the big ideas in the big disciplines, and use them routinely — all of them, not just a few. Most people are trained in one model — economics, for example — and try to solve all problems in one way. You know the old saying: to the man with a hammer, the world looks like a nail. This is a dumb way of handling problems.” http://www.fool.com/BoringPort/2000/boringport00051501.htm
“If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands” http://www.feedblitz.com/f/f.fbz?PreviewFeed=7799
Microsoft:
Every business tries to turn this year’s success into next year’s greater success. It’s hard for me to see why Microsoft is sinful to do this. If it’s a sin, then I hope all of Berkshire Hathaway’s subsidiaries are sinners. …Someone whose salary is paid by U.S.taxpayers is happy to dramatically weaken the one place where we’re winning big?!” http://www.fool.com/boringport/2000/boringport000501a.htm
Mispriced bets:
“… we came to this notion of finding a mispriced bet and loading up when we were very confident that we were right….” http://ycombinator.com/munger.html
Mistakes
The more hard lessons you can learn vicariously rather than through your own hard experience, the better. http://www.tilsonfunds.com/wscmtg04notes.doc
“Although I am very interested in the subject of human misjudgment — and lord knows I’ve created a good bit of it — I don’t think I’ve created my full statistical share” http://www.vinvesting.com/docs/munger/human_misjudgement.html
Since mistakes of omission don’t appear in the financial statements, most people don’t pay attention to them. We rub our noses in mistakes of omission – as we just did. http://www.tilsonfunds.com/brkmtg04notes.doc
“The most extreme mistakes inBerkshire’s history have been mistakes of omission. We saw it, but didn’t act on it. They’re huge mistakes — we’ve lost billions. And we keep doing it. We’re getting better at it. We never get over it.” There are two types of mistakes: 1) doing nothing; what
Warrencalls “sucking my thumb” and 2) buying with an eyedropper things we should be buying a lot of.”
After nearly making a terrible mistake not buying See’s, we’ve made this mistake many times. We are apparently slow learners. These opportunity costs don’t show up on financial statements, but have cost us many billions. http://www.tilsonfunds.com/
“Chris Davis [of the Davisfunds] has a temple of shame. He celebrates the things they did that lost them a lot of money. What is also needed is a temple of shame squared for things you didn’t do that would have made you rich. Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn’t remind you. Why not celebrate stupidities in both categories?” http://news.morningstar.com/article/article.asp?id=169398
There ’s no way that you can live an adequate life without [making ] many mistakes. http://www.poorcharliesalmanack.com/pdf/page228.pdf
“Our biggest mistakes, were things we didn’t do, companies we didn’t buy.” http://money.cnn.com/magazines/moneymag/moneymag_archive/1998/07/01/244582/index.htm
Moats
Kellogg’s and Campbell’s moats have also shrunk due to the increased buying power of supermarkets and companies like Wal-Mart. The muscle power of Wal-Mart and Costco has increased dramatically.” http://www.tilsonfunds.com/
“How do you compete against a true fanatic? You can only try to build the best possible moat and continuously attempt to widen it.” Poor Charlie’s at 59 http://www.amazon.com/gp/product/1578643031/104-7644521-2497538?v=glance&n=283155
Money
There are a lot of things in life way more important than money. All that said, some people do get confused. I play golf with a man who says, ” What good is health? You can’t buy money with it.” http://media.wiley.com/product_data/excerpt/32/04712447/0471244732-1.pdf#search=%22munger%20you%20know%20the%20cliche%20that%20opposites%20attract%22
Money Management:
It’s my guess that something like 5% of GDP goes to money management and itsattendant friction. I define it broadly – annuities, incentive pay, all trading, etc. Nobody else has used figures that high, but that’s my guess. Worst of all, the people doing this are among the best and the brightest. Hundreds and thousands of engineers, etc. are going into hedge funds and investment banking. That is not an intelligent allocation of the brainpower of the civilization. http://www.tilsonfunds.com/wscmtg05notes.pdf
I think money management is a low calling relative to being a surgeon. I don’t like the percentage of our GDP and brainpower and professional effort that’s in money management. I don’t think it’s a good thing for our country, and don’t expect it to end well. The present era has no comparable precedent in the history of capitalism when so many people are trading pieces of paper. We have a higher proportion of the intelligent sections of society involved in buying and selling bits of paper and trying to make money doing it. There are more people doing thisthan at any time in history. A lot of this reminds me of Sodomand Gomorrah. http://www.tilsonfunds.com/brkmtg05notes.pdf
The general systems of money management [today] require people to pretend to do something they can’t do and like something they don’t. It’s a terrible way to spend your life, but it’s very well paid. http://www.tilsonfunds.com/
“It’s natural that you’d have more brains going into money management. There are so many huge incomes in money management and investment banking — it’s like ants to sugar. There are huge incentives for a man to take up money management as opposed to, say, physics, and it’s a lot easier.” http://www.tilsonfunds.com/
I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.” Investment managers are in the position of that fishing tackle salesman. http://ycombinator.com/munger.html
In investment management today, everybody wants not only to win, but to have a yearly outcome path that never diverges very much from a standard path except on the upside. Well, that is a very artificial, crazy construct. That’s the equivalent in investment management to the custom of binding the feet of Chinese women. http://ycombinator.com/munger.html
I think a select few—a small percentage of the investment managers—can deliver
