Berkshire Hathaway's Charlie Munger says markets 'crazier' now than they were in the late 1990s

Berkshire Hathaway’s Charlie Munger says markets ‘crazier’ now than they were in the late 1990s

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12/3/2021 1:01:00 PM

Berkshire Hathaway’s Charlie Munger says markets ‘crazier’ now than they were in the late 1990s

The dot-com bust has nothing on what investors are seeing from markets right now, said Berkshire Hathaway's vice chairman Charlie Munger.

That was the verdict of the vice chairman of Berkshire Hathaway BRK.A, +1.18% BRK.B, +1.49%, Charlie Munger, describing current stock markets and company valuations out of touch with reality, at the Sohn Hearts & Minds Investment conference in Sydney on Friday.

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“Some of the valuations we saw in the dot-com boom were higher,” he said, according to The Australian Business Review. “But overall, I consider this as being even crazier than the dot-com boom, which blew up in 2000.”Specifically, Munger said many U.S. companies were trading 35 times earnings, making it tough for average investors to get a foothold, with valuations the most extreme he’d seen in recent history.

Want to become a better investor? Sign up for our How to Invest seriesOne stock that is in favor with Berkshire Chairman Warren Buffett’s right hand man is discount retailer Costco COST, -0.82%, which the 97-year old said he likes over U.S. e-commerce giant AMZN, -0.18%. Costco’s business model is centered on its customer memberships, which means those going into the stores are buying its products. “I predict that Costco will eventually become a huge internet player,” he said.

The retailer’s business model also helps it to keep prices lower as it buys in bulk. “We are all lucky to have Costco,” he said. Berkshire owns Amazon, but not Costco.Munger also singled out one of Berkshire’s holdings, China electric-car group BYD 1211, -2.49%, which he described as “one of the best companies in the world.”

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He’s also backing the shift to renewable energy, such as wind and solar. “I love the fact we’re rapidly reducing the burning of coal and the burning of gasoline and diesel…and replacing them with electricity from renewable sources.”

Read more: MarketWatch »

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