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Learning from Munger

Recs

18

February 07, 2013 – Comments (0) | RELATED TICKERS: BRK-A

Board: Berkshire Hathaway

Author: RoughlyRight

I attended the Daily Journal meeting with Charlie Munger today. Charlie is 89 now, but he doesn't seem much different to me then when I first started attended such meetings (WSCO, BRK) 18 years ago. The meeting was in L.A. My 19-year-old son lives in L.A. as he's a freshman biomedical engineering student at USC. At my encouragement, he skipped his Calculus class today and caught about 2/3's of the meeting (it lasted over two hours). My son quickly typed up his notes based on points he thought worth writing down; there was a lot more covered. I'm posting his notes. It's likely someone will have more complete notes to post.

My son's notes come from the perspective of someone not interested in investments. He's a fairly worldly 19-year-old, but he is just 19. I'm excited that was able to learn from Charlie.

Daily Journal Meeting Notes – February 6, 2013

1. Public notice business–previously highly lucrative, but now being downsized by technology
2. Charlie has not seen a housing bust like the one in recent years at any prior time in his life
3. After the Japanese bombed Pearl Harbor, one congressperson voted against war (used to illustrate the fact that we can never get unanimity)
4. Daily Journal was never used to spew a political ideology
a. Charlie thinks this was the best business policy, makes the Daily Journal a trusted source
5. Charlie doesn’t believe in a “master plan” but rather just reacting to the current needs of the marketplace/society
6. Charlie has never taken a penny out of the Journal
a. Charlie and his colleagues sincerely want people they barely know (that own stock in the DJ) to turn out alright
b. They don’t mind putting these people through a little hell along the way (chuckles)
7. Amazon takes territory from incumbents by brute force
8. The housing bust was created by people who blindly believed mathematical formulas over common sense; made the US pay a dear price for this
9. A good way to think: articulate those things that you do not want (i.e., things you’d like to avoid) and live a life that avoids such things. It seems simple, but many people don’t live their lives this way.
10. Why should criminal law dictate our behavior? We would never behave this way in a relationship, yet it’s common to behave this way in business.
11. Charlie doesn’t think society will function well if a bunch of people are making money simply by being clever (and then get “soft, white, wrinkly” hands)
12. There should always be a category in your mind that reads “this is too tough for me to fix.”
13. The method of corporate acquisitions in America usually hurts the shareholder
a. Berkshire seems to be an exception
14. “If you get pancreatic cancer, are you going to buy your way out of cancer? I don’t think so.”
15. If your product becomes a by-product of another company’s main product (e.g., Microsoft packaging a free encyclopedia in Windows) you’ve now acquired pancreatic cancer…but worse.
16. During the construction of the transcontinental railroad, some congresspersons took bribes from people like Huntington and Stanford
17. Charlie likes to live a life that has some fun in it (not all sure things)
18. The wealth of the country is based on the productivity of the country
a. Right now, we aren’t a very productive country, so this is bad for our overall welfare
19. If you want to get rich:
a. Have a few decent ideas
b. Have a lot of knowledge about them
c. Stick with it through the ups and downs
20. Charlie never paid attention to the “stupid” things taught in business classes
21. Department stores may not have the world’s greatest future; they realized this upon purchasing one
22. Charlie worst investment decision: he didn’t borrow money for buying stock in Bellridge Oil, and it soon sold out for over 35x what he was going to pay for it
a. You’ll only get a few risk-free opportunities in your life to make an investment/decision. Charlie regrets not having made this investment.

RR 

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