‘Bulls— earnings,’ risky investments, and technology: Charlie Munger issues a stark warning about the future

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REUTERS/Rick Wilking

  • Charlie Munger, the vice chairman of Berkshire Hathaway, spoke at a Wednesday shareholder meeting for the Daily Journal, a Los Angeles-based publisher.
  • Munger said there are “lots of troubles coming” because of “too much wretched excess,” according to CNBC.
  • “I don’t like when investment bankers talk about Ebitda, which I call bulls— earnings,” he said, according to the report.
  • He also spoke about Chinese investors and technological innovation.
  • Read more on Business Insider.

Charlie Munger, the vice chairman of Berkshire Hathaway and famed value investor Warren Buffett’s business partner, is worried about the future.

In a Wednesday shareholder meeting for the Daily Journal, a Los Angeles-based publisher that Munger chairs, he warned that there are “lots of troubles coming” because of “too much wretched excess,” CNBC reported Wednesday.

Some of that excess is because of Ebitda, Munger said, which is short for earnings before interest, taxes, depreciation, and amortization. It’s a common metric that companies such as Uber use when reporting quarterly and annual earnings.

“I don’t like when investment bankers talk about Ebitda, which I call bulls— earnings,” he said, according to the report. He continued: “Think of the basic intellectual dishonesty that comes when you start talking about adjusted Ebitda. You’re almost announcing you’re a flake.”

Munger also thinks investors today are taking too much risk, and highlighted China as part of the problem, saying, “It’s hard to imagine anything dumber than the way the Chinese hold stocks,” according to CNBC.

“In China … they love to gamble in stocks. This is really stupid,” Munger said.

In addition, the 96-year-old investor said he’s worried that the innovation seen in his lifetime could slow, according to the report.

“I do think that my generation had the best of all this technological change,” he said, noting improvements in medicine and air conditioning, according to CNBC. “I don’t think we’re going to get as much improvement in the future because we’ve gotten so much already.”

Investors flock to attend events where Munger or Buffett speak, as both have had prolific careers spanning decades. Still, in 2019, Berkshire Hathaway posted its worst underperformance of the broader market in a decade – while the company’s stock price gained 11%, the S&P 500 rose 29%.

Going forward, investors and analysts will watch to see what Munger and Buffett have to say during Berkshire Hathaway’s upcoming annual shareholders event in Omaha, Nebraska.