[Token Quote] "Buying good companies at high prices reduces returns" ㅡ Day 55

This content is not investment advice for specific stocks or assets. It is only intended to help investors develop a steadfast mindset in highly volatile markets and provide psychological guidance. Wishing you successful investing. [Editor’s note]

Buying high-quality companies at excessive prices will reduce returns.

-Charles Munger-

High-quality assets and good investments are two different things. No matter how outstanding a project is, if you buy it at too high a price, your returns will also decline. The person who bought Bitcoin in 2021 for 69,000 dollars was buying a high-quality asset at a bad price. When the price rises far above its value, even high-quality assets can turn into bad investments. Munger has always remained calm and calculated the gap between value and price. Driven by FOMO (fear of missing out), entering the market at the peak—regardless of the asset’s quality—will be the beginning of losses.

Even the best company can be poison if bought at an excessive price.

Charlie Munger (1924-2023) was Warren Buffett’s investment partner for 60 years and served as Vice Chairman of Berkshire Hathaway. He graduated from Harvard Law School and was a pioneer of “interdisciplinary thinking (a multi-model way of thinking),” applying principles from multiple disciplines such as psychology, mathematics, and physics to investment decisions. He emphasized “reverse thinking,” teaching people that more important than how to succeed is how to avoid failure. Buffett once said that after meeting Munger, his investment philosophy evolved from “buying at low prices” to “buying quality companies at reasonable prices.”