Do you really want to know what successful investing is…It's no more than a “mispriced gamble”

by , 21 September 2017
Do you really want to know what successful investing is…It's no more than a “mispriced gamble”
You may have never heard this before.

Or even have heard of the man who said it.

But he happens to be one of the owners of the world's most famous fund management company. And he happens to be one of the richest men in the world despite giving away most of his fortune.


That’s because he’s Buffet’s long-time partner at Berkshire Hathaway… Charlie Munger.

Never heard of him – well, he's the Vice-Chairman of Berkshire & Hathaway.

The interesting part is, much of Warren Buffett's and Berkshire's success was down to his partner, Charlie.

You see, Charlie was a king at finding mispriced stocks.

In fact, this strategy was the reason he was able to beat the Dow’s average yearly return by 14.8% from 1962 to 1975.

That’s 13 years of consistency.

When Buffett and Munger eventually met, Buffett immediately knew that partnering with a proven fund manager and brilliant mind was the key to making Berkshire successful.

And he did.

Through his advice to Buffett, he became an indispensable part of Berkshire helping to grow it into a $420 billion enterprise.

So how exactly do you find quality mispriced companies like Charlie did?

It’s not as hard as you may think. Let me explain…

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Revealed: The wealth secret of Columbia Room 305….
 
Professional investors Walter Schloss, Irving Kahn and William J. Ruane all used it to make a fortune. I use it in every investment decision I make for over 30,000 subscribers.
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How Munger earned $1 billion for Berkshire

Instead of a fair company at an excellent (low) price, Munger advocated investing in excellent companies at fair prices – in other words, a company that had a good balance sheet and grew profits consistently, but it’s price was relatively low compared to the quality of the stock available.

This concept of a seemingly quality company selling at an abnormally low price gave rise to this concept of a mispriced gamble.

He believed that great businesses at a fair prices compounds investor wealth year after year.
Whereas, a fair business at a great price only offers the potential to compound investor returns when it reaches fair value – then it must be sold.

The 1972 purchase of See’s Candies was the first such case — a great company that his partner Warren Buffett, at first, believed was overpriced.

Eventually Buffett took Munger’s advice and agreed to purchase See’s Candies for $25 million and the rest is history.

This investment has earned more than $1 billion for Berkshire since….

The secret to Munger’s investment strategy - mispriced gamble

Buying businesses below their fair value requires you to have an idea of what fair value is.

When the crowd becomes overly pessimistic they focus on negative possibilities and discount positive possibilities.

Having a true estimate of the real value gives an investor a sizeable edge.

Benjamin Graham was the ultimate investor when it came to finding real value in mispriced stocks.

He developed a value investing concept that helped pioneer the careers of some of the world greatest investors like Warren Buffett and Charlie Munger.

This is the strategy they have used over and over at Berkshire and there’s no denying it, it works.

And the truth is, it’s no great secret.

Read: The Graham-Dodd system… The ultimate secret to pick value stocks with double or triple profit potential 

You see, this mispricing in the valuation of a company is what’s most commonly referred to as the margin of safety.

To calculate it, is simple. It’s the difference between the real value of the stock and the price at which the stock is trading. 
A company that trades close to or above its real value offers almost no margin of safety.

In fact, this concept is crucial for my Real Wealth strategy.

In 2016, I recommended my Real Wealth readers to buy Nu-World which was trading with 47% safety margin built in.
In a year, the company soared 80% but has slightly lost gains and stands at 60%. But it has great potential to rise again.

Until next time,

Joshua Benton, Real Wealth

P.S.  My research has just uncovered the stock market’s latest mispriced gamble and there’s at least 75% growth in the next 18 months if you act fast. I’ll be sending this to my readers on the 14th of July. If you want to be part of this exclusive group to receive this quality stock selling for a bargain price then go here now.

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