Daily Journal AGM
Comment of the Day

February 14 2018

Commentary by Eoin Treacy

Daily Journal AGM

Eoin Treacy's view

I drove into downtown LA this morning to hear Charlie Munger talk at the Daily Journal AGM. Here are some of the points he raised. 

Berkshire Hathaway and indeed the Daily Journal has large positions in Wells Fargo and Munger thought the bank was getting an overly hard time from regulators. He said mistakes had been made and lessons learned and that depositors could expect a much better service in future. Considering just what kind of activities the institution has been up to, I think it is egregious to call out regulators rather than management when standards of governance have clearly been questioned.

Nevertheless, the share has found at least near-term support in the region of the trend mean following drop on the 5th and banking is a sector that should do well in a rising interest rate environment.

BYD is close to opening up its own lithium mine near Tibet which will make it one of the few vertically integrated electric vehicle companies. The share has been consolidating above a four-year range since its breakout in September and a sustained move below HK$60 would be required to question medium-term scope for additional upside.

He also commented briefly on cobalt which he said was an interesting market that could get tighter. Katanga Mines has been one of the more popular plays on the sector and is currently bouncing from the region of the trend mean.

A point he alluded to on a number of occasions is that there are fewer opportunities out there today than when he and Warren Buffett were starting out. That also formed part of an answer he made to a question about the durability of established brands amid the rise of companies like Amazon and Costco. The greater efficiency of the market is also a point Buffett has made in highlighting the difficulty most people have in outperforming the S&P500.

He also commented briefly on the health initiative announced by Berkshire Hathaway, Amazon and JPMorgan. His take was that any reform of healthcare is going to be very difficult but at the same time is it is necessary and just course of action considering how wasteful and parasitic the US healthcare system is. 

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