The legendary late vice chairman of Berkshire Hathaway
Charlie Munger, was unreserved in his praise of Jeff Bezos, the creator of Amazon.com Inc. (AMZN). However, despite his admiration, Munger chose not to invest heavily in Amazon. Let’s delve into his reasons and the broader implications of this decision.
Munger’s High Praise for Jeff Bezos
During an open conversation in 2019, Munger lauded Bezos as an “amazing human leader,” drawing comparisons with Singapore’s revolutionary leader, Lee Kuan Yew. Under Bezos’s direction, Amazon became the industry leader in cloud computing and e-commerce globally. Despite his enthusiasm, Munger and Berkshire Hathaway invested in Amazon somewhat later than others.
The Complexity and Uncertainty of Amazon
Munger was hesitant to invest in Amazon due to the company’s complexity and the unpredictability of its business environment. “It’s always been too complicated and uncertain for my particular temperament,” Munger stated. He stressed that he preferred to invest in areas where results could be accurately anticipated. This cautious approach, emphasizing companies with distinct, steady paths, has been the foundation of Berkshire Hathaway’s investing strategy.
Regrets and Missed Opportunities
Munger admitted with a trace of sorrow that his overly cautious approach resulted in a lost opportunity. Though he respected Bezos’ unmatched leadership, he adhered to his own investing beliefs and preferred safer, more straightforward business endeavors. “I find other things to do that’ll work fine,” he said.
Comparative Investment Returns
While Berkshire Hathaway shares have increased by more than 216% over the last ten years, Amazon.com shares have seen a staggering +1,055% return during the same period. This stark contrast highlights why Munger might feel some regret over not investing more heavily in Bezos’s e-commerce giant.
Why did Charlie Munger praise Jeff Bezos?
Munger praised Bezos for his leadership qualities, comparing him to Singapore’s revolutionary leader, Lee Kuan Yew, and recognizing his role in making Amazon a global leader in cloud computing and e-commerce.
Why was Munger hesitant to invest in Amazon?
Munger found Amazon’s business environment too complicated and uncertain for his particular temperament. He preferred investing in companies where results could be more accurately anticipated.
What has been the foundation of Berkshire Hathaway’s investing strategy?
Berkshire Hathaway’s strategy emphasizes cautious investments in companies with distinct, steady paths, where outcomes can be predicted with greater accuracy.
Did Munger express any regret over not investing in Amazon?
Yes, Munger expressed some regret, noting that his cautious approach led to a missed opportunity. However, he maintained that he preferred to stick to his investing principles.
How have Berkshire Hathaway and Amazon stocks performed over the last ten years? Over the past ten years, Berkshire Hathaway shares have increased by more than 216%, while Amazon shares have seen a remarkable +1,055% return.
