Costco will be ‘an absolute titan on the internet,’ Charlie Munger says

Daily Journal Chairman and Berkshire Hathaway Vice Chairman Charlie Munger discusses Costco's operations and stock valuation.

Video Transcript

BECKY QUICK: You recently talked about bubbles and high valuations in your Sone Conference talk. Is Costco a part of that? Costco has never traded at a higher price to sales or price to earnings multiple. How should new investors think about Costco, given its record run?

CHARLIE MUNGER: Well, that's a very good question. And I've always believed that nothing was worth an infinite price. So even an admirable place like Costco could get to a price where you would say that's too high.

But I would argue that, if I were investing money for some sovereign wealth fund or some pension fund, and I had a 30, 40, 50-year time horizon, I would buy Costco at the current price. I think it's that strong in enterprise and that admirable a place.

Now, I'm not saying I would-- I can't bring myself with my habits to pay these big prices. But I never even think about selling a share of Costco just because it's selling at a high price. So if you stop to think about it, I bought at Christmas time a flannel shirt, a bunch of flannel shirts at Costco. They cost $7 each, more or less.

And it was a soft flannel. And it was better and so forth. And then I bought pants. I think they were Orvis pants. And I paid like $7. And they stretch around my waist. And they're partly water-resistant, what have you.

Costco is going to be an absolute titan on the internet, because it got curated products that everybody trusts and huge purchasing power on a limited number of stocking units. So I'm not worried about it.

I'm not saying I'm buying Costco at this price. But I'm certainly not selling any. I think it's going to be a big, powerful company as far ahead as you can see. And I think it deserves its success. I think it has a good culture and a good moral ethos. And so I wish everything else in America was working as well as Costco does. Think what a blessing that would be for us all.