Of the many Mungerisms to resurface in the week since the passing of the Berkshire Hathaway vice-chair and investing icon, one feels particularly apt for these pages.
“A great business at a fair price is superior to a fair business at a great price” isn’t just a smart attitude. Depending on who you ask, it also encapsulates Charlie Munger’s role in the Damascene conversion of one Warren Buffett, the Benjamin Graham disciple who swapped margins of safety and discounts to book value for consistently high returns on equity and economic moats, just in time for an epochal shift in markets. Read our obituary of Charlie Munger here.
Then again, who’s to say what a ‘fair’ price is? While many quantitative investors regularly take a stab at this question, the manpower, time and technology afforded to the IC's stock screens acts as a hard limit on our market-wide computations. What number-crunching does allow us to do, however, is give us an indication of priciness relative to the rest of the market.