Showing posts with label Charlie Munger. Show all posts
Showing posts with label Charlie Munger. Show all posts

Tuesday, May 22, 2018

From Alice Schroeder's The Snowball (2008), on Warren Buffett

Warren "Buffett was the one who enjoyed pleasing people... Whereas [Charlie] Munger wanted only respect, and didn't care who thought he was a son of a bitch." -- from Schroeder's The Snowball (2008) (hardcover, pp. 24)

"Life is like a snowball. The important thing is finding wet snow and a really long hill." 

"Spend less than you make" could, in fact, have been the Buffett family motto, if accompanied by its corollary, "Don't go into debt." (39) 

"School for the most part bored him... Warren's teachers found him stubborn, rude, and lazy. Some of the teachers gave him double black Xs, for extra bad." (82)

"Throughout his entire educational history he had shown little interest in formal schooling--as opposed to learning--and considered himself largely self-taught." (125)

"Warren particularly disliked buying houses, considering money spent on them as lying fallow, not earning its keep." (351) 

"Derivatives are like sex... It's not who we're sleeping with, it's who they're sleeping with that's the problem." (659)

"The purpose of life is to be loved by as many people as possible among those you want to have love you." (826) 

Friday, June 4, 2010

Charlie Munger's Wisdom

The thoughts of others
Were light and fleeting,
Of lovers’ meeting
Or luck or fame.
Mine were of trouble,
And mine were steady,
So I was ready
When trouble came.
-- A.E. Housman

Charlie Munger: "You can say, who wants to go through life anticipating trouble? Well, I did. All my life I’ve gone through life anticipating trouble. And here I am, going along in my 84th year and like Epictetus, I've had a favored life. It didn’t make me unhappy to anticipate trouble all the time and be ready to perform adequately if trouble came. It didn’t hurt me at all. In fact it helped me." More here and here.

Wednesday, May 19, 2010

Wisdom from Charlie Munger

Many people know about Warren Buffett, but not enough people know about his right-hand man, Charlie Munger. See here for Munger's 1994 lesson on "Elementary, Worldly Wisdom As It Relates To Investment Management and Business":

"If people tell you what you really don't want to hear, that's unpleasant--there's an almost automatic reaction of antipathy. You have to train yourself out of it. It isn't foredestined that you have to be this way. But you will tend to be this way if you don't think about it."

"I think the reason we get 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.'"

Also, see here for more "Mungerisms" and my brief meeting with Mr. Munger.

Tuesday, June 2, 2009

More Wisdom from Charlie Munger

Charlie Munger on desire:

I had a considerable passion to get rich. Not because I wanted Ferraris - I wanted the independence. I desperately wanted it. I thought it was undignified to have to send invoices to other people. I don’t where I got that notion from, but I had it.

More from Charlie Munger here.

Friday, May 22, 2009

Berkshire Hathaway (2009) Live Blogging Link [UPDATE: LINK NO LONGER WORKS]

I can't believe I didn't see this link before:

http://www.omaha.com/index.php?u_page=1208&u_sid=10622671 [UPDATE: LINK NO LONGER WORKS]

Click on the "replay" button in the middle of the screen, and you'll get a live blogging report from the 2009 Berkshire Hathaway shareholder meeting.

According to the blogger, Charlie Munger made a comment about the subjectivity of bank earnings:

General accounting principles allow banks to show high earnings based on foolish investments. Munger says that kind of accounting should not be allowed.

Wednesday, May 6, 2009

Charlie Munger on NBR

Here's a recent NBR interview with Charlie Munger (Susie Gharib, May 1, 2009):

http://everythingwarrenbuffett.blogspot.com/2009/05/nightly-business-review-susie-gharib.html

We can't have a modern civilization without strong financial companies. But we don't need them as swashbuckling and as crazy and as venal as they've been.

More here from Munger:  http://willworkforjustice.blogspot.com/2010/05/wisdom-from-charlie-munger.html

Update: I replaced the link below, because it no longer worked: http://www.pbs.org/nbr/site/onair/gharib/charlie_munger_of_berkshire_hathaway_090501/

Tuesday, May 5, 2009

Munger on Economics

In honor of Berkshire Hathaway's recent meeting, here is a 2003 speech Charlie Munger gave in California: [warning: PDF file]

http://www.tilsonfunds.com/MungerUCSBspeech.pdf

Here's a fun snippet:

I think that economists would be way better off if they paid more attention to Einstein and Sharon Stone. Well, Einstein is easy because Einstein is famous for saying, “Everything should be made as simple as possible, but no more simple.” Now, the saying is a tautology, but it’s very useful, and some economist – it may have been Herb Stein – had a similar tautological saying that I dearly love: “If a thing can’t go on forever, it will eventually stop.”

Sharon Stone contributed to the subject because someone once asked her if she was bothered by penis envy. And she said, “absolutely not, I have more trouble than I can handle with what I’ve got.”

Also, Munger saw our financial problems well in advance:

[Question]: …financial destruction from trading of derivative contracts. Buffett said that the genie’s out of the bottle and the hangover may be proportionate to the binge. Would you speculate for us how that scenario can play out? [The question was garbled, but the person asked about derivatives, which Buffett has called “financial weapons of mass destruction.”]

Munger: Well, of course, catastrophe predictions have always been quite difficult to make with success. But I confidently predict that there are big troubles to come. The system is almost insanely irresponsible. And what people think are fixes aren’t really fixes. It’s so complicated I can’t do it justice here – but you can’t believe the trillions of dollars involved. You can’t believe the complexity. You can’t believe how difficult it is to do the accounting. You can’t believe how big the incentives are to have wishful thinking about values, and wishful thinking about ability to clear.

Running off derivative book is agony and takes time. And you saw what happened when they tried to run off the derivative books at Enron. Its certified net worth vanished. In the derivative books of America there are a lot of reported profits that were never earned and assets that never existed.

If you're interested, my review of Munger's 2008 shareholder meeting is here.

Thursday, May 15, 2008

Wesco Shareholder Meeting, May 7, 2008

Charlie Munger and myself

Charlie Munger and myself

President Jimmy Carter

If you're a Berkshire Hathaway shareholder, you know about Charlie Munger, the quick-witted lawyer who sits next to Warren Buffett and usually makes a brief comment that encapsulates in five seconds what Warren just took about three minutes explaining. Mr. Munger has his own company, Wesco (WSC), a subsidiary of Berkshire. To attend the meeting, which takes place after the Berkshire Hathaway meeting in Omaha, you can buy individual shares of WSC, or your ownership of Berkshire Hathaway automatically entitles you to admission. After going to the Berkshire meeting in Omaha, many fans, especially money managers, come to Pasadena, CA to hear Charlie speak. I saw so many money managers and dapper suits, I felt out of place with my jeans and more casual wear. The entire meeting, before it starts, really seems like one big networking event.

This year, the event took place at a special tent set up in the Pasadena Convention Center, about 25 minutes from Burbank Airport, the closest airport to Pasadena. Pasadena is a clean, diverse city that hosts the famous Rose Bowl and Rose Parade. I enjoyed walking around the older downtown area, i.e. the Old Pasadena section, which has several independent stores and old churches. While there, I discovered that President Jimmy Carter would be appearing at Vroman's bookstore to sign his new book about his mother. My friend bought a book, which came with two entrance tickets to see President Carter.

The meeting itself lasted about three and a half hours. Refreshments were basic--just coffee, some lemon bars, and some unsavory cookies. Mr. Munger had some interesting quotes, as always, in his version of "Socratic solitaire":

My favorite: "There will be a lot of chicanery in the new world."

We should expect returns of around 4 to 5% annually in the near future.

When talking about the overbuying of homes, which led to the bubble in housing prices, and the subprime mess, Mr. Munger talked about how investment "activities rely on momentum from self-fulfilling prophecies" and blamed greed, envy, and terrible accounting. Munger's fans were delighted when they heard, "Include me out," a favorite Mungerism.

Mr. Munger told a delightful story about keeping the big picture in mind and being willing to buck conventional thought. He talked about a boy in mathematics class who had to answer the question, "How many sheep are left in the pen when the gate is open and one leaves out of the ten?" The entire class told the teacher, "nine." One student, Billy, said, "ten." "Poor Billy," said the teacher, "you just don't understand math, do you?" Billy said, "No teacher, you don't understand sheep." That story got some uproarious laughs from the crowd.

"In accounting, liabilities are 100% good. It's the assets you have to worry about."

"Greenspan overdosed on Ayn Rand."

Those were some of the highlights of the day. Overall, it was fun listening to Munger speak, and I bought his book, Poor Charlies Almanack. Mr. Munger signed it and took a picture with me.

Afterwards, my friend and I went to see President Carter at Vroman's. Secret Service ushered everyone along very quickly, and people who wanted to take pictures could only do so for a few seconds before being told to move on. President Carter looked healthy and vibrant, and it was fun being in the presence of a former U.S. President, even if only very briefly. One tip: you cannot put your hand in your pocket anywhere near the President. I put my hand in my pocket to take out my camera, and was approached by two Secret Service agents almost immediately, who backed off only when they saw the camera.

I was exhausted when I returned to the airport the same day to head back to San Jose, but all in all, it was a pleasant experience, and one I would do again.