Investment Philanthropy

42. DJCO Annual Meeting 2017: Part 2: Lessons 7-12 From The Maestro

Ref: Adam Blum’s Notes

https://www.scribd.com/document/339530598/Munger-Daily-Journal-Annual-Meeting-Notes-by-Adam-Blum-2-15-17#from_embed

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Lesson 7:  Polymath Is Not For Everyone

On being a polymath: “Operating over many disciplines as I do is not a good idea for most people. It was a wonderful path for me, but the correct path for others is to specialize and get good at something that society rewards, but spend 10-20% of time on ‘big ideas’ outside the specialty. Otherwise, you become a one legged man in an ass-kicking contest. You have to know the ‘big ideas’ if you live life outside a cave.”

Lesson 8:  Lollapalooza Effect Is Not Linear.

Lollapalooza effect: “I coined it when I realized I didn’t know psychology. I bought three comprehensive psychology textbooks and read through them, and like usual I thought they were doing it all wrong, and I could do it better. When three or four tendencies were operating at once in same situation, the outcome wasn’t linear, it was straight up. The scholars were ignoring the most important thing in profession, because they couldn’t do experiments with so many variable operating together, and then they didn’t synthesize it with other disciplines, because they didn’t know squat about other disciplines. I am lonely, but I am right.”

Lesson 9: The Investment Business Is One Where You Can Get Better With Age. (Sic: Unlike Boxing Where You Get Better Until A Certain Age Or Meet Mike Tyson.)

On Buffett becoming a better investor with age: “If you’re in a game and learning more and honing skills, of course you do better over time. Berkshire would be a very modest company if Warren never learned anything. We went out and bought whole entire businesses – something we’d not have done early on as stock investors. And Iscar at five times book value, Ben Graham would’ve never bought that. We’ve learned better over time, and we can keep learning and are still doing it.

Lesson 10: Circumstances Have Changed. We’ve now bought AAR: Airlines, Apple and Railroads.

Lesson 11: You marry the best person who will have you.

He’s [Buffett] changed when he’s buying airlines, and he’s changed when he’s buying Apple. The nice thing about the game we’re in is that we can keep learning. We’re in the press for airline stocks when in 2013 we thought it was a joke, it was such a terrible business. Today, if you put all our holdings together, we own a small airline. It violates the total catechism. It’s the same thing for railroads scaring us away with all this trucking competition – it was a terrible business for 80 years, and then we become a massive owner when they finally got it down to four main railroads. This morning I was with my daughter-in-law, and she bought round trip tickets to Europe for $400 with taxes – huh [aghast at how cheap it was]? Maybe we shouldn’t be in the airline stocks. I frequently talk to Warren about old days. We shot fish in barrel. We even waited til they slowed down and used a shotgun. We get little edges now, while before had total cinches. But it isn’t any less interesting. We bought Exxon Mobil as cash substitute – we thought it’d do a little better than cash at the time – but early on we never would’ve done that. Think what changed when we bought Apple and a bunch of airlines’ is now a lead story about us in the press. But we’re just adapting to a business that’s gotten a lot more difficult. I don’t think we’ve gone crazy. I think we’re adapting. Now the odds are just a little in our favor. We’ll take that advantage, but it’s harder. You marry the best person who will have you. Be satisfied with the type of advantage we didn’t used to get, caused by getting so enormously rich – it’s not a bad trade off.”

Lesson 12: Donald Trump is not wrong in everything, Just roll with it.

On saying Trump wasn’t morally qualified to be President: “I’ve gotten more mellow. Think about the good. Reexamining tax system is constructive. All these crazy republicans and social security – Trump is right in not touching social security. I am with Donald Trump. He’s not wrong in everything, and just because he isn’t like us, roll with it. If there’s a little danger, what the hell, you’re not going to live forever anyway.

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