Oil is important for energy. But also for other items like plastics, pharmaceutical and other everyday life uses. We can use energy from sun, but not to make plastics. However, chances are that the scientific and technological progress will identify ways to deliver cheap energy and everyday items at low prices some time in the future. Thus, I am not at all worried that oil will run out or that we will go back to living in caves.
Saving all oil so US can use it 100 years later is similar to what Buffett says” like saving sex for old age“.
Munger is still investing legend, and I would likely never reach same level of wealth as him. However, he might be best suited to stick to doing investments, rather than discuss macroeconomics. Of course, if your goal in life is to make money in investments, you might not be the best person to make long-term predictions. If Munger is not senile, then his idea could be meaning that oil companies could be good long term investments.
I am happy to be owning Chevron (CVX), ConocoPhillips (COP) and Royal Dutch (RDS.A, RDS.B) ( ranked in order of my happiness holding these companies). The companies yield 3.20%, 4.10% and 5.30% respectively. The moral of this story is that as individual investor, you are the one ultimately responsible for allocating capital. You should not rely 100% on judgement of others. Outsourcing your investment decisions to others could be costly. Also, if you are an investing legend, stick to being an investing legend.
It is also important to learn another thing about risk. As you grow older, you might end up doing decisions that could be very costly. By not being flexible, you can stick to your Citigroup (C) stock in 2008, because it paid you dividends for many years prior to that. This is the reason why I have the automatic rule to sell after a dividend cut. If I have diminished mental capacities in 2040, it would be easier for someone managing my otherwise long-term investments to follow a rule based guideline. I am also considering whether a low risk index fund wouldn’t be a good situation, given the lack of interest in managing investments on the part of my descendants. This is something that came to me, as I was thinking about this article. I need to do a little more thinking, and would try to share my findings with you.
Of course, given the long-term nature of my dividend paying holdings, I am fairly confident that a fun-loving DGI trust-fund baby that only collects dividend checks and doesn’t sell anything, will likely do well for the next 50 years. My dividend portfolio is built so that it can generate healthy amounts of cash, with low upkeep required.
In summary, I believe that Munger should be sticking to doing investments, rather than solve economic issues. I still find him of the best investment minds of the past 100 years, and plan to keep learning about his investment style.
Full Disclousre: Long CVX, COP, RDS.B