The prize for the most quotable person in the investment world in recent weeks must go to Charlie Munger, whose two-hour speech to the University of Michigan yielded more than a few nuggets of wisdom. Here are just a few, courtesy of Fool colleague Morgan Housel:
"Generally speaking, I believe Costco does more for civilization than the Rockefeller Foundation. I think it's a better place. ... I've seen so much good in the world by people who really created better systems, and I've seen so much folly and stupidity on the part of our major philanthropic groups, including the World Bank, that I really have more confidence in building up the more capitalistic ventures like Costco."
"I think those bailouts were absolutely required to save civilization … [they were] absolutely required and we are lucky that both administrations were as wise and bold as they were. You shouldn't resent that. You should thank God they did it."
"I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational hoarding gold. Even if it works, you're a jerk."
(Disclosure: I own gold, and feel slightly offended.)
George Soros, who also owns gold, weighed in again on the subject:
"I've called gold 'the ultimate bubble,' which means that it may be going higher, but it's certainly not safe. And it's not going to last forever."
Get out and spend!
Related to the gold debate is the area of monetary policy, and Charles Bean, the Deputy Governor of the Bank of England, caused a stir with his comments that discouraging saving was a deliberate policy rather than a side-effect of low interest rates:
"Savers shouldn't necessarily expect to be able to live just off their income in times when interest rates are low. It may make sense for them to eat into their capital a bit. ... Savers shouldn't see themselves as being uniquely hit by this. A lot of people are suffering during this downturn."
"I wouldn't want to call it a side effect. I think it's important to realize that actually it's a key way that monetary policy affects the economy by affecting the incentive to save. What we're trying to do by our policy is encourage more spending, ideally we'd like to see that in the form of more business spending but part of the mechanism that might encourage that is having more household spending so in the short term we want to see households not saving more but spending more."
His colleague on the U.K. Monetary Policy Committee, Adam Posen, warned of the potential dangers facing the country:
"The risks we face now are the far more serious ones of sustained low growth turning into a self-fulfilling prophecy, and/or inducing a political reaction that could undermine our long-run stability and prosperity."
Brazil's Finance Minister, Guido Mantega, pulled no punches when discussing the global macro-economic policy:
"We're in the midst of an international currency war."
The future will be ...
Ken Fisher is decidedly more optimistic about our prospects:
"We are chimpanzees with no memory. The next 10 years are going to be just as good as the 1990s. The problems in this current environment we think are so different, and so new and so unique. It's the same stupid old normal we've always had. We've got a great future."
Taking a more cautious approach, Seth Klarman of Baupost Group gives a very bearish assessment. These comments are from his address to the CFA annual conference in Boston in May, but the text of his speech was only made available a couple of weeks ago:
"It is almost as if our government is in the business of giving people bad advice: 'We are going to hold rates at zero. Please buy stocks or junk bonds that will yield [an inadequate] 5 or 6 percent.' In effect, it forces unsophisticated investors to speculate wildly on securities that are too overvalued."
"I am more worried about the world, more broadly, than I have ever been in my career. There is an old saying, 'How did you go bankrupt?' And the answer is, 'Gradually, and then suddenly.' The impending fiscal crisis in the United States will make its appearance in the same way. Essentially, the problem is that government intervention interfered with the lessons investors needed to learn."
The obligatory HH section
No roundup is complete without some withering comment from iconoclastic London-based hedge fund manager Hugh Hendry:
"Misanthropes are good. People that say things which others don't want to hear. You have to challenge all of the time, and yet we have a society where we don't want to hear. I would say to you that the truth today has become unpalatable, we are confronted with a very, very uncertain future, and again if we hark back to the political debates, everything is organized to stop people talking about the truth."
"The financial sector was the most regulated part of the economy, and it still failed. It had the wrong form of regulation. The most effective form of regulation is if you make errors, you go out of business."
Let's see if October brings any more cheer.
For more financial quotes:
- The Attention-Seeking Ravings of a Lunatic
- If There Was a Way to Short Obama, I Would
- Here Comes the Third Depression
This article was adapted from our sister site across the pond, Fool UK. Padraig O'Hannelly doesn't own shares of any company mentioned. Costco Wholesale is a Motley Fool Inside Valueselection. Costco Wholesale is a Motley Fool Stock Advisor pick. The Fool owns shares of Costco Wholesale and has a disclosure policy.