Notes by Ed Barr from Charlie Munger’s latest speech yesterday. The full speech by Munger is attached below in scribd, great satire….
This will take the place of the weekly link-fest.
A Morning with Charlie
July 1, 2011
Notes by Ed Barr (with minor edits by Whitney Tilson)
I shuttled west for Munger’s last solo performance since Wesco has now been acquired by Berkshire. These are my quick notes with almost all commentary from Charlie. Enjoy!
Format: comment briefly on merger, academics and markets, greedy bastards that we are.
About half of Wesco shareholders took stock and the rest cash. Berkshire’s stock price went way lower than Warren or he expected so they had to issue more stock than they wished. But they try to behave well for those without power.
Lollapoolooza effects come from multiple academic disciplines from the same direction. Academics can’t figure out why Cokes and candy bars too high priced at movie theaters.
Americans would not handle the Japanese situation nearly as well. Export driven but then new huge competition from Korea and China.
Just reread Matt Ridley’s book, The Rational Optimist: How Prosperity Evolves . Power gets allocated to those that deserve it with example of 20 restaurants in Pasadena driven down to the two best. Don’t reach for the obvious/first answer.
Blue Chip Stamps/Berkshire. Immense float from stamps but dying. In decades found few things to do. See’s, Buffalo News and Wesco. Most acquirers hurt their shareholders. If we can’t buy companies then we buy securities. They had an alternative. Wesco was the worst of the three but went from $5 to $385.
Nothing more counterproductive than envy. Learning as they went. Did not initially understand the power of a brand. It changed Berkshire. You must be a continuous learner. Protect your own mind. Improve as much as you can.
We did some massively stupid things. What is needed is lifelong learning and it is fun.
Current investment scene. Like Japan, an idiotic bubble. Evil in banking, investment banking and mortgage banking. Can’t foist gambling onto people. Cutting risk taking is like asking Vegas to keep slots but cut craps, blackjack etc. Medical community prevents problems but not accounting. What accounting people have expressed any contrition?
For folly and evil to succeed, all that’s necessary is for wise and good men to remain silent.
Dick Fuld ruined Lehman with megalomania and evil – Munger would bet that he has no contrition. Don’t behave like others just so you can make more money.
Thinks Bill Gross’s “new normal” (see: www.pimco.com/EN/Insights/Pages/Gross%20Sept%20On%20the%20Course%20to%20a%20New%20Normal.aspx) is probably correct. Europe having an adult experience.
Increasing hours to get higher pension is evil and dishonorable. Either saying always soak the rich or can’t have any new taxes are both really dumb.
Combination of patience and opportunism is highly desirable as an investor. When a major opportunity comes along, don’t be timid.
Three most important parts of his legacy. Self-improvement. Don’t imitate a lot of his peculiarities. Irreverence can get you in a lot of trouble if you aren’t Munger. Self-discipline is good.
Loves the Wall Street Journal. Likes the Economist the best among magazines.
Authors to study. I have an inadequate response.
Index funds: I prefer to do considerably better. Said he’s unhumble by nature so willing to put up with a certain amount of misery. Utterly failed with Dexter since they issued stock. Owners of Berkshire will do quite alright from here just sitting.
Re. adversities: you simply must soldier through the best you can.
He thinks it’s perfectly obvious that there will be inflation over time.
Greece is contemptible. If he was running Europe he would not have taken Greece in. An ounce of prevention worth way more than a pound of cure.
It is hard for me to imagine Google not having a strong position. I don’t know how you would displace Google.
Of course I have helped my children financially. The children that don’t get anything hate their parents. Lose graciously. Will they be as driven? Not likely.
Exxon stands by itself as long term, in the past, investment.
Admiration the best kind of love.
Lot of people want to be greedy jerk then nice at the end. Doesn’t recommend that. Just consistent learning.
Won’t do this meeting again next year. You people need a new cult hero. I am doing you a favor by saying no.
Do what you like to do. Follow your interests and your talents. Could not have been a quarterback or ballet dancer.
Is Coke as good as twenty years ago? No, but still one of my favorites. Very entrenched. Tough for the elephant to move fast. Likes branded companies selling cheap items that are entrenched. If he