Charlie Munger Praised Buffett's $20B 'No-Brainer' Investment In Japan: 'Like Having God Just Opening A Chest And Pouring Money Into It'

When you think of Warren Buffett's investments, you probably picture American icons like Coca-Cola Company KO, Apple AAPL, Dairy Queen, or even See's Candies—classic brands that embody his preference for simplicity and predictability. But in 2020, Buffett and Berkshire Hathaway made an uncharacteristic move. They turned their focus overseas, quietly pouring billions into Japan. 

Charlie Munger, Buffett's longtime business partner and vice chairman of Berkshire Hathaway BRK BRK.B)), shared his thoughts on this unexpected investment. In October 2023, over dinner at his Los Angeles home, Munger sat down with the hosts of the Acquired podcast and reflected on a lifetime of wisdom, including this bold bet on Japan. He spoke with admiration for Buffett's ability to see opportunities where others didn't, calling the investment in Japan's five largest trading companies a "no-brainer."

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Berkshire's foray into Japan began in 2020, when the company purchased stakes in Itochu, Marubeni, Mitsubishi, Mitsui & Co., and Sumitomo. Known as sogo shosha, these firms operate as general trading houses, deeply entrenched in Japan's economy with businesses spanning energy, mining, agriculture, and consumer goods. Buffett invested around $6 billion initially, taking advantage of Japan's historically low interest rates to fund the deal with yen-denominated bonds. These bonds carried yields of about 0.5%—practically free money—while the trading houses themselves offered steady dividend yields of approximately 5%. 

Their diversified operations made them resemble mini versions of Berkshire itself, with reliable cash flow generated from their sprawling portfolios of assets. 

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Munger emphasized that Buffett's patience, combined with Berkshire's strong credit rating, was instrumental in making the investment successful. By financing the deal at historically low borrowing costs, Berkshire was able to gradually build its position while ensuring consistent returns. 

Over the next few years, Berkshire gradually increased its stakes in the five trading houses. By late 2023, the positions had risen in value significantly, with Berkshire's investment growing to ¥2.9 trillion (about $20 billion), according to The Japan Times.

Munger's reflections on the investment weren't just about the numbers. For him, this was a textbook example of the principles he and Buffett had followed throughout their careers. "If you're as smart as Warren Buffett, maybe two or three times a century, you have an idea like that," he said. Munger emphasized that the opportunity was so clear that it almost seemed too good to be true: "It was like having God just opening a chest and pouring money into it. Awfully easy money."

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The move also highlighted Buffett's rare ability to think globally while staying grounded in simple, fundamental principles. Historically, Berkshire's portfolio has leaned heavily toward American companies, reflecting its deep confidence in the U.S. economy. But this foray into Japan was proof that Buffett wasn't bound by geography—only by the opportunity itself. 

For Munger, who passed away just weeks after the interview at the age of 99, this investment was a final testament to the timeless principles he and Buffett spent their lives practicing: patience, discipline, and an uncanny ability to see opportunities others overlooked. Reflecting on Berkshire's success with the Japanese trading houses, Munger captured the simplicity of the strategy: "A huge flow of cash with no investment, no thought, no anything. How often do you do that?"

And with Buffett's trademark patience and precision, they did just that—turning a $6 billion initial investment into holdings worth nearly $20 billion in only a few short years.

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