Charlie Munger Sees Trouble Ahead for US Stocks

As Warren Buffett (Trades, Portfolio)’s confidante and long-time wingman at Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B), Charlie Munger (Trades, Portfolio) has developed a fearsome reputation as a master investor, but he is also renowned for his penchant for pithy and quotable lines. The venerable value investor has coined many aphorisms that are both profound and simple to understand.

Yet, while much of Munger’s comments are timeless, he is also a great resource for timely insights on the markets of today. Both Munger’s advice, and his active management style, were in full evidence at the annual meeting of Daily Journal Corp. (NASDAQ:DJCO) this year.

With the longest bull market in history continuing to chug along as value stocks trade at their steepest discount in many years, it would serve investors well to listen to what Munger has to say about the current stock market.

Confronting a challenging stock market

No one can doubt that value investing opportunities have proven few and far between in recent years. Truly, it seems as if there are no bargains to be had anymore.

Even Berkshire seems to think so these days, as evidenced by Buffett’s uncharacteristic investment in Amazon.com Inc. (AMZN) last month. At the Daily Journal annual meeting, Munger reflected on this historically trying market:

“If you have trouble finding good investments, join the club… My advice to the seeker of high compound interest is to reduce your expectations. Things are likely to be tough for a while.”

Lowering expectations

Munger’s relative pessimism is understandable, if one considers Berkshire’s recent quite lackluster performance. The massive conglomerate has barely managed to mirror the performance of the broader stock market in recent years, and has even underperformed of late. This is due to a myriad of factors, but the long bull market and upward re-pricing across

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