Charlie Munger’s 2015 Daily Journal Annual Meeting
“It’s always wise to be prepared for it getting worse. Favorable surprises are easy to handle. It’s the unfavorable surprises that cause the trouble.”
“Concentrating hard on something that’s important, I can’t succeed at all without doing it. I did not succeed in life by intelligence. I succeeded because I have a long attention span.”
“That is the most important governmental leader, the most important nation builder who ever existed in the history of the world. There is no other record equal to Lee Kuan Yew’s unbelievable achievement.”
“I know no wise person who doesn’t read a lot. I suspect that you can read on the computer now and get a lot of benefit out of it, but I doubt that it’ll work as well as reading print worked for me.”
“It shows how hard and dangerous it is to make money in a commoditized business, and how many businesses that you formerly thought were hugely advantaged can be commoditized.”
“But we have a saying at Berkshire that when a man with a reputation for genius takes on a business with a reputation for tough operating conditions, it’s the reputation of the business that’s likely to prevail. Without government help, getting electric cars off the ground is really hard. In China, it works a lot better than it does here, because their air is worse.”
“Through enormous discipline, enormous will, and enormous intelligence, 3G has adopted a zero-based budgeting system which is more extreme than anybody else’s. Yet they’ve been able to do it time after time in a way where the place ends up as strong or stronger after they’ve removed a lot of the cost. Of course, that’s a very interesting example.”
Wang Jianlin, a Billionaire at the Intersection of Business and Power in China
Jeff Bezos in Amazon Annual Letter
investment philosophy from Day 1
We will continue to focus relentlessly on our customers.
We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.
We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up our investment in those that work best. We will continue to learn from both our successes and our failures.
We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.
When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.
We will share our strategic thought processes with you when we make bold choices (to the extent competitive pressures allow), so that you may evaluate for yourselves whether we are making rational long-term leadership investments.
We will work hard to spend wisely and maintain our lean culture. We understand the importance of continually reinforcing a cost-conscious culture, particularly in a business incurring net losses.
We will balance our focus on growth with emphasis on long-term profitability and capital management. At this stage, we choose to prioritize growth because we believe that scale is central to achieving the potential of our business model.
We will continue to focus on hiring and retaining versatile and talented employees, and continue to weight their compensation to stock options rather than cash. We know our success will be largely affected by our ability to attract and retain a motivated employee base, each of whom must think like, and therefore must actually be, an owner.
China in Africa
Redirect a good link from
by– June 17th, 2014
Trading & Investing Rules, Aphorisms & Books
• In Defense of the “Old Always” (Montier)
• The golden rules of investing (India)
These are more general rules, not necessarily about investing:
“Charlie will always emphasize the fact that we ought to state the other guy’s case as well as he can and better than he can if possible. That’s when you get to where you can think through your own case better, and that may be his legal training to some extent. But he starts out stating the opposite case.”-B
Retailing is a tough, tough business, partly because your competitors are always attempting and very frequently successfully attempting to copy anything you do that’s working. And so the world keeps moving. It’s hard to establish a permanent moat that your competitor can’t cross. And you’ve seen the giants of retail, the Sears, the Montgomery Wards, the Woolworth’s, the Grants, the Kresges. I mean, over the years, a lot of giants have been toppled. -B
BECKY: Let me ask all three of you. All three of you are investors that spend a lot of time thinking about things. I wonder, with the stock market hitting new highs, if that concerns any of the three of you, if things are starting to look expensive at these levels. Bill, what do you think?
GATES: Well, relative to interest rates, equities are still a bargain. And, you know, so you’ve really got to have an opinion about interest rates to be an investor of any kind in this market. It’s such a key factor. You know, by historical measures, yes, interest rates were very different in most of those time periods.
BECKY: Have you been surprised that interest rates have stayed so low this year?
GATES: Well, the central banks are making sure that’s the case. They are trying to stimulate these economies as best they can. The fact that it requires the gas pedal being pushed to the floor as much as it does is an amazing and even a little bit scary thing.
BECKY: Charlie, what do you think?
MUNGER: Well, I think under what Bill Gross calls the “new normal,” common stocks may not do quite as well in the future as they did in the last 100 years. But that doesn’t mean that the Mungers are going to sell their common stock in an effort to buy them back later cheaper.
BECKY: Warren, how about you?
BUFFETT: Well, the option is to own equities or own fixed dollars. I think it’s clear you own equities. I do not think they’re in crazy territory. But most of the time stocks have been in a zone of reasonableness over my lifetime. I think they’re in the zone of reasonableness now. And certainly if you said to me it’s either going to have to be long the 30-year bond and short an index fund for 30 years or vice versa, it would be long index fund. I would be long in stocks. ”
Good read off Value Investing Congress Las Vegas Notes 2014
– John Lewis (Osmium Partners):
As Stumpf’s bible puts it: “There are only three ways a company can grow. First, earn more business from your current customers. Second, attract customers from your competitors. Or third, buy another company. If you can’t do the first, what makes you think you can earn more business from your competitors’ customers or from customers you buy through acquisition?”
“There’s only three jobs at Wells Fargo: taking care of existing customers, getting new customers and managing the risk of those two things,” adds Loughlin. “Nowhere in there am I talking about profitability or market share.”
prior 3/15: Session 1-7
3/16 – 3/22: Session 8-9
3/23 – 3/29: Session 10-11
3/30 – 4/05: Session 12-14
4/06 – 4/12: Session 15-16
4/13 – 4/19: Session 17-18
4/20 – 4/26: Green book
4/27 – 5/03: Green book
5/04 – 5/10: Practice Exam
5/11 – 5/17: Practice Exam
5/18 – 5/24: Practice Exam
5/25 – 5/31: Reviews
6/01 – 6/07: Reviews