Excellent Book: Charlie Munger For All Seasons
Point 25. When you are 81, you’ve got bigger problems than diminished returns.
Too high is a funny word – they are high to those of us who are accustomed to finding real bargains. But it’s not a promise [that there will always be such bargains]. I don’t think it’s unfair; I don’t think it’s too high in the sense that we’re being deprived. Our future prospects are way worse than what they used to be. But I’m 81; I’ve got bigger problems than diminished returns. (Laughter)
Point 26. It’s hard to spot bad people.
It’s hard to judge the combination of character and intelligence and other things. It’s not at all simple, which explains why we have so many divorces. (Laughter) Think about how much people know about the person they marry, yet so many break up. It’s not easy, it is in some cases. If people are splashing around with money like Dennis Kozlowski, with vodka at parties coming out of some body part, and if it looks like Sodom and Gomorrah, then maybe this isn’t what you’re looking for. (Laughter) But beyond that, it’s hard. If you have some unfortunate experiences while getting that knowledge, well, welcome to the human race. (Laughter)
Point 27. It’s Difficult to Make Money Investing in China
I think it’s very tough to make money in China. A lot of terrible things can happen to you and you have no good antidote. China makes a lot of cheap well-made goods, but it could be that we won’t have attractive investment opportunities in China even though the country may prosper.
Point 28. We Want the Chinese to Get Richer
China is a nuclear power. We have no option but to have friendly relations with China – anything else would be really stupid. We want the Chinese to get richer and richer. I’m not unhappy that Wal-Mart is expanding in China.
Point 29: There Is Big Risk of a Calamity Investing in Currencies. Better Follow Warren Buffett Model.
I do think that it’s conceivable that some enormously talented person that studied economics and relative value of currencies and devoted his life to it and only bet occasionally, that such a man could do very well [investing in currencies]. It’s not my line of talent.
I’d rather do something that’s not such a zero-sum game. If I invest in equities – the businesses are growing; for example, Wrigley’s will make more gum. It’s automatically working for me, even if I do nothing. But if I invest in currencies, it’s not working for me.
If I had to make a living outside of equities, it might be in currencies. But I don’t have to do it. There’s less chance of a big calamity in equities. The problem with currencies is that it sucks you into margin, and then if it moves against you but you’re sure you’re right, it sucks you in deeper. And then one more twist of the screw…
If you’re already rich, why would you live under such conditions? I think more people will do well if they follow the Warren Buffett model.
Point 30: I Think the Country Is Better Off for Having Wal-Mart. It’s a fabulous enterprise that does a lot of good and delivers value to the customer and that’s why it’s successful.
With Wal-Mart and the like getting so powerful, have we made a pact with the devil? My answer is I think the country is better off for having Wal-Mart. It’s a fabulous enterprise that does a lot of good and delivers value to the customer and that’s why it’s successful. I think the country is better off for having this system for distributing goods.
When I go into Wal-Mart, I see elderly people as greeters – they’re working part time and it gets them out of the house, but people say, “Isn’t Wal-Mart nasty [for exploiting the elderly]?”
As far as I’m concerned, I think Wal-Mart does a lot of good with efficient distribution.
I’m a director of Costco. Do we really want our entrepreneurs not to try very hard? Do we really want to wake and say, “Let’s stop competing so hard?” I say, let winners run instead of investing in losers. I like Wal-Mart’s culture. As far as I’m concerned, Wal-Mart is one of the glories of civilization.
Notes from 2005 Wesco Financial Annual Meeting – May 4, 2005 – By Whitney Tilson
