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Charlie Munger: All Investments Are Value Investing

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Value investing guru and billionaire investor Charlie Munger fielded questions from shareholders of the Daily Journal, where Munger serves as the corporation’s chairman, on topics that included value investing. The importance of value investing resurfaced during last week’s trading session as the coronavirus outbreak doused the markets with a heavy dose of volatility.

On the topic of value investing, Munger reminded shareholders that whether you’re a proponent of growth, momentum or other factors, value investing is inherent in all investing.

“Basically, all investment is value investment in the sense that you’re always trying to get better prospects that you’re paying for,” Munger said. “But you can’t look everywhere at once. Just any more than you could run a marathon in 12 states at once. And so you have to have some system of thinking someplace to look which is your hunting ground. But you’re looking for value in every case…I think the strongest companies are not in America. I think Chinese companies are stronger than ours, growing faster.”

“It really helps if you know which hunting ground to look in,” Munger added. “Where we all do better hunting and hunting where the hunting is easy. I have a friend who’s a fisherman. He said I have a simple rule for success in fishing, “Fish where the fish are.” You want to fish where the bargains are. It’s that simple. If the fishing is really lousy where you are, look for another place to fish.”

Exchange-traded funds (ETFs) that focus on value can help ease the burden of ferreting out individual stocks that are value-oriented. As such, here are a few funds that tilt towards the value that investors should put on their watch lists:

  1. WisdomTree U.S. LargeCap Dividend Fund (NYSEArca: DLN): seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. LargeCap Dividend Index. The index is a fundamentally weighted index that is comprised of the large-capitalization segment of the U.S. dividend-paying market.
  2. WisdomTree U.S. MidCap Dividend Fund (NYSEArca: DON): seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. MidCap Dividend Index. The index is a fundamentally weighted index that is comprised of the mid-capitalization segment of the U.S. dividend-paying market.
  3. WisdomTree U.S. SmallCap Dividend Fund (NYSEArca: DES): seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. SmallCap Dividend Index. The index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the U.S. dividend-paying market.

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