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Pearls of Wisdom 11. Frustration of a “Good At Heart Politician”: You know what should be done, but can’t get it done under the constraints of politics.
Q8: CM: Berkshire vs Wesco?
CM: Berkshire is better. Wesco sells too high because you people are cultists. If I were buying today, I’d buy Berkshire. That is the place the entrepreneurs want to join. Berkshire is where people want to be. It is a historical accident that Wesco is independent.
[Munger now invites several attending journalists to ask questions.]
Q9: Mattias Schwartz from Harpers Magazine. You talked about what you would do if you were President. What would you do if you were Sec of Treasury?
CM: I think they have been doing pretty well. I agree with Hank Paulson and his work on the toxic asset scheme. That said, it was not nearly strong enough. I think he deserves credit for changing his opinion/adapting as facts changed. Geithner and Summers are very good. They are terribly constrained by the politics of their locale. You know what should be done, but can’t get it done under the constraints of politics. I never had interest in Government. I wouldn’t want to be prominent with someone pounding on my head with two hands tied behind my back.
Q10: Buck Hazel, Motley Fool. What would you do…?
Pearls of Wisdom 12A. Reduce incentives to go to Wall Street. Change laws so little hamlets couldn’t reject rational action.
Pearls of Wisdom 12B. Go “hell for leather” for electric grid and electric cars.
Pearls of Wisdom 12C. No guarantee any geographic area shouldn’t lose what it formerly enjoyed.
CM: I would reduce incentives to go to Wall Street. I would make Wall Street purposely less efficient. I would invest in the electric grid, and I would change laws so little hamlets couldn’t reject rational action. I would go hell for leather for electric grid and electric cars.
It is unthinkable that any geographic area shouldn’t lose what it formerly enjoyed. It is natural that some places go down while others rise in capitalism. If someone my age can cheerfully die, some geographic area can see its main industry shrink.
Pearls of Wisdom 13. If someone my age can cheerfully die, some geographic area can see its main industry shrink.
Q10: Car incentives?
CM: Toyota has a problem in the world I forsee. Detroit will have a hell of a problem when Toyota has a problem. To solve Detroit, I would throw out all the contracts, and let one company take only what they want [from the factories and models and dealers], and abandon the rest. That would have a 40% chance of working. The same thing happened with British Leland, and after billions of pounds, it didn’t work. These people haven’t covered themselves with glory. There is nothing in this crowd that makes me feel the way I feel about some of other people that are bringing the new world in a rational way. I remember when Rochester had two of the best companies in world, Xerox and Kodak. Is this end of world now, now that someone else is winning? They have great medical centers and nice cheap houses. It is unthinkable that any geographic area shouldn’t lose what it formerly enjoyed. It is natural that some places go down while others rise in capitalism. If someone my age can cheerfully die, some geographic area can see its main industry shrink.
Pearls of Wisdom 14. On Investments: Important to Manage Expectations & There’s a lot of Irrationality.
Q11: Cathy Kristoff. In the last year individual investors, have become disillusioned, believing now that Wall Street is corrupt. They worry that they shouldn’t trust corporate stocks. Hundreds of shareholders have said I’ve sold out of stocks, citing Ponzi schemes, and exorbitant pay.
CM: First, everyone should maximize their social security benefit. What to do if you have investable sums? I think to expect a lot is irrational. In other words, you are likely to be happier if you are aiming low. The right way to get felicity is by aiming low. Not many can get felicity by aiming high. Having realistic expectations is important. You should defer consumption, and do some investing. Now stockbrokers in this room are smart, but they aren’t normal. In general stock brokers are a disaster waiting to happen.
Source: http://www.valueplays.net/wp-content/uploads/The-Best-of-Charlie-Munger-1994-2011.pdf