I recently attended the annual shareholder meeting of Daily Journal Corp, a publishing company based in Los Angeles, US. I am not a shareholder in DJCO, but this was a chance to hear the 94-year old Charlie Munger, who is its chairman and director.
Mr. Munger answered questions from the audience for around two hours – on wide-ranging topics like bitcoins, banking, artificial intelligence, and life – including one from me (see below). Here are excerpts from the notes prepared by Adam Blum (see the link to entire notes at the bottom of the post).
On searching for ideas – The two rules of fishing are to fish where the fish are, and don’t forget the first rule. Investing is the same thing. In some places, no matter how good a fisherman you are, you won’t do well. Life is a long game. Take it as comes and do the best you can, and if you live to an old age, you will get your full share of opportunities, which will be two in total, maybe, but seize one of the two, and you will be alright.
On personal success – Approach life like [Thomas] Carlyle, and get up every day doing the best you can. Marry the right person. Everyone here who’s your age will do well. You’re not that mad at the world; instead you’re trying to cope with how to make it a little better. If you were here with placards shouting, you wouldn’t have bright future. Avoid extremely intense ideology, because it ruins your mind. The kids with the placards are pounding the idiocy in instead of shouting it out.
On cryptocurrencies – I regard the bitcoin craze as totally asinine to create some manufactured currency … I expect the world to do silly things from time to time, because everybody wants easy money. It’s just disgusting that people are taken in by something like this. Who would want one’s children growing up buying things like bitcoin? I hope to god my family doesn’t buy it. It’s noxious poison. People love it, because the computer science is interesting to those with a mathematical bent, but you can get terribly good at torture if spend time on it. China stepping on it hard is right. Our government’s more lax approach to it is wrong. The right answer with stuff that bad is to step on it hard. It’s the government’s job.
On commodity investing – I am hardly an expert at commodity investing.
On banking – Banking is a very peculiar business. The temptations to do something stupid are way greater for a bank CEO. Banks are a dangerous place to invest. There are a lot of ways to make the near-term future look good by taking risks that affect long term future. There are a few exceptions. Berkshire tries to pick a few exceptions as best we can when we look at banks. I haven’t anything more to say except that I am right.
On overvaluation of Google, Facebook, Apple and Amazon – I don’t know. Next question.
On marriage – Happiness comes from the partner you choose. For me, the best thing was to find a partner who had low expectations. If you’re constructed the way I am, that’s the only way to go.
On money management (Peter Kaufman) – I call them the five aces: (1) total integrity, (2) actual deep fluency in whatever you say going to do on behalf of the client, (3) a fee structure fair in both directions, (4) an uncrowded investment space, and (5) a long runway (a manager who’s reasonably young in age). If ever you find one with all 5 qualities, put money there immediately and put as much as you’re allowed to put with them.
On Artificial Intelligence – People who study it don’t know the answer, and of course I don’t study it. I am not sure the AI will create an economic revolution. I can see that AI is working in the marketing arrangements of Facebook and Google, and so it’s working well. I don’t know what exactly it will be. I’ve done so well in life by using organized common sense that I never wanted to get into fields like AI. I can walk along shores picking up boulders of gold. Why go sift and pan in the mines?
Advice for teachers and parents – I got the opportunity to Ask Mr. Munger this question –
Vishal: Good Morning, Mr. Munger. My name is Vishal. I come from India. The friend who asked me to come here said that Mr. Munger is not getting any younger, but I think he was wrong, when I see you. So, thanks for the opportunity. I am a teacher of value investing back in India and a parent. My question is, what would you advise me as a teacher and as a parent to help my kids and my students become better thinker and decision makers and be happy in life. Thank you.
Charlie Munger: That’s a wonderful question. I would say, look, the minute you have the attitude you’ve already expressed, you’re probably going to win in everything you want to win at. Then everything you are doing, you just keep trying to live a good life and a constructive life and to be rational and to be honorable and to have reasonable expectations. Of course, you are going to get ahead over time. The best way to teach is by example. And of course, example works better when you win and behave right, then you’re more likely to win. So, I would say, you are on the right track already. All you have to do is just keep at it.
Click here to watch the video
Most of what Mr. Munger said wasn’t incremental learning for people who have followed him and Warren Buffett for long. But who doesn’t want constant reassurance that you can survive and thrive in a world full of noise and anxiety by practicing the right behaviour and principles, and maintain your sanity even as many others are losing it all?
That’s exactly what guys like Munger and Buffett provide to their followers – reassurance – like he did at the DJCO meet. And that meant a lot.
Read – Adam Blum’s Notes from DJCO 2018 AGM
Thanks for sharing . Apart from providing credit for your writing ,I always sense an honesty in your article .Keep writing .Hope we cross our path sometime in life 🙂 .
“On overvaluation of Google, Facebook, Apple and Amazon – I don’t know. Next question.”
That is wrong. FANG stocks – Facebook, Amazon, Netflix, Google. Not Apple. Apple is Berkshire’s biggest stock in Portfolio. Please correct that
Wow… wonderful…
I am eagerly waiting for safalniveshak post.
Thanx for your outstanding sharings.
Jitendra .soni
very well asked. Mr munger doesn’t gave any extraordinary answer. Me told what is the truth. But sometimes Vishal, we need constant pamper and approval from someone who is good at things even than ourselves. Warren buffet once said , to succeed in life, you don’t have to do everything good in life. To succeed in life, you just have to do somethings right.
Its always a pleasure to listen and read your articles. When the big names were gone from this world, the world will need another sets of individuals who will guide them and lead them in investment space through their ideas that will work in that point of time. And when the time came, i know you will be there to guide many of the young investors like me in that point of time.
Thanks for sharing such wonderful post and giving us first hand experience also through audio-visual clip..
Hi Vishal,
Your question is simple, sensible and sincere, given the occasion and to the person you are speaking.
The answer sounds like a blessing from the old wise man than a reply.
God bless Safal Niveshak.
P R Lakshmi Narayanan
Hey vishal.. as always very nice read.. thanks for sharing.
you got to attend CM meeting… congrats on that part .. 🙂
When do I get to attend your Delhi workshop? Eagerly waiting.
Awesome. Keep up the good work. I am learning lot from you.. recent PNB fiasco is evident why you don’t like banking stocks. Missed the graphite bus when you mentioned about it in Mumbai seminar in 2015(I guess).. nice job.
Vishal,
You literally are going places 🙂
Reassuring it indeed is to know that you are headed in the right direction, for I am tailgating you.
Regards
Good to see your spotlight on the DJCO Munger shareholder meeting, which isn’t quite as famous as the Berkshire meeting, but every bit as educational in my view. “Mungerims” is a field of study in itself, that I believe will be taught in business schools someday!