The Notebook: Susannah Streeter on how Charlie Munger shaped Berkshire Hathaway
Where the City’s movers and shakers get a few thinks off their chests. Today, Susannah Streeter, head of money and markets at Hargreaves Lansdown, takes the Notebook pen.
Investing with, not just like, Warren Buffett
Succession plans are in the limelight at Berkshire Hathaway after Warren Buffett lost his right-hand man. Charlie Munger was the Sage of Omaha’s sounding board for six decades. The dynamic duo turned the company into an investment powerhouse, with Munger widely credited for helping steer the ship into more profitable waters by refocusing on companies which weren’t just cheap but offered longer term value. While it’s clear the unique relationship between Munger and Buffet won’t be replicated, the principles established are set to cascade down through the company for many years to come.
For years investors have tried to emulate Buffett and Munger’s investment styles. After all, buying into a slice of Berkshire Hathaway’s success is eye wateringly expensive. Just one share of the investment powerhouse costs around $545,000, putting it out of reach of ordinary retail investors. However, the UK government is now making moves to permit fractional shares in ISAs, under plans unveiled in the Autumn Statement.
This is a welcome move as it gives retail investors the opportunity to benefit from the growth of companies they might otherwise have been priced out of. And of course, being able to buy fractions of Berkshire Hathaway will enable people to brag that they invest with Warren Buffett and not just like Warren Buffett.
This opportunity might persuade more newcomers to dip their toe in and grow a portfolio by diversifying across a range of assets. But of course, investing in fractional shares is not right for everyone. If you want exposure to a large tech firm, a fund which invests in such stocks, is a good alternative. This would have the added, crucial benefit of diversification. Holding multiple funds across different sectors and geographies is prudent, especially now, when stock market gains have been driven by just a handful of companies. Spread your risk. Go on you know you want to.
Scaling interest rates mountains this winter
Those of you hoping to avoid big jumps in mortgage payments may well be dusting down the ski-jacket and salopettes in the coming months. As inflation heads on a downwards slope, there is enthusiasm and relief in the air at the prospect of borrowing costs easing. But central bankers have also been contemplating the mountains. While we may feel like we’ve trekked up the Matterhorn and are on the descent, the Bank of England’s Chief Economist Huw Pill prefers to envisage the route ahead for rates as more like Table Mountain, with a long plateau ahead before cuts are in sight. So, it might be worth going a little easy on the pricey fondu and vin chaud, and ringfence budgets as there could be some borrowing pain to come.
Bridging the gender investment gap
My last vertiginous ascent of the Shard last week saw me in the company of some fabulous City women, determined to bridge the perilous gender investment gap. While the pay disparity between men and women has been widely debated, the knock-on effect of stymied careers, lower salaries and how it affects resilience over time, particularly for our pensions, doesn’t make such big headlines. The Hargreaves Lansdown Financially Fearless initiative aims to change that. The determination on the faces of 150 women who gathered at the Shard to hear our call to action was inspiring. Let’s hope it sparks a cascade of conversation and open up the world of investment to many more women.
Apple Watch validation
While my stairs don’t match the 72 floors of the shard, if you run up and down a townhouse enough, it’s certainly a workout. When you have three children with a habit of discarding belongings everywhere they trail, sorting, tidying and cleaning seems like a veritable marathon every week. I know because I now usually track this exercise on my Apple Watch. It’s been a revelation. Until I owned this nifty device, there was zero evidence of the daily housework grind. Now it’s just gone into repair I’m bereft as I’m back to feeling resentful of tiresome chores. The step totals it records means that unpaid housework is no longer invisible. It’s not just me recognising it, my watch does too and for some reason it makes the burden so much more bearable.
Quote of the week
The best armour of old age is a well-spent life preceding it.
Charlie Munger, the vice chair of Berkshire Hathaway