Money and Finance
- Improving Rationality...
Someone over at the Corner of Berkshire & Fairfax posted their question and Charlie Munger's answer from yesterday's Daily Journal Meeting this is worth repeating here as well: Hi Charlie, I'm JD from Phoenix. At Berkshire last...
- On Checklists And Not Being Stupid...
From Charlie Munger: The Complete Investor: A lattice approach is, in effect, a double-check on the investing process. But instead of just two checks, you are checking the result over and over. Munger believes that by going over your decision-making process...
- Investor Syntactic Sugar - The Lighter Side Of Berkshire
I wrote up my notes for the Omaha trip to Berkshire annual meeting yesterday. The event is a lot of fun, and they ham it up pretty good. Warren and Charlie had a contest to see who could sell the most Heinz ketchup, complete with price war. Along those...
- Omaha Trip Report
The Berkshire Hathaway weekend is a lot of fun, its great to hang out with friends and talk and learn together. Every year there is something new. This year, I completed what I call the Omaha Triathlon part 1 - Berkshire Hathaway meeting, part 2- the...
- Markets Are Made Up Of People
If you've followed up on Charlie Munger's book recommendations, then you'll know Robert Cialdini. Cialdini is most famous for "Influence", and he joins a cavalcade of authors at the big book signing every year in Omaha at the annual Berkshire...
Money and Finance
A few notes from the Berkshire Hathaway Annual Meeting
I'll put up some of the better transcripts that start to appear over the next few days, but until then, here are a few highlights from the notes that I took during the meeting. These are based on my scribbling and aren't exact quotes, just summaries of what I thought were interesting remarks.
Munger: People accomplish more if they pick their spots for public disapproval. You should be suspect of people that go around shouting their disapproval about everything.
...
Buffett: Charlie and I view our cost of capital as what can be produced by our second best idea.
Munger: I've never heard an intelligent cost of capital discussion. Warren's way of having every dollar retained having to produce at least a dollar of market value is the best way to describe our cost of capital. But that's not what people mean when they say it, especially in business schools. But it's simple; our way is right and their's is wrong.
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Munger: If there's any secret at Berkshire, it's that we're pretty good at ignorance removal [i.e. learning machines]. We were pretty stupid when we bought Sees [because we almost said no]....we were just barely smart enough to buy it. Sees' main contribution to Berkshire was some ignorance removal [i.e. taught them first hand the value of a great brand and a great business].
Munger: We've been quite good at both removing ignorance and scrambling out of mistakes. Both are quite useful. [He used Diversified Retailing and Berkshire textile mills as examples of scrambling out of mistakes].
...
Buffett: I've ventured outside of my circle of competence in retail more than anywhere else. It's easy to think you understand a certain retail business and then find out you don't.
Munger: Competency is a relative thing. What I needed to get ahead was to compete against idiots. And luckily there's a large supply.
Buffett: When trying to learn an industry, I'd talk to maybe 8-10 CEOs to help gain an understanding, and then I'd also ask them: 1) If they had to put all of their money in one company in their industry and couldn't touch it for 10 years, what company would it be?; and 2) Alternatively, if you had to sell one company short and hold the position for 10 years, which company would it be?
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Munger: Selling a wonderful product at a very low price is a good model [e.g. Costco and Geico]. A lot of people say they have that, but few do. It's easy to talk the game, but hard to live it. It's against human nature to want to lower price and increase quality.
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Munger: I think it's better to have slow growth than extremely high inflation as a result of some politicians deciding to keep printing money. I'll never forget [the example and lessons of] Weimer Germany.
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Buffett and Munger: The prosecution of individuals has more effect than the prosecution of corporations in changing behavior; though it is easier to go after companies [because they just write a check to settle, so the prosecutor has an easier case. The individuals are a tougher case because they are fighting to stay out of jail instead of just being able to write a settlement check].
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Buffett: It's probably not a good idea for super rich people and companies to own businesses that are liability targets [e.g. helmet companies, airport security companies].
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Munger: The greatest way to get a spouse is to deserve one. The same goes for getting a good business partner.
- Improving Rationality...
Someone over at the Corner of Berkshire & Fairfax posted their question and Charlie Munger's answer from yesterday's Daily Journal Meeting this is worth repeating here as well: Hi Charlie, I'm JD from Phoenix. At Berkshire last...
- On Checklists And Not Being Stupid...
From Charlie Munger: The Complete Investor: A lattice approach is, in effect, a double-check on the investing process. But instead of just two checks, you are checking the result over and over. Munger believes that by going over your decision-making process...
- Investor Syntactic Sugar - The Lighter Side Of Berkshire
I wrote up my notes for the Omaha trip to Berkshire annual meeting yesterday. The event is a lot of fun, and they ham it up pretty good. Warren and Charlie had a contest to see who could sell the most Heinz ketchup, complete with price war. Along those...
- Omaha Trip Report
The Berkshire Hathaway weekend is a lot of fun, its great to hang out with friends and talk and learn together. Every year there is something new. This year, I completed what I call the Omaha Triathlon part 1 - Berkshire Hathaway meeting, part 2- the...
- Markets Are Made Up Of People
If you've followed up on Charlie Munger's book recommendations, then you'll know Robert Cialdini. Cialdini is most famous for "Influence", and he joins a cavalcade of authors at the big book signing every year in Omaha at the annual Berkshire...