Charlie Munger calls inflation the No. 1 danger apart from nuclear war, pans crypto and trading apps

Published Wed, Feb 16 20223:50 PM ESTUpdated Wed, Feb 16 20226:11 PM EST

Charlie Munger, vice chair of Berkshire Hathaway and Warren Buffett 's longtime business partner, issued a dire warning on inflation, calling surging prices the biggest threat second only to a nuclear war. The 98-year-old investor held a Q & A session Wednesday at the Los Angeles-based Daily Journal annual shareholders meeting livestreamed by Yahoo Finance. Munger also criticized cryptocurrencies as well as trading apps that are enabling gamification of financial securities. On inflation, Munger said, "It's the biggest long-range danger we have probably apart from a nuclear war." His comment came as red-hot inflation surged to a fresh four-decade high with the consumer price index rising 7.5% year over year. The persistently high inflation is putting more pressure on the Federal Reserve to raise interest rates multiple times this year. Munger said inflation was the driver that led to the eventual collapse of the Roman Empire. "Inflation is a very serious subject. You can argue it's the way democracies die. It's a huge danger ... If you overdo it too much, you ruin your civilization," Munger told CNBC's Becky Quick . Still a crypto hater Munger's disdain toward cryptocurrencies seemed stronger than ever. "I wish it had been banned immediately. I admire the Chinese for banning it. I think they were right, and we've been wrong to allow it," Munger said. Bitcoin, the world's largest cryptocurrency, hit a record high last year as involvement from Tesla to major Wall Street banks made it more and more mainstream. Munger has long criticized bitcoin for its extreme volatility and a lack of regulation. On Wednesday, he even said crypto is a "venereal disease." "We've already got a digital currency, that's called a bank account," Munger added. 'A gambling parlor' The longtime investor also slammed a new wave of trading platforms that are allowing manic momentum-driven activity by amateur investors. "Certainly, the great short squeeze in GameStop was wretched excess," Munger said. "We have a stock market which some people use like a gambling parlor." The jaw-dropping GameStop mania of 2021 has become the poster child of the speculative bubble in certain risky stocks amid the pandemic. Munger argued that retail traders are being enticed by brokerage apps touting free trading and said he wished he could reduce market liquidity. "I would make it unfeasible to make short-term gains in securities," said Munger. "We now mix up a legitimate activity … with a gambling casino. Those two functions when they're mixed … create a speculative mess." Tech is here to stay Munger, as well as Buffett, ditched their aversion to high-flying tech stocks in recent years and added Apple to Berkshire's equity portfolio in 2016. Now, Berkshire's massive Apple stake makes up more than 40% of its equity portfolio, worth about $160 billion. "I think Warren and I have come to tech like some newborn infant that's dragged there," Munger said Wednesday. "We had to come because reality has dragged us there. That's true for all of America. Tech is here to stay." Buffett previously called Apple Berkshire's "third-largest business," after its insurance and railroad interests. "I think Apple is one of the strong companies and will stay a strong company, and I think it's ungodly well managed," Munger said. Munger has served as Daily Journal's chairperson since 1977 and manages the newspaper publisher's investment portfolio.

Charlie Munger at Berkshire Hathaway's annual meeting in Los Angeles California. May 1, 2021.

Gerard Miller