntly – stated.
Here are a few of his thoughts, many lifted from a very recent podcast:
• The world is full of foolish gamblers, and they will not do as well as the patient investor.
• If you don’t see the world the way it is, it’s like judging something through a distorted lens.
• All I want to know is where I’m going to die, so I’ll never go there. And a related thought: Early on, write your desired obituary – and then behave accordingly.
• If you don’t care whether you are rational or not, you won’t work on it. Then you will stay irrational and get lousy results.
• Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.
• You can learn a lot from dead people. Read of the deceased you admire and detest.
• Don’t bail away in a sinking boat if you can swim to one that is seaworthy.
• A great company keeps working after you are not; a mediocre company won’t do that.
• Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.
• Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying.
• There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice.
• You don’t, however, need to own a lot of things in order to get rich.
• You have to keep learning if you want to become a great investor. When the world changes, you must change.
• Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never.
• Finally, I will add two short sentences by Charlie that have been his decision-clinchers for decades: “Warren, think more about it. You’re smart and I’m right.”
And so it goes. I never have a phone call with Charlie without learning something. And, while he makes me think, he also makes me laugh.
************
I will add to Charlie’s list a rule of my own: Find a very smart high-grade partner – preferably slightly older than you – and then listen very carefully to what he says.
I can't help but get goosebumps as I read through these quotes, reflecting on the profound legacy that Munger has left behind and the myriad of ways we can honor and remember him. Munger's advice and legacy serve as a reminder to cherish those who support and guide us, especially in challenging times and always seek laughter when we can.
Munger embodied the essence of a great partner, a quality far more precious and elusive than any investment or business opportunity ever pursued by Berkshire Hathaway.
Despite Munger's well-known aversion to crypto, expressing these sentiments feels fitting. Speculating on how Munger might have viewed cryptocurrency in a different era is beside the point. The world will undoubtedly feel the absence of Charlie Munger, a figure whose influence extends beyond individual opinions on specific technologies or financial matters.
If there's one meaningful way I can think of to honor Charlie Munger, it would be to follow and echo Buffett's advice and encourage you to actively seek someone you can truly rely on. Despite Charlie's reservations about crypto and the challenges we uniquely face in our industry, I align with the notion that, irrespective of our differing beliefs, we could all benefit from finding a great partner.
Your perspectives, even on crypto, brought us a good laugh, and your character served as a reminder that having someone dependable in our lives is truly invaluable.
Rest in peace, Charlie Munger.
Bitcoin Thoughts And Analysis
Every time Bitcoin hits $38,000, it gets smacked back down below. You can see that every time attempts has been met with a long wick up, indicating strong selling in this area. We are yet to see a daily close above that level, which is still the key signal for me. Nothing to do but wait.
Altcoin Charts
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
DOT is forming a bull flag after a significant move up and break of the downtrend. The key resistance remains $5.70.
A break of the bull flag would target ~$8.80 based on the length of the flag pole.
Nice volume on the move up, decreasing as price consolidates. There's nothing to do here unless we see a breakout from the bull flag - until then this is just an idea.
Rate Cut Anticipation Fuels Continued Rally
The euro experienced a downturn, dropping 0.4% against the dollar, amid expectations of interest rate cuts by the European Central Bank (ECB), following slower-than-expected inflation in Europe. This anticipation fueled a global asset rally, with the Stoxx 600 index climbing 0.3%. Meanwhile, U.S. Treasury bonds halted their November rally as markets await further indications of potential rate cuts in 2024. Upcoming U.S. economic data is expected to show a continued slowdown in inflation. In the Euro-zone, consumer prices rose less than predicted, and the French economy saw a slight contraction. Markets are now pricing in a quarter-point reduction in ECB rates by April 2024. In the U.S., recent economic data suggests a moderate slowdown, supporting the idea of a 'soft landing' for the economy. All eyes are now on an upcoming speech by Fed Chair Jerome Powell for more guidance. Other global economic highlights include China's manufacturing and services sectors contracting, and OPEC+ preparing for discussions on oil production policies.
Key events this week:
OPEC+ meeting, Thursday
Eurozone CPI, unemployment, Thursday
US personal income, PCE deflator, initial jobless claims, pending home sales, Thursday
China Caixin Manufacturing PMI, Friday
Eurozone S&P Global Manufacturing PMI, Friday
US construction spending, ISM Manufacturing, Friday
Fed Chair Jerome Powell to participate in “fireside chat” in Atlanta, Friday
Chicago Fed President Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.3% as of 10:11 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average rose 0.4%
The MSCI Asia Pacific Index rose 0.3%
The MSCI Emerging Markets Index was little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.5% to $1.0918
The Japanese yen fell 0.2% to 147.54 per dollar
The offshore yuan was little changed at 7.1482 per dollar
The British pound fell 0.4% to $1.2643
Cryptocurrencies
Bitcoin was little changed at $37,705.59
Ether was little changed at $2,028.5
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.29%
Germany’s 10-year yield declined two basis points to 2.41%
Britain’s 10-year yield advanced four basis points to 4.13%
Commodities
Brent crude rose 1% to $83.95 a barrel
Spot gold fell 0.3% to $2,038.31 an ounce
The SEC Is Getting Its Ducks In A Row
The SEC proactively delayed Franklin Templeton's Bitcoin ETF filing two days ago, initially suggesting a negative development. However, there might be a silver lining. A positive interpretation of the SEC's decision to delay before the scheduled timeline is that, theoretically, the SEC could now approve all filers in early January. This notion gains further support from the SEC's preemptive delay of Hashdex's filing, which also faced a deadline on January 1st. Navigating the approval process is confusing due to the regulatory hurdles and scattered dates. Nevertheless, the encouraging aspect is that with the recent developments, every filer (except Pando) now stands a chance of approval in early January. I’m keeping my fingers crossed.
Bitcoin Is Destroying The Planet
Allow me to anticipate what’s next…'Bitcoin is consuming too much oxygen, endangering our ability to breathe?' The challenge with this article lies in grappling with the notion that a Bitcoin transaction, costing anywhere from $1 to $5, somehow compares to the expense of filling up a swimming pool. If water were indeed this inexpensive and easy to come by, why does water insecurity persist as a global issue?
By this reasoning, if a wire transfer were to equate to the cost of several pools, does it imply that banks are responsible for Flint's lack of clean drinking water or the absence of wells in Kenya? Moreover, if banks consume more electricity than Bitcoin, could banks be implicated in the challenges some developing countries face with unstable electricity? The confusion induced by FUD is truly headache-inducing.
Pando Asset Joins The Race
Switzerland-based asset manager Pando Asset has joined the race for a Bitcoin spot ETF in the United States. What adds intrigue to Pando's application is that it may be 'late' for consideration in the January round. However, Pando brings experience to the table, having offered crypto products successfully outside of the U.S.
“Pando Asset currently offers three exchange-traded products (ETPs) that trade on the SIX Swiss Exchange, including ones focused on bitcoin and ether. The third allocates to six crypto assets: bitcoin (BTC), ether (ETH), binance coin (BNB), cardano (ADA), solana (SOL) and polkadot (DOT).”
My interpretation of this news is that Pando is just one among numerous entities poised to enter the market on their terms in the ensuing months and years. They will bring along their own clientele, individuals and businesses alike, seeking exposure to Bitcoin and other digital assets products. Spot ETFs will have profound impacts over time.
ALERT! Buy Bitcoin Mining Stocks - Find Out Why! l Mike Alfred
Scott is joined by investor Mike Alfred to discuss the bullish case for Bitcoin miners.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
Very good post Scott. Easy to dislike Munger because of his views on crypto but a very inspirational investor that we can try our best to replicate his success.