Investment Wisdom

35. Eleven Gems From Financial Times Interview in July 2009

Excellent Book: Charlie Munger For All Seasons

1. Peculiarly Successful and Why Not?

“Warren is peculiar, and I’m peculiar,” says Mr Munger, who is also Berkshire’s vice-chairman. “We’ve got our own peculiar operating model. Nobody else operates the same way or stays in the game in a major corporation as long as we have, so we’ve got a different model. And we like it that way.”

2. If It Wasn’t Value Investing, It’s Not Intelligent Is It?

Working 1,500 miles apart – Mr Buffett remains in his hometown of Omaha, Nebraska – the two “intellectual pals” have built up a stellar record by sticking to the basic principles of value investing: they buy companies in industries they understand, with managers they trust, at cut-rate prices. “We think all intelligent investing is value investing,” he says. “What the hell could it be if it wasn’t value?”

3. Cigar Butt Investing Is Getting Difficult, Too Many People Are Looking For The Same Thing

While Mr Buffett’s mentor, the economist Benjamin Graham, is considered the father of value investing, it is Mr Munger who is credited with helping Mr Buffett evolve beyond buying stocks for no other reason than that they were cheap.

“That worked fine in the period after the 1930s,” Mr Munger says. “I don’t think it works nearly as well now. Too many people are doing it.”

4. If People Just Rush To A Fad That Worked Well Lately, A Lot Of Them Are Going To Get Creamed

Many of Berkshire’s holdings, from longtime investments such as Coca-Cola and Wells Fargo to last year’s purchase of General Electric’s preferred shares, are blue-chip companies considered the best at what they do.

The strategy sounds simple enough, but Mr Munger says few investors practise it. “You can’t believe the way that conventional wisdom invests money,” he explains. “They tend to rush into whatever fad has worked lately. In my opinion, a lot of them are going to get creamed.”

5. Mandatory Meetings We Do. Ad Hoc For Everything Else.

There are no regular meetings at Berkshire, no corporate-speak or standard management memorandums that help define the cultures of so many companies.

“The legally required meetings for corporate governance, we do those,” Mr Munger says. “Everything else is ad hoc.”

6. What’s Better Than One Person Tap Dancing To Work? Well, Two Partners Tap Dancing To Work

“When Warren talks about tap dancing to work, he’s not kidding,” he says. “His spirits lift as he goes through the office door. And I’m the same way.”

7. Public Fury With Wall Street Was Justified

“The public is furious with Wall Street,” he says. “Everyone who is in a position to observe this says they’ve never seen this much fury to one particular industry.”

Is it justified?


8. Disagree Without Having An Argument: Hear, Hear, My Friends.

While they no longer speak daily, rarely will more than a week pass between conversations. They still frequently send one another documents and books to read. And while they often disagree, Mr Buffett once told the Financial Times that they had “never had an argument”.

9. A Different Kind Of Fun But It’s Fun All The Same

“We are having a huge amount of fun understanding how the world works,” Mr Munger says.

10. Warren Buffett And I Are In The Same Club. Guess Which One?

“He’s got a real fan club, but for good reason,” Mr Buffett has said. “I’m a member, too.”

11. On Succession: Same, Same But Different.

“There’s no successor to Charlie,” Mr Buffett says. “You’re not going to find anyone like him.”