Warren Buffet’s right-hand man has a blunt message for grumblers worried about “trouble.” 3 Stocks That Make Charlie Munger Happy During Troubled Times
Despite a strong start for equities in early 2023, inflation remains hot and recession fears linger.
But Warren Buffett’s right-hand man, Charlie Munger, suggests we should be happier with our current situation.
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“People are less happy about where things are now than they were when things were a lot harder,” Munger said earlier this year.
“It’s strange for someone my age because I was in the middle of the Great Depression when the need was unbelievable.”
Munger, best known as vice chairman of Berkshire Hathaway and a longtime business partner of Buffett, also serves as chairman of the Daily Journal, a newspaper publisher with a sizable stock portfolio of its own.
So if you’re hoping that some of Munger’s outspoken realism will rub off on you this year, why not borrow some of his investing advice too? If these three stocks can keep the 99-year investment veteran happy, they might work for you, too.
Bank of America
The Daily Journal held 2.3 million shares of Bank of America (NYSE: BAC) stock at the end of September 2022, worth about $69.46 million at the time. With 42.49% of the portfolio, the bank is the largest publicly traded holding in Munger’s company.
Given the economic turmoil forecast for this year, it’s a smart position for Munger. While many sectors are afraid rising interest rates, Banks look forward to it. That’s because banks lend money at higher rates than they borrow and then pocket the difference.
When interest rates rise, the dispersion of a bank’s profits widens.
And coincidentally, Bank of America has steadily increased its payout to shareholders.
Last summer, Bank of America increased its quarterly dividend by 5% to 22 cents a share — and that’s after the company’s 17% dividend increase in July 2021.
At the current share price, the bank offers a 2.5% annual yield.
Buffett likes the companyas Bank of America happens to be the second largest holding in Berkshire Hathaway.
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With approximately $1.9 trillion in assets, Wells Fargo (NYSE:WFC) is another major player in America’s financial services industry. It serves one in three households in the US and more than 10% of small businesses in the country.
The Daily Journal owned 1.59 million shares of Wells Fargo as of September 30, 2022, making the bank its second-largest public company with a 39.16% weighting.
According to the company’s most recent earnings report, Wells Fargo posted revenue of $19.6 billion in the fourth quarter. Earnings for the quarter were 67 cents a share.
Management is monitoring how higher interest rates may affect its customers.
“Our customers have remained resilient, with deposits, consumer spending and credit quality still better than before the pandemic,” Wells Fargo CEO Charlie Scharf said in a statement.
“As we look ahead, we are carefully monitoring the impact of higher interest rates on our customers and expect deposit balances and credit quality to continue to return to pre-pandemic levels.”
Wells Fargo has a quarterly dividend rate of 30 cents per share, which translates to a 2.6% annual yield.
Chinese tech stocks aren’t exactly the darlings of markets these days. E-commerce giant Alibaba Group, for example, plummeted 26% in 2022 and has declined more than 40% over the past five years.
But the Daily Journal has retained the company as its third-largest holding. As of September 30, the company owned 300,000 shares of Alibaba — a stake worth $24.0 million at the time.
And the downturn in Alibaba stock may give way contrarian investors something to think about.
In the third quarter of 2022, the Chinese tech company grew its revenue by 3% year over year to $29.1 billion.
Management noted that the company achieved this revenue growth despite “the impact on consumer demand from the resurgence of COVID-19 in China, as well as the slowdown in cross-border trade due to rising logistics costs and foreign currency volatility.”
While Alibaba doesn’t pay a dividend, it still gives cash back to shareholders share buyback program.
As of November 16, 2022, the company has repurchased approximately $18 billion of its own stock under its existing $25 billion stock repurchase program.
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This article is informational only and should not be construed as advice. It is provided without any guarantee.
https://finance.yahoo.com/news/things-were-way-tougher-charlie-150000169.html Warren Buffet’s right-hand man has a blunt message for grumblers worried about “trouble.” 3 Stocks That Make Charlie Munger Happy During Troubled Times