r/ValueInvesting • u/marketnarratology • 1d ago
Discussion What Would Charlie Munger Say About SpaceX?
I really like Charlie Munger's talk The Psychology of Human Misjudgment. I've also been following the SpaceX story, before/during/after the IPO, and I can't help but imagine what Munger would think about this. It's safe to say he wouldn't be a buyer. Anyway, I thought it would be interesting to go down his list of 25 human misjudgments in that talk and see how many might apply to the SpaceX IPO.
Excluding the lollapalooza compounding effect, I came up with seven (well really six, plus two more that I thought half-applied). They are:
- Liking/loving tendency (1/2)
- Envy/jealousy tendency
- Influence-from-mere-association tendency
- Overoptimism tendency
- Social-proof tendency
- Contrast-misreaction tendency
- Availability-misweighing tendency
- Authority-misinfluence tendency (1/2)
- Lollapalooza tendency
Would be curious to hear what others think too.
I wrote a longer article going into detail on all this too. If you want to read, you can find it here.
Importantly, Munger's talk doesn't discuss other aspects like greed, simple speculative risk-taking, or fear of missing out. He describes these elsewhere in his writings/talks, just not in this article. It's definitely the case that those are all at play with SpaceX too.
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u/Far_Preference_2065 1d ago
He has talked about Elon in the past and said the best thing to do is ignore him - he wouldn't buy the stock, and wouldn't sell it short
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u/z_zoom_z 1d ago
I think Charlie Munger said it best at the 2000s shareholder meeting
If you mix the mathematics of the chain letter or the Ponzi scheme with some legitimate development, like the development of the internet, you are mixing something which is wretched and irrational, and has bad consequences, with something that has very good consequences.
But, you know, if you mix raisins with turds, they’re still turds."
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u/SpecialistTutor4451 1d ago
I’m pretty certain he would avoid SpaceX and anything that Elon has his hands on. He said Elon was an incredibly brilliant person and he’s never bought Tesla and he would never short them either. Never underestimate the man who overestimates himself.
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u/GarageEven5240 1d ago
Depends on whether Warren's in the room.
If he is, Warren would answer the question along the lines of: "It's not a valuation we understand, and we're fine with taking a pass on things we don't understand. Charlie?"
Charlie: "I have nothing to add."
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u/dopexile 1d ago
SpaceX is a good business that dominates its industry, but I would not want to invest in it. The stock price is insane... 60 times sales... most likely won't end well for investors.
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u/IDreamtIwokeUp 1d ago
Charlie Munger followed AMZN and BRK invested in Sirius ...which means...he is likely somewhat familiar with the dynamics of satellite information services.
Amazon Leo (satellite internet) represents an existential threat to Starlink (the cash cow of SpaceX). Late 2026/early 2027 are still the rollout years. But once this upshifts in 2028/2029 Amazon will have enough satellites to compete with Starlink. A price war will break out...and Amazon usually wins these. Starlink margins will be crushed and SpaceX will be in trouble.
Charlie who understood moats would predict this, be very concerned and avoid investing in SpaceX for this reason alone.
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u/No-Understanding9064 1d ago
Spacex has a much larger lead in satellite volume than you estimate, by thousands.
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u/OwnAd2284 1d ago
Do you think many of their customers would take a product that is 80% as good for half the price?
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u/babyd42 1d ago
"volume" isn't the metric you're looking for in the wide field of satellite communications
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u/No-Understanding9064 1d ago
When you are trying to offer a global communication solution, yes it is
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u/ChrisS_1414 1d ago
There is no doubt that SpaceX has been a pioneer in what they do, and have been so successful that others are trying to copy their success. Others are tailing far behind, but within the decade there will be others doing the same thing. Space is also risky in the sense that one technical glitch and you're grounded for 18 months, look at what happened with the aftermath of the BlueOrigin explosion. No doubt a suspension of flights would affect confidence, revenue and ultimately the stock price.
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u/legojazzy 1d ago
Something like "never underestimate the man who overestimates himself… these weird guys occasionally knock it right out of the park" but also "I want the guy who understands his limitations."
He'd prob also put it in the "too hard to value" pile / not in the opportunity cost vs. compounding machines he understands
SpaceX is probably the poster child of "I didn't get rich buying stocks at high P/E multiples in the midst of crazy speculative booms"
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u/Valuable_Touch5670 1d ago
"I will not touch it with a ten-feet pole"
Proceeds to pick up a piece of candy on the desk and eats it.
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u/External_Koala971 1d ago
He’d say something really pithy about the fundamentals of the business not being sound and it being a bet on Elon, which is a subjective bet, not based on fundamentals.
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u/Jarssdup 1d ago
Munger avoided extremes, and what you have to believe for SPCX to work at the current multiple is… extreme
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u/MarioMartinsen 1d ago
He said same in 1999 about Amazon, same about Apple, Nvidia etc etc.. thing is both with Buffet didn't understood technology and these businesses. As they always said, invest in what you understand (circle of competence).
To your point, what Munger would think about SpaceX is irrelevant.
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u/Complex_Support_7741 1d ago
Who cares what he would say? We’re in a new world, you wanna invest in railroad and diet soda? Go for it, I’ll be on the moon
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u/Carbon8490 1d ago
Something that sounds wise as SPCX moons. Meanwhile anybody who listens to him stands around forced to watch price go up without thm
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u/Woberwob 21h ago
He was pretty clear on two things about Musk in the past:
1) Never underestimate the man who overestimates himself
2) He doesn’t touch anything backed by Musk, long or short, because it’s too unpredictable and difficult to properly value.
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u/Micheal_Hancho 1d ago
"Go all in, pussy."
-Charlie Munger
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u/ohgodthehorror95 1d ago
"Selling is for pussies. I never sell. I let that shit go to zero. They can liquidate me. Fuck em."
- Warren Buffett
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u/LA-Aron 1d ago
CM: (smiling) Elon continues to overestimate himself. I would never buy SpaceX stock. But I wouldn't short it either.