(King World News) – The following is the full transcript of the remarkable interview with Warren Buffett’s partner, Charlie Munger, that CNBC sent to King World News. For those who would like to watch a video of the interview click here. Otherwise, the text is below, and what a great read it is.
BECKY QUICK: Charlie, thank you very much for taking the time to sit down with us today.
CHARLIE MUNGER: Glad to do it.
BECKY QUICK: You spent a lot of time today talking about how people who think that they can beat the market averages are probably fooling themselves, how much tougher it’s gotten to be a value investor, or even just an investor in general. And I was just wondering, do you think the golden era of investing is over?
CHARLIE MUNGER: Well, not forever.
BECKY QUICK: Why?
CHARLIE MUNGER: Well, because I think, it isn’t like the last recession or the last big opportunity that the world is ever going to get is past. There’ll be opportunities in the future. There are times where they’re easier, and there are times when it– which are harder.
BECKY QUICK: So is right now tougher just because–
CHARLIE MUNGER: Now is tougher.
BECKY QUICK: –valuation–
CHARLIE MUNGER: Now is tougher.
BECKY QUICK: –just because valuations have come up so much?
CHARLIE MUNGER: Of course.
BECKY QUICK: So you think–
CHARLIE MUNGER: A) the valuations have come up. And B) the competition sorting through those opportunities is more intelligent and more aggressive and more numerous. Of course it’s harder.
BECKY QUICK: Do you think that the–
CHARLIE MUNGER: The net result is people are going to get worse results.
BECKY QUICK: Do you think that the number of people who are smarter, who have better information than they used to, that that will go down, or it will just be a question of valuations coming down at some point?
CHARLIE MUNGER: Well, I think valuations will come– will go up and down because they always have. And I think we’ll have smart people in this game forever. Lots of them.
BECKY QUICK: You’ve compared it to–
CHARLIE MUNGER: The opportunities that we all remember came from a demoralized period when about 90% of the natural stock buyers got very discouraged with stocks. That’s what created the opportunity for these fabulous records that my generation had. And that was a rare opportunity that came to a rare group of people of whom I was one. And Warren was another.
BECKY QUICK: So you’re talking–
CHARLIE MUNGER: And people who start now have a much less– they have lower opportunity.
BECKY QUICK: Do you think we saw a generational low after 2008, beginning of 2009?
CHARLIE MUNGER: Generational? Maybe.
BECKY QUICK: We–
CHARLIE MUNGER: Yeah, I don’t think the market is going to be cheaper.
BECKY QUICK: Do you think–
CHARLIE MUNGER: Than it was then. Yes, it was low. There were huge opportunities then.
BECKY QUICK: What about just back around December, Christmas Eve? Prices were down 20% and further for a lot of stocks.
CHARLIE MUNGER: Well, I don’t follow the details and don’t remember the exact days that are– I know that when The Daily Journal bought those bank stocks, it was basically the low tick.
BECKY QUICK: Right.
CHARLIE MUNGER: That was an accident. I deserve no credit for that.
BECKY QUICK: Well, you deserve some credit.
CHARLIE MUNGER: No. Well– but– but the exact perfect timing was an accident.
BECKY QUICK: What about the lack of volatility that we’ve seen in the markets? That– that’s also kind of, as central banks got into the game and increased liquidity—
CHARLIE MUNGER: Well, of course it’s– with all this massive central bank interference, I think that was necessary to do. I admire the politicians who did it and the technocrats, including the Federal Reserve people. And I think it was absolutely required, and that the danger they were avoiding was worth some of the troubles they caused. So– but it was very peculiar. And it did have the accidental effect of bailing out the rich in order to help the poor. And nobody was doing that because they love the rich. They just didn’t have any other tool in the kit, and they had to do something.
BECKY QUICK: So the inequality that came from that–
CHARLIE MUNGER: It wasn’t malevolent. And it was an accident. And it probably won’t happen again. And it’s not a permanent conspiracy against the poor. It was a– it was an accident that we had the huge recession caused partly by massive stupidity in finance and venality. And then when we ran out of tools and had to do something really peculiar that we’d never done before, that was the wisest thing to do, given the amount of trouble we were in. You’ve got to remember that if the trouble has been allowed to run, we might have had a re-visitation of the kind of troubles that brought Hitler into power. So we were facing real difficulties. And both parties and our technocrats got together for the last time, I think, and worked us out of it. It was a very admirable thing, and that you can all be proud. I’ve been proud of nothing in politics since.
BECKY QUICK: This leads me down so many roads.
CHARLIE MUNGER: But it was– but that was a– that was a high moment.
BECKY QUICK: There are all sorts of political proposals out there right now to try and solve that inequality that was created. Everything from a 70% tax on the highest brackets to a wealth tax to taxing stock buybacks or even preventing them. Do you think any of them work?
CHARLIE MUNGER: I don’t think we have to destroy– some inequality is probably going to go by itself. …..More Here