Lesson 25: People who really love you are the ones who you scramble through things with; adversity is the sinew of your successful relationships and personal bonds and affection and every other damn thing.
Lesson 26: Life is series of adversities and each is an opportunity to behave well or badly, and we need techniques for welcoming adversities at old age to get through it.
First thing to tell Chinese who want to invest in US: “If I were a Chinese person, I would invest in China and not the US. The fruit is hanging lower, and companies are more entrenched. It’s a mistake to look for a pie in sky when you have a big piece of pie in your lap; At current prices, they would do better investing in China.
Big ideas: “Be intelligent in improving yourself. It’s way better to take on a big idea that comes up than tiny ideas you won’t face – why piddle around and ignore the big ones? The problem in front of you is solvable if you reach outside your discipline over the fence into other disciplines. I shouldn’t have been so brash as I was and am now in flouting this, but I haven’t completed my self-improvement process (laughter). It is so much fun to get an idea by going out of one’s discipline. I don’t observe professional boundaries. I am the person who crosses off PSA test at the doctor. I don’t give opportunity for the doctor to do something dumb. If the cancer is too early, then I can find out in three months, or too if the cancer has grown too fast, then why tell me? I think I know better. I am always doing it and recommend getting out of your boundaries too when you’re my age with the PSA. But women, I can’t help you.”
Investment choice of entity: “It is plumb crazy to invest in a corporation that owns common stock compared to a partnership, which is just what Berkshire does. It is not the logical way to do it with the double tax. It is totally asinine to invest in stocks via c-corp. Berkshire’s publics keep going down as a percentage of the business, so it’s not as relevant going forward, but as a rule, I wouldn’t even consider it. Avoid it. You’re totally right, which you already knew.“
China: “What I like about China is they have some companies that are very strong and still selling at low prices. And the Chinese are formidable workers and they make wonderful employees. The Chinese government really tries to help its companies unlike India. I admire China’s 1.5 billion in poverty being taken up so fast. It’s an incredible achievement. They have bullet trains to heart of city. And they didn’t do it by borrowing from Europe or how we (the US) did it. They did it by saving up as a poor country and counting on deferred gratification. Their problem is they like to gamble, and they actually believe in luck. That is stupid. You want to believe in odds, not luck. Too many people believe in luck and gamble, and that’s a national defect.”
What the world will look like in the future: “What won’t change about business it still won’t be that damned easy – there’s lot of trouble sure to come. At the end of life, you know it’s all over and that’s the game – knowing when you start that you have to lose – dogs don’t. The law of thermodynamics should be restated to be that you can’t win or get out of game. If you do well with what you started with and help others and set a reasonable example, you played well. In our directors meeting we were talking about glitches that lead to reverses and troubles and scrambling. People who really love you are the ones who you scramble through things with; adversity is the sinew of your successful relationships and personal bonds and affection and every other damn thing; life is series of adversities and each is an opportunity to behave well or badly, and we need techniques for welcoming adversities at old age to get through it.
Lesson 27: Converting corn to ethanol is the stupidest idea.
On his fee structure starting out: “I copied the Buffett formula for fee structure. I don’t like business scraping off the top. If you’re advising others, you should be alongside investors. Like so many things I like, this is not spreading much. My net influence in the world, like Warren’s influence, is small. There may be a total of three examples of executive compensation at companies who structure it like we did.”
Agriculture: The productivity of an acre is up 300%, which has prevented starvation on earth. This started with Rockefeller, Borlaug, and so forth, and we need another doubling and will probably get it. It’s amazing how efficient farmers are. They’re not a mix of socialization or stupidity or inefficiency. Really they’re the glory of civilization, except I hope they don’t use up the topsoil too fast. Farm subsidies matter to farmers who get richer and richer. Yes, it is peculiar to subsidize the filthy rich to use up topsoil faster, and converting corn to ethanol is the stupidest idea. I’d rather jump out of a 20th floor window to see if I can fly, and I am the king of stupid ideas. But the agricultural revolution has been remarkable; if we can turn oil into food, why produce every last drop of oil and sell it? I may have 3-4 people who agree with me in this room. In the rest of world, I am all alone.”
Lesson 28: Rationality Is A Moral Duty
On spirituality: “Just because you don’t have a specific theology, and I don’t – when I learned about the talking snake in the Garden of Eden, I knew it was fake. I was young but didn’t believe the teacher at bible school and haven’t changed. That doesn’t mean I’m not spiritual; I just don’t need a talking snake to make me behave well. Rationality is a moral duty. Rationality is a moral duty. If you’re capable of being reasonable, it’s a moral failing not to be. We should all take this on even if we are a little stupid. Yes, we need a social safety net, too but not one as dumb as the one we have now.”
On the Munger Tolles law firm office move: “I was cleaning out office when moving and found these damn things (stories) and thought ‘my God , I will give copies to all these people coming here from India and China.’ – I am just now revisiting some of my past screeds.” (see attached to these notes)
Lesson 29: Do I care if someone piles up a lot of money and leaves it to some foundation? That’s not my idea of evil.
Taxes: “I don’t know what the border adjustment tax is, and those proposing it don’t know what it is either, so stay calm. But deep revision is a good idea. We need a consumption tax. Do I really care if someone piles up a lot of money and leaves it to some foundation? That’s not my idea of evil. But people living high should be taxed.”
Lesson 30: Don’t use your body by being stupid in handling it.
Deferred gratification: “Don’t use your body by being stupid in handling it. Same for your money. The only way to win is work a long time where doesn’t come easily, in a long grind. Think of doctors with the night shifts. It’s an honorable activity being a doctor. I admire the life of a doctor more than I admire the life of a derivatives trader, and I hope you do too.”