{"id":323,"date":"2017-02-08T08:18:23","date_gmt":"2017-02-08T08:18:23","guid":{"rendered":"http:\/\/charliemungersays.com\/?p=323"},"modified":"2017-10-25T00:30:38","modified_gmt":"2017-10-25T00:30:38","slug":"33-djco-annual-meeting-2016-part-vi-lesson-26-30","status":"publish","type":"post","link":"https:\/\/charliemungersays.com\/index.php\/2017\/02\/08\/33-djco-annual-meeting-2016-part-vi-lesson-26-30\/","title":{"rendered":"33. DJCO Annual Meeting 2016: Part VI – Lesson 26-30"},"content":{"rendered":"

\"\"<\/a><\/strong><\/p>\n

Excellent Book: Charlie Munger For All Seasons<\/a><\/p>\n

Lesson 26: Philanthropy Through Dormitories: Why Not? Doesn\u2019t Have To Be World Peace All The Time You Know.<\/strong><\/p>\n

Question: Would you please recommend some books that you\u2019ve enjoyed lately?<\/p>\n

Answer: Well you people send me books, like 30 a week.\u00a0 That I tend to skim them so rapidly that I no longer develop the joy of reading I use to when I picked a few books of my own to read. (laughter) So you\u2019re ruining my judgment of books.\u00a0 I can\u2019t resist reading the damn things when you send them to me.\u00a0 No I skim a lot of them, and I like each one in its way, because it\u2019s different from anything else I normally do. \u00a0But I\u2019m no longer a good book source.<\/p>\n

Question: Regarding philanthropic work, what inspired you and what results do you look for?<\/p>\n

Answer: Well, I never wanted to tackle problems like world peace.\u00a0 I read enough biographies.\u00a0 Carnegie thought he was so smart and so rich, so he thought that he\u2019d use his money to create world peace\u2026I watched Carnegie try to do it and I decided that if he couldn\u2019t do it, then I\u2019m going to leave it alone.\u00a0 So I don\u2019t take up those big subjects.<\/p>\n

I like to create dormitories, science teaching facilities, stuff like that.\u00a0 It\u2019s a pretty modest activity, but it\u2019s interesting to me, and it\u2019s easy to do them better than most people do them.\u00a0 I have no feeling that I have any advantage about bringing about world peace, but I am pretty good at dormitories.\u00a0 So I do what I\u2019m good at, and I suggest that all of you do the same thing.<\/p>\n

Lesson 27: Why You Shouldn\u2019t Be Jealous Of Tiger Woods. Aristotle said: \u201cPeople will cheerfully tolerate considerable differences of outcome if they seem deserved.\u201d\u00a0 Nobody minds the fact that Tiger Woods has a big income because he\u2019s the best golfer who\u2019s ever lived.<\/strong><\/p>\n

Question:<\/p>\n

Mr. Buffett has stated that he believes that income inequality is an issue that needs to be addressed. \u00a0With Senator Sanders, he has built his campaign around this issues. \u00a0And with so many from my generation starting to \u201cfeel the Bern\u201d, how would you address this issue?<\/p>\n

Answer:<\/p>\n

Well, that\u2019s a very good question because it\u2019s\u2026we\u2019ve had Piketty and then Sanders. \u00a0My attitude is that both Sanders and Piketty are a little nuts. \u00a0People who really were passionate about egality and wanted to bring it about by government action, gave us things like the Soviet Union, with all the death and agony and the poverty they have now in spite of (having egality). \u00a0And Communist China, they got egality, and think of the unnecessary deaths. \u00a0North Korea?<\/p>\n

I\u2019m suspicious for all of this passion for egality that has such bad examples. \u00a0On the other hand, if you want to look at what non-egality brings us. \u00a0Let\u2019s just take Communist China. \u00a0Communist China had egality, meaning that three fourths of their people were dirt poor, subsistence level poor. \u00a0But they had the advantage of being equal.\u00a0 They were all struggling to get enough to eat. \u00a0And of course when they adopted private property and more property rights, and so on, what they got was living standards that had advanced by a factor of 10 or so more quickly than anyone ever had. \u00a0But of course they had a lot more inequality.\u00a0 You have all of these rich Chinese.\u00a0 \u00a0I think it\u2019s been a very good bargain for the Chinese to have.<\/p>\n

In other words, I don\u2019t think Bernie Sanders understands this at all. \u00a0He doesn\u2019t\u00a0want\u00a0to understand it. \u00a0He has a religion. \u00a0He\u2019s had it for 30 years. \u00a0He\u2019s a Johnny one note. \u00a0It doesn\u2019t matter. \u00a0As an intellectual he\u2019s a disgrace. \u00a0I think that we\u2019d all be glad to have him marry into the family, but as a thinker he\u2019s\u2026pretty bad. \u00a0Now I don\u2019t think he\u2019s any worse than some of our Republicans, but at least they\u2019re crazy in a different way.<\/p>\n

But the egality has one effect in a democracy, which Aristotle comments on, people will cheerfully tolerate considerable differences of outcome if they seem deserved.\u00a0 Nobody minds the fact that Tiger Woods has a big income because he\u2019s the best golfer who\u2019s ever lived. \u00a0Or you find somebody who invents something wonderful, or a surgeon who\u2019s way better than other surgeons, etc , etc. \u00a0But differences in outcomes that are perceived as undeserved tend to disrupt democracy.\u00a0 That\u2019s why Aristotle commented on it in one of his most well known observations.<\/p>\n

And of course who is getting the undeserved money in America now? \u00a0Good question. \u00a0It is not Bill Gates, it is not the people who create the new companies\u2026\u00a0 We don\u2019t resent their success.<\/p>\n

I think we have a lot of underserved wealth that causes a lot of envy.\u00a0 And to some extent, well, I think envy is always a bad idea.\u00a0 I think it\u2019s also inevitable that we\u2019re going to have a lot of it.\u00a0 There\u2019s a lot of undeserved wealth in the financial class.\u00a0 In a lot of cases for doing nothing, or being counterproductive.\u00a0 So I think that fixing the obviously undeserved wealth of a lot of people would be a constructive thing.\u00a0 If you take the ordinary investment partnership, not only do they get capital gains on what for anybody else would be ordinary income, but they don\u2019t pay any income tax at all.\u00a0 Because it\u2019s unrealized appreciation that gradually shifted to the general partner and he can take securities out when he leaves the business and not recognize the gain.\u00a0 They have enormous liquid fortunes being made on paying no taxes at all.\u00a0 Naturally that\u2019s resented.\u00a0 It would be resented even more if people understood it.\u00a0 But that\u2019s not very complicated to understand.\u00a0 And so, I think by and large, feeling unhappy with inequality\u2026Inequality is the natural outcome of a successful civilization that is improving for everybody.<\/p>\n

Most of these guys (wealthy individuals) are not that interested in politics.\u00a0 People like to talk about the terrible influence of the rich on politics.\u00a0 But when you\u2019re rich, you realize how little influence the rich really have.<\/p>\n

I think that these people who are raging about inequality, like Picketty and Sanders are wrong.\u00a0 But I think that the people who say that the undeserved wealth deserves some attention, I think they\u2019re right.\u00a0 I think a huge source of the undeserved wealth is coming from the old finance.<\/p>\n

Lesson 28: If A Securities Got Pounded So Hard That\u2019s It\u2019s Selling Way Below It\u2019s Worth – Buying Is Not A Bad Idea<\/strong><\/p>\n

Question: You mentioned Wells Fargo earlier and its culture and the reason that you bought it back in the 80\u2019s.\u00a0 Daily Journal Corporation owns U.S. Bank as well.\u00a0 You also own Bank of America and its culture is a little different.\u00a0 And I\u2019m curious if the decision to buy Bank of America was driven by its low price or if you also see the compounding element.<\/p>\n

Answer:\u00a0 Bank of America was bought through the way that we use to buy securities.\u00a0 It just got pounded so hard that it was selling for less than it was worth.\u00a0 Way less.\u00a0 And there\u2019s a lot in the Bank of America which is sound.<\/p>\n

Lesson 29: Self-Driving Car Is Not Going To Happen Quickly<\/strong><\/p>\n

Question: I\u2019m pretty excited about the prospect of self-driving cars over the next 10-20 years.\u00a0 It seems like the technology is moving very quickly.\u00a0 As a Berkshire shareholder I\u2019m worried about the implications about the entire auto insurance if accidents, hopefully, become a thing of the past.\u00a0 That\u2019s good for civilization, bad for the auto insurance business.\u00a0 I would love to hear your thoughts on that.<\/p>\n

Answer: Well you\u2019re right.\u00a0 If all the cars run around without drivers, it will be bad for Geico.\u00a0 And I don\u2019t think it\u2019s going to happen very quickly.\u00a0 In fact I think it\u2019s going to be quite slow.\u00a0 But in the auto industry\u2026the first thing that people did when they got new wealth was (buy) more cars.\u00a0 I think that even if we don\u2019t get self-driving cars, that culture may be waning.\u00a0 Not so much in the third world, but in places like America.<\/p>\n

Lesson 30: Avoiding Areas Outside Your Circle Of Competence Can Pave Way For Other Passions<\/strong><\/p>\n

Lesson 31: Beware Of Sleazy Financial Activities. Large amounts of easy money cause regrettable human behavior. …. To Be Continued ….<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Excellent Book: Charlie Munger For All Seasons Lesson 26: Philanthropy Through Dormitories: Why Not? Doesn\u2019t Have To Be World Peace<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[1,3,4],"tags":[],"class_list":["post-323","post","type-post","status-publish","format-standard","hentry","category-charlie-mungers-3-categories-of-investment-in-out-too-tough","category-investment","category-wisdom"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/comments?post=323"}],"version-history":[{"count":5,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/323\/revisions"}],"predecessor-version":[{"id":903,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/323\/revisions\/903"}],"wp:attachment":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/media?parent=323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/categories?post=323"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/tags?post=323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}