Warren Buffet’s partner Charlie Munger thinks it’s not safe to start buying stocks yet

While other daring investors Michael Burry thinks that investing in stocks in spite of the current market situation is worth the risk, other investors like Charlie Munger are of the opinion now may not be the best time. Only a few days ago, Warren Buffet dropped some of his airline stocks and he is also of an opinion similar to Munger’s. In an interview with The Wall Street Journal, Munger said that Buffet is keen about caution and safety during the coronavirus pandemic, and has the best interest of his company’s investors at heart.

He mentioned that Buffet wants to ensure that Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) is “safe” for its investors who have 90% of their net worth invested in the company’s stock. As a result of this, Berkshire has placed liquidity as its top priority in these times.

Munger said that the company intends to pass through these trying times “with a whole lot of liquidity.” He further added that “we’re not playing, ‘Oh goody, goody, everything’s going to hell, let’s plunge 100% of the reserves [buying into businesses].”

He cited an example with the airline industries that have been badly hit. He insinuated that the deal airline companies are making with the government is probably not the ideal thing to do at such a time as this. He expected that troubled airline companies could have reached out to someone like Buffet to make a financing deal, rather than negotiate with the government.

Munger warns that the government’s decision of “plunging” the reserves could result in “a different kind of mess” eventually. As it is, a recession is non-negotiable, however, no one is yet certain of the total damage it will cause and how long it will last.

“I don’t think we’ll have a long-lasting Great Depression … But we may have a different kind of mess. All this money-printing may start bothering us,” he said.

Buffet’s and Munger’s decision, and by extension Berkshire’s decision to sit and wait rather than buy stocks at this time is quite alarming for many people. Berkshire has sold millions of its airline shares but hasn’t bought any new stock yet.

During the 2008 Financial Crisis, Berkshire loaned out money to Goldman Sachs and GE, they also bought a lot of stock of other companies. As it is, money isn’t the problem of Berkshire as it currently sits on a $128 billion cash pile. Compared to the financial crisis, the coronavirus pandemic economic impact is unlike what they had seen over the years, and they would rather not invest at the moment.

“We’re always going to be on the safe side. That doesn’t mean we couldn’t do something pretty aggressive or seize some opportunity. But basically, we will be fairly conservative. And we’ll emerge on the other side very strong.”