Over the past few years, Warren Buffett-controlled Berkshire Hathaway has been building its strength in the Japanese market.
The investment company, among others, purchased shares in the “trading houses” Marubeni, Mitsubishi, Mitsui, Sumitomo and Itochu.
These are conglomerates that operate in areas such as commodity trading, shipping, industry, finance and infrastructure projects.
“If you’re as smart as Warren Buffett, you’ll probably get an idea like this two or three times a century,” said Buffett’s right-hand man, Charlie Munger, 99, in an interview with the Acquired podcast, released today.
Favorable loan terms
Interest rates in Japan have been around 0.5 percent for the past 10 years and trading companies are old and well-established, Munger said. He continued:
– Corporations own cheap copper mines and rubber plantations, so we can borrow money for 10 years and buy stocks that offer a reliable 5 percent return without worrying too much.
Munger further explained that Berkshire Hathaway’s impeccable credit rating meant they could borrow money on very favorable terms.
However, he stressed that it took a long time for Berkshire to build its position from about 5 percent in August 2020 to about 7.4 percent on average in April.
He said: “We can do something that no one else can do,” and continued:
-The only way we can achieve this is to be very patient and buy little by little. It took a long time to invest $10 billion, but it was as if God opened a treasure chest and poured money into it. “The money was very easy,” he concluded.
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