{"id":329,"date":"2017-02-09T01:46:15","date_gmt":"2017-02-09T01:46:15","guid":{"rendered":"http:\/\/charliemungersays.com\/?p=329"},"modified":"2017-10-25T00:29:59","modified_gmt":"2017-10-25T00:29:59","slug":"34-djco-annual-meeting-2016-final-part-vii-lesson-31-35","status":"publish","type":"post","link":"https:\/\/charliemungersays.com\/index.php\/2017\/02\/09\/34-djco-annual-meeting-2016-final-part-vii-lesson-31-35\/","title":{"rendered":"34. DJCO Annual Meeting 2016 – Final Part VII – Lesson 31-35"},"content":{"rendered":"

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

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

… continue from previous article ….<\/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.<\/strong><\/p>\n

Question: Could you publish a personal book list of the books in your library?<\/p>\n

Answer: I don\u2019t want to be a book recommender.\u00a0 (laughter)\u00a0 It would be quite time consuming.\u00a0 So I\u2019m afraid you\u2019ll have to (ask another question).<\/p>\n

Question: A lot of people here have the ability to do well, but they don\u2019t have the opportunity to meet the right people.\u00a0 Ronald Burkle credits you with give him credibility when he was starting to acquire grocery stores at age 30.\u00a0 Who was your mutual acquaintance and how was Ron Burkle able to meet you in the early 1980s.<\/p>\n

Answer: In those days, we (Berkshire Hathaway) had a lot of declining businesses and one of them was trading stamps.\u00a0 And our last big trading stamp customer was the company that Ron Burkle\u2019s father controlled.\u00a0 And that\u2019s where I met Ron Burkle.\u00a0 It was an attempt to preserve that customer.\u00a0 The last customer we had.\u00a0 And in due course I failed.\u00a0 Ron Burkle on the other hand left that occasion and did nothing but succeed.\u00a0 So maybe you should ask him.<\/p>\n

Question: What\u2019s your view on the Unicorn companies like Airbnb, Uber, etc.\u00a0 Do you think those companies have such high valuations can ever go public?<\/p>\n

Answer: Well, my attitude is that I have a circle of competence.\u00a0 And that does not include correctly predicting which new companies in Silicon Valley, or dependent on Silicon Valley, are going to succeed.\u00a0 So I tend to avoid the subject entirely.\u00a0 I\u2019ve paved my way in other passions.\u00a0 However I will comment on one thing.\u00a0 Manipulated Finance.<\/p>\n

As these venture capitalists, who are part of the finance industry, the constructive ones.\u00a0 These are the people who make their living more honorable than the rest of the people in finance because they\u2019re actually allocating capital to new businesses.\u00a0 So the venture capitalists are useful members of finance.\u00a0 But they don\u2019t escape their share of sin.\u00a0 What they\u2019ve gotten in the habit of doing is creating these rounds of financing.\u00a0 And each new one is at a higher value.\u00a0 But they just sneak a little clause in saying, that nobody who previously bought into the venture gets anything until the new guys are preferred.\u00a0 Well that is sort of like a ponzi scheme.\u00a0 It\u2019s a disgusting, tricky, dishonorable thing to do.\u00a0 Particularly since it\u2019s obscured.\u00a0 And of course it\u2019s being deliberately obscured.<\/p>\n

So even our most reputable part of finance has dirty sleazy activities creeping in.\u00a0 Large amounts of easy money cause regrettable human behavior.\u00a0 That\u2019s Munger\u2019s rule.<\/p>\n

Lesson 32: Fundamental Value Investing Will Never Go Out Of Style \u2013 It\u2019s Mathematical<\/strong><\/p>\n

Question: Apparently the environment that we invest in today is very different from when you started.\u00a0 With high frequency trading, momentum trading, and all of that, do you think that fundamental value investing is losing relevance?<\/p>\n

Answer: I don\u2019t think that fundamental value investing will ever be irrelevant because of course to succeed in investing you have to buy things for less than they\u2019re worth instead of more than they\u2019re worth.\u00a0 You have to be smarter than the market.\u00a0 That will never go out of style.\u00a0 I mean that is like arithmetic it\u2019s always going to be with us.<\/p>\n

Now as far as high frequency trading, that is a complicated subject.\u00a0 I think that high frequency traders of the world, many of whom are personally admirably and honorable people, I think they have all made contributions to the American economy like a bunch of rats do in a granary. (laughter) They\u2019re just sucking some of the resources out for themselves while contributing nothing to the civilization.<\/p>\n

Lesson 33: What Kind Of Person Shall I Be? Be The Kind Of People, Other People Name In Their Will To Raise Their children If They Die Unexpectedly.<\/strong><\/p>\n

Question: Do you have a specific approach to spending quality time with your family?<\/p>\n

Answer: Well, I don\u2019t think I want to (promote) myself as some wonderful example of family life.\u00a0 I did the best I could\u2026<\/p>\n

Question: Do you think that Coach Nick Saben shares qualities with Sam Walton?<\/p>\n

Answer: I don\u2019t know anything about Coaching.\u00a0 I\u2019m better at Ballet.<\/p>\n

Question: Could you name a few people in history that you admire?<\/p>\n

Answer: Well of course there\u2019s a lot of historical people that I admire.\u00a0 One of the advantages of being a reader is that you can consort with some of the best people who have ever lived.\u00a0 So that\u2019s what I do with a lot of my time.\u00a0 But I admire a lot of people, take surgeons who get way the hell better than other surgeons\u2026or take some actor who gets to be the best actor in the world, and moves and entertains a lot of people.\u00a0 And there are a lot of people who are constructive, intelligence, generous and improve the world for the rest of us.\u00a0 And there are a lot of people who are good examples.\u00a0 And I spent some time, because he was on the Costco board for a long time, with Dan Evans who was Senator and Governor in the state of Washington.\u00a0 Generally admirable, sensible, high-grade, politician.\u00a0 There\u2019s so few politicians like Dan Evans.<\/p>\n

But when you do find a Dan Evans you really admire him and like him.\u00a0 And I think there will always be admirable people.\u00a0 That\u2019s what we all want to be.\u00a0 We all want to be admirable.\u00a0 What you want to be is the kind of people, other people name in their will to raise their children if they die unexpectedly.\u00a0 When a lot of people are doing that, you\u2019ll know you\u2019re doing something right.\u00a0 People are very shrewd about guessing who will be good at raising their children.<\/p>\n

Lesson 34: Well generally I\u2019ve avoided circumstances which automatically cause people fear.\u00a0\u201cIf at first you don\u2019t succeed, well, so much for hang gliding.\u201d<\/strong><\/p>\n

Question: When you were an attorney, you sold your most important client an hour a day.\u00a0 And I\u2019m guessing that you spent that time reading and thinking, or did you do some other activity for an hour.<\/p>\n

Answer: No, no, that was the most important client, myself, you\u2019re right about that.\u00a0 It was reading and thinking.\u00a0 The beauty of doing a lot of reading and thinking is that if you\u2019re good at it, you don\u2019t have to do much else.<\/p>\n

Question: Question about fear.\u00a0 I was once given the advice that it\u2019s really important to conquer fear.\u00a0 Could you speak to your relationship with fear and whether you\u2019ve conquered it.<\/p>\n

Answer: Well generally I\u2019ve avoided circumstances which automatically cause people fear.\u00a0 My son Philip is in the audience.\u00a0 When he was young, he had a saying, he would say, \u201cIf at first you don\u2019t succeed, well, so much for hang gliding.\u201d (laughter) \u00a0And so I don\u2019t seek out fear to get thrills.\u00a0 I don\u2019t even seek out the appearance of fear when it\u2019s really safe.\u00a0 Generally I\u2019m not a big lover of danger or even the appearance of danger.\u00a0 So that\u2019s not my thing.\u00a0 I don\u2019t think I\u2019ve felt much fear for a long time.\u00a0 I\u2019ve just lived a long time.\u00a0 I had fears when I was younger, but they gradually melted away.<\/p>\n

Lesson 35: Sweetened beverages sales including full sugar Coke are declining but that doesn\u2019t mean Coca-Cola company is going the same path. But it\u2019s no longer like shooting fish in a barrel.<\/strong><\/p>\n

Question: Question about Coke.\u00a0 Sweetened beverages are on the decline.\u00a0 Does Berkshire\u2019s ownership give Coke some leeway about addressing the declining nature of their business?<\/p>\n

Answer: Well, that\u2019s an easy one.\u00a0 Coke for many decades, the basic product, full sugar Coke, grew every year.\u00a0 It was like the inevitable march of time.\u00a0 In recent years, full sugar coke is declining.\u00a0 Now fortunately the Coca-Cola company has amassed distribution infrastructure business in a lot of other products.\u00a0 Coca-Cola as an individual product is declining some, instead of going up the way it always did before.\u00a0 The rest of the businesses are on average rising.\u00a0 So I think Coke is still a pretty strong company and it will be a respectable investment.\u00a0 But it\u2019s not like it use to be when it was like shooting fish in a barrel.<\/p>\n","protected":false},"excerpt":{"rendered":"

Excellent Book: Charlie Munger For All Seasons … continue from previous article …. Lesson 30: Avoiding Areas Outside Your Circle<\/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],"tags":[],"class_list":["post-329","post","type-post","status-publish","format-standard","hentry","category-charlie-mungers-3-categories-of-investment-in-out-too-tough"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/329","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=329"}],"version-history":[{"count":4,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/329\/revisions"}],"predecessor-version":[{"id":902,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/329\/revisions\/902"}],"wp:attachment":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/media?parent=329"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/categories?post=329"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/tags?post=329"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}