“Rear-view Mirror”: Munger on Bargain Opportunities in China, the Fallacy of EBITDA & the Habit of Change

Munger (link) talks about:

  • Chinese stocks: “I think a shrewd person can find more bargain stocks in China than he can find in the U.S.”
  • Fallacy of EBITDA – an insane invention by the investment bankers to make their life easier: referring to Buffett, Munger says D&A are real costs and actually they are the worst kind of costs, because they have to be paid well in advance, but the benefits will only come way later. Hence, EBITDA is not a good proxy for free cash flow.
  • Habit of reexamining old ideas: “… you have got to clean out your idea cabinet all the time and throw out the bad ideas and put in better ones. You just can’t get through life successfully without it. The world changes!”

(“Rear-view Mirror”: These posts relate to topics that were discussed some time ago. However, the insights are as meaningful today as they were at the time of writing.)

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