Disclosure: I received complimentary products to facilitate this post. All opinions are my own.
by Gary Carmell
Sure,
Charlie Munger is Warren Buffet’s partner at Berkshire Hathaway but
what is a Munger Moment? They 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.
Munger
Moments 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 awhile. 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.
Now that you know what a Munger Moment is have you had your own Munger Moments?
Gary Carmell is the President of CWS Capital Partners,
a real estate investment management firm based in California and Texas,
and founded in 1969. He specializes in the acquisition, development,
and management of apartment communities throughout the United States,
where his company owns and operates more than twenty thousand units with
a value of over $3 billion.
A
Chartered Financial Analyst, Mr. Carmell received his B.A. from the
University of California Los Angeles in political science and an M.B.A.
from the University of Southern California. He is the father to two
adult children, and he lives in Southern California with his wife.
Carmell can be reached through his website www.garycarmell.com, and through LinkedIn and Twitter.
The Philosophical Investor is available for purchase on Amazon and other fine booksellers.
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