Charlie Munger, vice chairman of Berkshire Hathaway and Warren Buffett 's longtime business partner, said big-box retailer Costco has the potential to eventually go head to head with e-commerce giant Amazon . "Amazon may have more to fear from Costco in terms of retailing than the reverse," Munger said Friday at the Sohn conference in Sydney, The Australian Financial Review reported. "Costco will eventually be a huge internet player. People trust it and they have enormous purchasing power," the 97-year-old investor said. Munger has been a board member of Costco since 1997. He personally owned about 166,000 Costco shares at the end of 2020, a regulatory filing showed. The membership-only retail chain benefited from last year's lockdown-induced panic buying of household items and groceries. Now the reopening economy is giving people more confidence to return to shopping in physical stores, which helped Costco's bottom line. Costco has invested in building its e-commerce business. In March 2020, Costco made a $1 billion acquisition of Innovel Solutions , which provides last-mile delivery services. Innovel was previously a subsidiary of Transform Holdco, which operates Sears and Kmart stores. Shares of Costco have risen nearly 40% this year after a 28% return in 2020. On the broader market, Munger sounded the alarm on sky-high equity valuations and investors' speculative behaviors, saying that the current environment was "more extreme" than anything he had ever experienced. The stock market has bounced back swiftly from the pandemic-induced bear market. The massive comeback attracted a record number of amateur investors who at times bid up speculative stocks in manic momentum-driven trading. "The dot-com boom was crazier on the valuations even than we have now but overall, I consider this era even crazier than the dot-com era," Munger said at the conference. "You have to pay a great deal for good companies and that reduces your future returns."
Charlie Munger at Berkshire Hathaway's annual meeting in Los Angeles California. May 1, 2021.