Last week, Warren Buffett mentioned to the Wall Street Journal that “in terms of simple profitability, an average investor could have done just as well as his company Berkshire Hathaway by investing in the stock market if they bought during the panic period” immediately following the financial crisis in 2008.
At the time of this writing, Berkshire Hathaway has made roughly $10 billion in pretax income from interest and dividends earned on $26 billion worth of investments and loans that they made to 6 blue-chip companies during the years 2008 and 2011.
It appears that one individual was heeding Warren Buffett’s advice: his business partner and good friend – and vice chairman of Berkshire Hathaway – Charlie Munger.
There’s no doubt that Buffett got lucrative terms and preferred stocks, as well as the promise of high returns on his investments from companies like General Electric and Goldman Sachs. But he also believes that buying the average shares of quality companies would have also provided really good returns as well.
The Oracle of Omaha mentions stocks like American Express and Wells Fargo as his examples. After the Lehman Brothers collapse, Wells Fargo shares dropped to as low as $8.60 each. At this time, they are trading at about $41 per share, which is roughly quadruple the money. American Express shares hit a low of about $10 per share at the height of the crisis. Their shares are currently trading around $73.
Charlie Munger, a member of the board of a tiny newspaper publishing company called the Daily Journal, helped the business invest their cash into stocks beginning in 2009. They rationalized the move as being a better one than buying bonds from the government at near zero interest rates. An executive, along with Munger, chose three stocks to buy. The Daily Journal never shared which stocks they chose, but knowing Munger and Buffett and how they think alike, it wouldn’t be surprising to learn that American Express and Wells Fargo were right in the mix.
Truthfully, Charlie Munger’s picks for the Daily Journal went so well that the SEC inquired earlier this year why the newspaper publishing company isn’t looked at as an investment company because its marketable securities were in excess of 40% of total assets.