Legendary investor Charlie Munger gave shareholders blunt advice when asked how he thinks about downside protection and selling stocks, back in 2019: "Find Costcos, not good exits."
What Happened: Munger, then vice‑chairman of Berkshire Hathaway, confessed he's "no good at exits." He reminded the crowd he bought Berkshire stock in 1966 and first invested in Costco (NASDAQ:COST) in 1997, rarely trimming either stake.
"I don't like even looking for exits. I'm looking for holds," he said, drawing laughter. For Munger, value compounds through time and trusted operators, not rapid‑fire trades. "Think of the pleasure I've got from watching Costco march ahead. Such an utter meritocracy and it does so well. Why would I trade that experience for a series of transactions … In the first place, I'd be less rich after taxes."
Berkshire's buy‑and‑hold ethos has become an investing canon. Its $1.3 billion Costco stake, built under Munger's influence, delivered double‑digit annual returns until the company exited in 2020.
His point for newer investors: hunt for durable, well‑run businesses you can cheer for decades. "It's a much less satisfactory life than rooting for people I like and admire," he added.
See also: Warren Buffett Met Charlie Munger In The 1950s Thanks To The Davises After A $100,000 Investment, Felt Instant Chemistry Over Dinner
Why It Matters: Costco's disciplined playbook still carries Charlie Munger's fingerprints. Chair Hamilton "Tony" James told Chief Executive that the late Berkshire vice‑chairman spent 25 years on the board urging directors to "stick to our knitting, our values, and our principles," a mantra that underpins Costco's keep‑it‑simple retail model.
Munger's loyalty was personal as well as professional. He once called himself "a total addict" of the warehouse chain and vowed "I'm never going to sell a share," a stance that helped inspire his famously concentrated three‑stock portfolio of Costco, Berkshire Hathaway (NYSE:BRK) (NYSE:BRK) and Daily Journal (NASDAQ:DJCO).
Warren Buffett's 2023 shareholder letter showcased Munger quotes that frame that philosophy. "There is no such thing as a 100% sure thing when investing," Munger warned, showcasing his disdain for leverage. He also advised, "You don't, however, need to own a lot of things to get rich," a maxim reflected in his ultra‑focused holdings. Finally, Munger's insistence that investors "keep learning" echoed his push for Berkshire's lucrative bet on BYD, reminding markets that adaption, not diversification, powered his lollapalooza returns.
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