The Importance of Being Earnest During a Secular Paradigm Shift

Volume II, Issue IX

The Federal Reserve held interest rates steady for a third meeting and gave its clearest signal yet that its aggressive hiking campaign is finished by forecasting a series of cuts next year.  Officials decided unanimously to leave the target range for the benchmark federal funds rate at 5.25% to 5.5%, the highest since 2001. Policymakers penciled in no further interest-rate hikes in their projections for the first time since March 2021, based on the median estimate.

While Chair Jerome Powell said officials are prepared to hike again if price pressures return, he indicated policymakers are now turning their focus to when to cut rates as inflation continues its descent toward their 2% goal. Quarterly projections showed Fed officials expect to lower rates by 75 basis points next year, a sharper pace of cuts than indicated in September...

~ Bloomberg, December 13, 2023

I have a friend who’s a fisherman. He says, ‘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, you should probably look for another place to fish.

~ Charlie Munger, 2020

---

This is Volume II, Issue IX of The Macro Value Monitor. To listen to The Macro Value Monitor, click on the headphones icon in your Substack app.

---

Charlie Munger, right, and Warren Buffett in the 1970s.

This past month witnessed the end of a truly legendary investing duo. 

Charlie Munger, the vice-chairman of Berkshire Hathaway and the closest friend and confidant of Warren Buffett over the past six decades, passed away peacefully in California at the age of 99.  He will be remembered for his infamous wit, as well as his uncanny ability to distill advice about investing, and life, down to an essential, often pithy saying.  The quote above is but one example.  Many other examples over the decades were collected into a book, published in 2005: Poor Charley’s Almanac.

Yet Charley Munger was hardly poor.  His wealth was immense, and it was in large part due to one fateful moment in 1971.