Charlie Munger has a clear message for the whiners worried about “hardship”. These are the stocks that keep Warren Buffett’s right hand happy in difficult times

‘Everything was harder’: Charlie Munger has a clear message for weepers worried about ‘toughness’. These are the stocks that keep Warren Buffett’s right hand happy in difficult times

It may be a new year, but not everyone is excited about what 2023 will bring. Stocks are falling, economic growth is slowing and inflation is running rampant.

But Warren Buffett’s right-hand man, Charlie Munger, suggests that we should actually be more content with where we are now.

“People are less happy than when things were tougher,” Munger said earlier this year.

“It’s strange for someone my age because I was in the middle of the Great Depression, when the challenges were incredible.”

Munger, best known as the vice chairman of Berkshire Hathaway and a longtime business partner of Buffett’s, also serves as chairman of the Daily Journal, a newspaper publisher with a large stock portfolio of his own.

So if you’re hoping Munger’s blunt realism will rub off on you this year, why not pick up some of his investment picks? If these three stocks can make a 98-year-old investment veteran happy, maybe they’ll work for you, too.

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Bank of America

The Daily Journal owned 2.3 million shares of Bank of America (NYSE: BAC ) at the end of September, worth about $69.46 million at the time. It holds 42.49% of the portfolio, making the bank Munger’s largest publicly held shareholder.

With economic turmoil forecast for next year, this is a savvy holding for Munger. While many sectors fear rising interest rates, banks are looking forward to them. Because banks lend money at a higher interest rate than they borrow, and then pocket the difference.

When interest rates rise, the spread of bank returns widens.

And it just so happens that Bank of America is steadily increasing its payouts to shareholders.

In July, Bank of America increased its quarterly dividend by 5% to 22 cents per share — and that follows the company’s 17% dividend increase in July 2021.

At the current share price, the bank offers an annual yield of 2.7%.

Buffett also likes the company, as Bank of America is Berkshire Hathaway’s second largest holding.

Wells Fargo

With about $1.9 trillion in assets, Wells Fargo ( NYSE:WFC ) is another heavyweight in America’s financial services industry. It serves one in three US households and more than 10% of the nation’s small businesses.

The Daily Journal owned 1.59 million shares of Wells Fargo as of September 30, making the bank its second largest public holding with a 39.16% weighting.

According to the company’s latest earnings report, Wells Fargo posted revenue of $19.5 billion in the third quarter, a 4% year-over-year increase. Earnings were 85 cents per share for the quarter, down from $1.17 per share at the same time a year ago.

Read more: 4 Easy Alternatives To Increase Your Earnings Without The Hard Stock Exchange

While the economy faces uncertainty going forward, management remains optimistic.

“Wells Fargo is well positioned as we continue to benefit from higher rates and continued disciplined cost management,” Wells Fargo CEO Charlie Scharf said in a statement.

“Both consumer and business customers remain in strong financial condition, and we continue to see historically low delinquencies and high payment rates across our portfolio.”

Wells Fargo’s quarterly dividend rate is 30 cents per share, yielding an annualized yield of 2.9%.

Alibaba Group

Chinese tech stocks haven’t exactly been market darlings lately. For example, e-commerce giant Alibaba Group is down 26% in 2022 and has fallen more than 60% in the past two years.

But the Daily Journal retained the company as its third-largest holding. As of Sept. 30, he owned 300,000 shares of Alibaba — a stake worth $24.0 million at the time.

And the drop in Alibaba stock could give contrarian investors something to think about.

In the third quarter, the Chinese tech company reported a 3% year-over-year increase in revenue to $29.1 billion.

Management noted that the company delivered this high-level growth despite “the impact of the resurgence of COVID-19 on consumer demand in China, as well as a slowdown in cross-border trade due to increased logistics costs and foreign currency volatility.”

Although Alibaba does not pay a dividend, it does return cash to shareholders through a share buyback program.

As of Nov. 16, the company has repurchased approximately $18 billion of its stock as part of an existing $25 billion share repurchase program.

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This article provides information only and should not be construed as advice. Provided without any warranty.

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