Charlie Munger, Warren Buffett’s longtime business partner, emphasizes the necessity for investors to own stocks in tech behemoths like Apple and Alphabet. The 99-year-old investor contends that these companies have become dominant players, and those who don’t invest in them risk falling behind. Munger, known for his value investing approach, surprisingly endorses the tech titans, citing the importance of adapting to the evolving market landscape.
In the ever-evolving landscape of the stock market, Charlie Munger, the 99-year-old business partner of Warren Buffett, advocates for investors to embrace tech giants like Apple and Alphabet. Munger contends that these companies have become so dominant that those who neglect to include them in their portfolios risk falling behind in the market.
In recent interviews, Munger expressed the view that it’s a “Magnificent Seven’s world,” emphasizing that a select few technology companies have outperformed the stock market significantly in recent years. He highlights the importance of investors having a stake in these market leaders to keep pace with the evolving dynamics.
“What everybody has learned is that everybody needs some significant participation in the 12 companies that do better than everybody else,” Munger stated in an interview with the Acquired podcast. “You need two or three of them, at least.”
Despite being known for his traditional value investing approach and a preference for predictability, Munger acknowledges the necessity of adapting to the current market conditions. This recommendation might seem surprising, given his historical inclination toward old-school value investing and avoiding expensive growth stocks.
Munger specifically mentioned Apple as the “logical candidate” for Berkshire Hathaway, Buffett, and himself, emphasizing that its stock was trading at an attractive valuation when they invested. Berkshire’s significant investment in Apple, totaling over $30 billion between 2016 and 2018, has proven to be one of their most successful moves, with Apple’s stock price more than tripling since then.
Addressing concerns about potential regulation for Big Tech, Munger shrugged off the idea of breaking up these companies, stating, “I would not break them up. They’ve got their little niches. Microsoft maybe has a nice niche, but it doesn’t own the Earth.”
Expressing his fondness for high-tech companies, Munger believes that capitalism naturally produces a few big winners by accident. He suggests that the stock market has evolved into a “winners take all” arena, where a handful of companies dominate and achieve outsized gains.
In Munger’s perspective, adapting to the times and embracing the current market leaders, particularly in the tech sector, is crucial. His message to investors who may be reluctant to change with the evolving market trends is clear: Evolve or risk being left behind in the ever-changing landscape of the stock market.
