Charlie Munger Speaks at the 2017 Daily Journal Corporation Annual Meeting

Charlie Munger Speaks at the 2017 Daily Journal Corporation Annual Meeting
Photo by TEDizen

Charlie Munger Speaks at the 2017 Daily Journal Corporation Annual Meeting by John Szramiak was originally published on Vintage Value Investing

Daily Journal Corporation (NASDAQ: DJCO)’s most recent annual meeting was held on February 15, 2017.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Daily Journal Corporation is a publishing company headquartered in Los Angeles that publishes newspapers and websites that cover legal affairs in California and Arizona. Daily Journal Corporation also has a subsidiary, Journal Technologies, that supplies case management software systems and related products to courts and other justice agencies, including administrative law organizations, county governments, and bar associations. Daily Journal Corporation’s largest publications are the Los Angeles Daily Journal and the San Francisco Daily Journal.

ValueWalk’s December 2021 Hedge Fund Newsletter: Hedge Funds Avoid Distressed China Debt

InvestWelcome to our latest issue of issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring hedge funds avoiding distressed china debt, growth in crypto fund launches, and the adapting venture capital industry. Q3 2021 hedge fund letters, Read More

The chairman of Daily Journal Corporation is none other than Berkshire Hathaway vice chairman Charlie Munger (which is a perfect fit, as he was a lawyer and actually established the law firm of Munger, Tolles & Olson – which is a very prominent law firm today – before he became an investor).

Munger, now 93, runs a bit of a mini-Berkshire Hathaway shareholder meeting at the Daily Journal. Here is him speaking at the 2017 Daily Journal Corporation Annual Meeting:

Here are some of the main takeaways:

Mellow on Donald Trump

Last year, Charlie Munger said that his fellow Republican Donald Trump was not morally qualified for the White House. At the 2017 Daily Journal Annual Meeting, Munger said:

“Well, I’ve gotten more mellow. He’s not wrong on everything. Just roll with it. If there’s a little danger, what the hell, you’re not going to live forever anyway.”

A Reversal on Technology and Airlines

Berkshire Hathaway recently revealed multi-billion dollar stakes in Apple and the four biggest U.S. carriers: American Airlines, Delta, Southwest, and United Continental.

This marks a huge reversal in Buffett’s and Munger’s longstanding aversion to investing in the technology sector (which was deemed outside their “circle of competence“) and in the airline industry (an industry that both have had very harsh words for in the past – Buffett has called it a “gruesome” industry and Munger once called it a “joke”). Now, Berkshire is Apple’s fifth largest investor and is the largest or second largest investor in the four airlines.

At the meeting, Munger said:

“The nice thing about the game we’re in is that we can keep learning.”

Speaking of Buffett, Munger said:

“He’s changed when he’s buying airlines, and he’s changed when he’s buying Apple.”
“I don’t think we’ve gone crazy. I think we’re adapting.”

Wells Fargo’s Biggest Problem Was Its Reaction to the Scandal

Munger downplayed the impact of the recent scandal at Wells Fargo, in which Berkshire Hathaway is the largest investor with a ~10% stake. Wells Fargo was caught flat-footed by the public outcry after it settled regulatory charges that employees created as many as 2 million fake customer accounts to meet sales goals. The scandal cost longtime Chief Executive John Stumpf his job.

According to Munger, the biggest problem for the company was not its sales culture, but how it reacted to the scandal:

“The mistake there was that when the bad news came, they didn’t recognize it. I don’t think that impairs the future of Wells Fargo.”

Uncertainty Around American Express

Charlie Munger was less sure about the outlook for American Express, another large Berkshire Hathaway holding, saying people would be in a “state of delusion” for thinking they could project the state of the payments system in a decade.

Still Critical of Valeant Pharmaceuticals

Charlie Munger also defended is early criticism of Valeant Pharmaceuticals business practices, including the Canadian drug company’s model of acquiring rights to drugs and riving prices higher. Criticism and regulatory probes have caused Valeant’s growth plant to unravel, and its share price to plunge more than 93% in a year-and-a-half.

“It was really interesting how many high-grade people that took in. It was too good to be true.”

Updated on

Ben Graham, the father of value investing, wasn’t born in this century. Nor was he born in the last century. Benjamin Graham – born Benjamin Grossbaum – was born in London, England in 1894. He published the value investing bible Security Analysis in 1934, which was followed by the value investing New Testament The Intelligent Investor in 1949. Warren Buffett, the value investing messiah and Graham’s most famous and successful disciple, was born in 1930 and attended Graham’s classes at Columbia in 1950-51. And the not-so-prodigal son Charlie Munger even has Warren beat by six years – he was born in 1924. I’m not trying to give a history lesson here, but I find these dates very interesting. Value investing is an old strategy. It’s been around for a long time, long before the Capital Asset Pricing Model, long before the Black-Scholes Model, long before CLO’s, long before the founders of today’s hottest high-tech IPOs were even born. And yet people have very short term memories. Once a bull market gets some legs in it, the quest to get “the most money as quickly as possible” causes prices to get bid up. Human nature kicks in and dollar signs start appearing in people’s eyes. New methodologies are touted and fundamental principles are left in the rear view mirror. “Today is always the dawning of a new age. Things are different than they were yesterday. The world is changing and we must adapt.” Yes, all very true statements but the new and “fool-proof” methods and strategies and overleveraging and excess risk-taking only work when the economic environmental conditions allow them to work. Using the latest “fool-proof” investment strategy is like running around a thunderstorm with a lightning rod in your hand: if you’re unharmed after a while then it might seem like you’ve developed a method to avoid getting struck by lightning – but sooner or later you will get hit. And yet value investors are for the most part immune to the thunder and lightning. This isn’t at all to say that value investors never lose money, go bust, or suffer during recessions. However, by sticking to fundamentals and avoiding excessive risk-taking (i.e. dumb decisions), the collective value investor class seems to have much fewer examples of the spectacular crash-and-burn cases that often are found with investors’ who employ different strategies. As a result, value investors have historically outperformed other types of investors over the long term. And there is plenty of empirical evidence to back this up. Check this and this and this and this out. In fact, since 1926 value stocks have outperformed growth stocks by an average of four percentage points annually, according to the authoritative index compiled by finance professors Eugene Fama of the University of Chicago and Kenneth French of Dartmouth College. So, the value investing philosophy has endured for over 80 years and is the most consistently successful strategy that can be applied. And while hot stocks, over-leveraged portfolios, and the newest complicated financial strategies will come and go, making many wishful investors rich very quick and poor even quicker, value investing will quietly continue to help its adherents fatten their wallets. It will always endure and will always remain classically in fashion. In other words, value investing is vintage. Which explains half of this website’s name. As for the value part? The intention of this site is to explain, discuss, ask, learn, teach, and debate those topics and questions that I’ve always been most interested in, and hopefully that you’re most curious about, too. This includes: What is value investing? Value investing strategies Stock picks Company reviews Basic financial concepts Investor profiles Investment ideas Current events Economics Behavioral finance And, ultimately, ways to become a better investor I want to note the importance of the way I use value here. It’s not the simplistic definition of “low P/E” stocks that some financial services lazily use to classify investors, which the word “value” has recently morphed into meaning. To me, value investing equates to the term “Intelligent Investing,” as described by Ben Graham. Intelligent investing involves analyzing a company’s fundamentals and can be characterized by an intense focus on a stock’s price, it’s intrinsic value, and the very important ratio between the two. This is value investing as the term was originally meant to be used decades ago, and is the only way it should be used today. So without much further ado, it’s my very good honor to meet you and you may call me…
Previous article Bank Rally Likely To Shift To Micro-Cap Banks
Next article How Whole Foods Can Emerge From A Slump

No posts to display