August 2025 Economic and Investment Update
For our August 2025 Economic and Investment Update, I want to dive into some powerful insights from the book Buffett and Munger: Unscripted by Alex Morris. In this fascinating read, Morris brings to life the investing philosophies of two of the most successful investors in history: Warren Buffett and Charlie Munger. Their collaborative approach to investing, along with their distinct personal philosophies, provides a wealth of valuable lessons for anyone looking to pick stocks and build a successful portfolio.
Here are 8 key takeaways from the book and how you can apply them to your stock-picking strategy and a little extra thought from the team about how we view them. :
1. The Importance of Patience and Long-Term Thinking
Buffett and Munger’s Philosophy: “Time is the friend of the wonderful business, the enemy of the mediocre.”
Takeaway: Both Buffett and Munger emphasize the importance of patience in investing. They understand that great companies take time to grow, and their value compounds over long periods. By staying the course and avoiding knee-jerk reactions to short-term market movements, you’ll position yourself to reap the rewards of long-term growth.
Action: When selecting stocks, look for businesses that are positioned for long-term growth. Ask yourself: Is this a company that I can hold for 5 to 10 years without worrying about market fluctuations?
Portus Thought: When we buy stocks for our stock portfolio, we really want to understand whether it’s a position we feel comfortable owning for at least 3 years. No company is given a bypass to being held forever but it sure would be great if we could hold most of them for a long time.
2. Embrace a Multi-Disciplinary Approach
Munger’s Advice: “I think it’s very important to have a broad base of knowledge… and use that to make decisions.”
Takeaway: Munger often highlights the importance of having a wide-ranging knowledge base, including psychology, economics, and history, to make sound investment decisions. A broad perspective enables you to understand various factors affecting a business, beyond just financial metrics.
Action: As a stock picker, avoid getting trapped in a single framework for analysis. Expand your understanding to include industry trends, market psychology, global economics, and even behavioral finance. This holistic approach will help you identify stocks with strong growth potential that others might overlook. You’ve seen us write often about reading various opinions on the market. Being regular readers of history, finance, economics, and current events is certainly something we think add to our approach.
3. The Power of Mental Models
Munger on Mental Models: “I have a latticework of mental models… the more models, the better.”
Takeaway: Charlie Munger is a strong advocate of building a “latticework” of mental models (concepts from various discipline) that can be applied when making investment decisions. The more models you have at your disposal, the better your ability to evaluate companies and situations from different angles.
Action: Build a personal set of mental models to guide your stock-picking decisions. These can include frameworks like Porter’s Five Forces, the Circle of Competence, or margin of safety. Continuously add new models from diverse fields to broaden your analytical toolkit.
Portus Thought: One thing that we are excited about is the ability to use technology to help us build mental models. But our team is also built a little different. William is a middle-aged white male from the US and Sakshi is a 28-year old female immigrant born and raised in India. While we see the world similarly, we can get there through different though mental models.
4. Look for Companies with a “Durable Competitive Advantage”
Buffett’s Moat Concept: “We look for economic castles protected by unbreachable moats.”
Takeaway: Buffett and Munger often speak about finding companies with a “moat”—a competitive advantage that protects them from competition. This could be a strong brand, proprietary technology, or regulatory barriers. A company with a durable moat can maintain profitability over the long term, even during periods of market turbulence.
Action: When researching potential investments, prioritize companies that have clear, sustainable competitive advantages. This could be anything from a network effect (think of Facebook or Google) to a strong brand reputation (think of Coca-Cola). Ask yourself: What keeps this company ahead of its competition?
Portus Thought: Apple, Nvidia, Amazon, Microsoft, Johnson and Johnson, Caterpillar, Nucor these are all companies that have very, very strong competitive advantages. It doesn’t mean that someone can’t push them out of their top spot in their industries but it sure would take a heck of a company/technology shift to move them out of their position of strength.
5. Focus on the Management Team
Munger on Management: “If you’re not a great business, management can’t make you one.”
Takeaway: Both Buffett and Munger place great emphasis on the quality of a company’s management. In their view, competent, honest, and visionary management is one of the most important factors in determining a company’s long-term success. However, even the best management can’t save a poor business.
Action: Assess the management team of companies you’re considering for investment. Look at their track record in terms of capital allocation, transparency, and strategic vision. Consider how they’ve navigated previous market cycles and whether they have a long-term growth strategy.
Portus Thought: We talk about the management team often – not only of our individual stocks but about the managers of our mutual funds. JP Morgan is an excellent example of this. Jamie Dimon is one of the top bank CEOs (if not top CEOs) of this generation. We give someone like him a lot more rope to maneuver the market/economy than a new CEO stepping into a role and navigating the often-turbulent economy.
6. Be Cautious of Speculation
Munger on Speculation: “The big money is not in the buying and selling… but in the waiting.”
Takeaway: Munger and Buffett both emphasize that investing is not about speculation or trying to predict short-term price movements. Instead, it’s about buying ownership in great businesses and holding them for the long term. They warn against getting caught up in speculative bubbles or day trading, as these approaches rarely lead to sustainable wealth creation.
Action: Avoid chasing “hot” stocks or market trends that are driven by speculation. Instead, focus on companies with strong fundamentals and long-term growth prospects. Stick to your process and avoid letting short-term market noise sway your decision-making.
Portus Thought: This syncs with our desire to hold stocks for longer period of time. We feel the more decisions we make the more likely we are to start making more poor decisions. We’d rather be intentional with our decision making and take the longer view.
7. Understand the Importance of Valuation
Buffett’s View on Price and Value: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Takeaway: Both Buffett and Munger stress that valuation matters. Even the best company can become a poor investment if bought at too high a price. They are not opposed to paying up for quality, but they caution investors to be mindful of the price they pay relative to the intrinsic value of the company.
Action: Before buying any stock, carefully assess its valuation. Consider multiples like P/E, P/B, and EV/EBITDA, as well as future growth potential. Use discounted cash flow (DCF) models to estimate the intrinsic value of the business and compare it to the current market price.
Portus Thought: This is tough because there are so many ways to value a company. But we do believe that price is a very important component of the future expected returns from an asset. A good company will overcome valuation but a good company at a good valuation really does make it easier to buy.
8. Be Fearless When Others Are Fearful
Buffett on Contrarian Investing: “Be greedy when others are fearful, and fearful when others are greedy.”
Takeaway: One of Buffett’s most famous principles is to take advantage of market fear. When everyone is selling, it often creates buying opportunities for high-quality stocks that are temporarily undervalued. This contrarian mindset can help you capitalize on market inefficiencies and generate outsized returns.
Action: When market sentiment is overwhelmingly negative, it may be time to look for high-quality companies that have been unfairly punished. Use this as an opportunity to buy stocks at a discount, while maintaining a long-term perspective.
Portus Thought: The hardest one to execute when managing money for other people is being willing to buy when you know they are scared. But it absolutely is something we strive to achieve.
Final Thoughts
Buffett and Munger: Unscripted offers a wealth of wisdom that any investor can use to sharpen their stock-picking skills. By embracing patience, focusing on companies with strong moats, and avoiding speculation, you can make more informed, long-term investment decisions. Just as Buffett and Munger have done over the years, you can build a disciplined, well-thought-out investment strategy that focuses on value, quality, and management. And if this isn’t your cup of tea, then we love doing for you!
Both Warren Buffett and Charlie Munger’s success can be attributed to a clear, structured approach to investing, but equally important are their failures. They’ve openly discussed past mistakes, from failing to act on promising opportunities to overpaying for companies. Learning from both their triumphs and their missteps, you can build a robust portfolio framework.
As always, we are here to help guide you through your investment journey. Feel free to reach out if you’d like to discuss how to apply these principles to your portfolio or if you need assistance with stock research.
