How to Identify and Leverage Your Munger Moment

This week I revisit one of my favorite concepts discussed in the book: The Munger Moment. The video discusses what I mean by this. For those of you who either prefer to read about the concept or have the video amplified by the key points, here you go.

What is a Munger Moment

• ‘Munger Moments’ are those rare opportunities when the odds align strongly in our favor and all we need are the resources and courage to take advantage of them.

• ‘Munger Moments’ are rare, but when seized they can radically alter the financial and emotional resources available to the individual or business.

• They provide an opportunity to strike quickly because eventually, investors identify the opportunity.  Then comes more competition, higher prices, diminishing returns and lost an opportunity.  At the end of the day, it is easy to delay, overanalyze, and be consumed by fear.  What separates those who make money in the long run and those who don’t, is the courage to grab the moment when the timing is right.

• This year’s perennial Oscar nominee was Richard Linklater’s ‘Boyhood.’  The end of the film posits the question of whether we should grab moments in life or let moments grab us.  It’s an interesting debate, but in the context of investments, there is no real debate.  Always grab the moment.

• My partners at CWS Capital Partners and I did just that in the midst of the Great Recession when we decided to expand and invest very aggressively.  That’s right, we seized the ‘Munger Moment’ and used variable-rate loans to finance the acquisition of new properties and refinance existing assets in our portfolio.

• Where did that idea come from?  We were convinced that home ownership would be out of reach for millions of people due to tightening credit, the need for individuals to build and rebuild their credit, the traumatic experience of the global economy almost collapsing because of extraordinary housing excesses, a tougher regulatory environment, favorable demographics, and a banking system that would not lend to apartment builders for a while. All of these factors pointed to a once in a generation opportunity to capitalize on what we believed would be a significant imbalance between supply and demand in the apartment industry.

• How did we muster the courage to use variable-rate financing? It came from an obsession on my part to study historical interest rate trends and what interest rates and inflation did in the 1930s in the midst of the Great Depression.

• Having the wisdom to know what to do and the courage to take action on it when the ‘Munger Moment’ presents itself will ultimately determine success in business and in life.

Over to you:

Now that you know what a Munger Moment is have you had your own Munger Moments?