{"id":452,"date":"2017-03-14T01:56:03","date_gmt":"2017-03-14T01:56:03","guid":{"rendered":"http:\/\/charliemungersays.com\/?p=452"},"modified":"2017-10-24T23:22:45","modified_gmt":"2017-10-24T23:22:45","slug":"58-charlie-mungers-wisdom-nuggets-djco-annual-meeting-2014-part-5-nugget-31-36","status":"publish","type":"post","link":"https:\/\/charliemungersays.com\/index.php\/2017\/03\/14\/58-charlie-mungers-wisdom-nuggets-djco-annual-meeting-2014-part-5-nugget-31-36\/","title":{"rendered":"58. Charlie Munger’s Wisdom Nuggets: DJCO Annual Meeting 2014: Part 6 Nugget 31-36"},"content":{"rendered":"

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

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

Ref: https:\/\/www.forbes.com\/sites\/phildemuth\/2014\/09\/19\/charlie-munger-and-the-2014-daily-journal-annual-meeting-a-fans-notes\/#7c92323d7d2c<\/a>
\nhttps:\/\/www.facebook.com\/groups\/charliemungersays\/<\/strong><\/a><\/p>\n

Nugget 31: The natural course of competition is that it gets tough.\u00a0 It\u2019s the people who expect everything to just keep going wonderfully who are nuts.<\/strong><\/p>\n

Q: Have you had any thoughts on the recent troubles at Tesco [ticker: TSDCY]?<\/p>\n

Munger: Tesco owned the world for a long time. It looked inevitable.\u00a0 Berkshire bought some.\u00a0 I think Lou Simpson bought it originally, and Warren bought some more. They had a formula that really worked.\u00a0 Then one day it stopped working so well. Partly it was hubris. They thought they were so smart, they could do something difficult like Fresh and Easy, and some other adventures like that they found were way harder.<\/p>\n

Then the home market got tougher, just as the Japanese had trouble when behind them rose Japan and Korea.\u00a0 Tesco got in trouble when Aldi came in one side and other people came in on the other.\u00a0 It got tougher.\u00a0 How many big companies stay totally on top forever?\u00a0 Maybe Wrigley’s Gum.<\/p>\n

Basically, the normal result is what happened to Tesco.\u00a0 Listen, Aldi is a tough competitor.\u00a0 Ruthlessly low cost, limited assortment, all private label.\u00a0 It’s terribly efficient.\u00a0 You think Costco’s any good for the rest of the grocery stores?\u00a0 And Sam’s Club?\u00a0 It\u2019s a competitive world out there.\u00a0 Somebody is always starting something.\u00a0 Even for the branded goods makers, who looked so invincible for forty years.\u00a0 The natural course of competition is that it gets tough.\u00a0 It\u2019s the people who expect everything to just keep going wonderfully who are nuts.<\/p>\n

Nugget 32: If Einstein couldn’t do it, I don’t think you should try it.<\/strong><\/p>\n

Q: Can you tell us about your partnership with Warren Buffet?<\/p>\n

Munger: People don\u2019t normally get a divorce after they’ve been together for this long.\u00a0 We’ve adjusted to it.\u00a0 (laughter)\u00a0 If we were going to get a divorce we would have done it earlier.\u00a0 I think the honest answer is pretty modest on my part. Einstein needed somebody to talk to.\u00a0 (laughter)\u00a0 As good as he was, needed a talking foil. I’ve occasionally helped in some other ways, but, basically, you would not want to sit home alone by yourself making the decisions.\u00a0 If Einstein couldn’t do it, I don’t think you should try it.<\/p>\n

Audience member: Einstein had his wife, who was a physicist.<\/p>\n

Munger:\u00a0 She was not very good.<\/p>\n

Nugget 33: The medical interventions that are made purely for money are a national disgrace.<\/strong><\/p>\n

Q: What do you think of Obamacare?<\/p>\n

Munger:\u00a0 I thought you were going to ask a hard question.\u00a0 All you want to know is have we unraveled the mysteries of Obamacare.\u00a0 I can’t do that.\u00a0\u00a0 If you\u2019re an old rich man you can say impolitic things.\u00a0 If I were the benevolent despot of the United States, I would have single payer medicine that people were able to opt out of and buy their own forms of private care, either from places like Kaiser or from individual doctors.\u00a0 I think we’re at a big competitive disadvantage to other countries that don’t have this big cost built into their manufacturing.\u00a0 And, I think that paying for medicine per item for all the old people causes a lot of unnecessary treatment.\u00a0 It wastes a lot of money and hastens a lot of death in this country.\u00a0 The medical interventions that are made purely for money are a national disgrace.<\/p>\n

Now I\u2019ve practically offended everybody.\u00a0 Brings out the absolute worst in me.\u00a0 I basically think the existing system is crazy.<\/p>\n

Nugget 34: It’s in the nature of things that some people are going up and some people are going down. [If you happen to be in the down group, it\u2019s not going to be fun. Also, politicians can exploit and create angst.]<\/strong><\/p>\n

Q: Do you think the increases in the standard of living that we’ve seen in this country for most people are likely to continue?<\/p>\n

Munger: I think that it gets harder — just as Japan has troubles being as prosperous as it was against these powerful neighbors with these big populations getting more prosperous and eating Japan’s lunch.\u00a0 If you have a system where a lot of people prospered in manufacturing, and you get free trade in rising countries like China, Vietnam, Mexico, and so forth, of course it’s going to be harder for the people who had high-paying union manufacturing jobs under the old system.<\/p>\n

It’s in the nature of things that some people are going up and some people are going down, and it’s the nature of politicians to identify anybody who is going down and try to make them feel terribly abused, and to profit personally by exploiting the angst. But there’s some angst where the best solution is just to suck it up and cope.\u00a0 In other words, I don’t think you can run a country that eliminates up and down distributional changes between groups.\u00a0 I think that’s the flux of life.<\/p>\n

What are we going to do about it?\u00a0 We live in one world.\u00a0\u00a0 China comes up. The rise of China has not been good for American unionized textile workers.\u00a0 Now, even China can\u2019t even make textiles; that’s going to Vietnam.\u00a0 That kind of flux is just is natural, and the productivity comes from the fact that people suffer all the creative destruction of capitalism.\u00a0 So they don\u2019t like the damn flux when it happens to catch them.\u00a0 But the flux in total is making the whole boat go up, and the fact that the boat never goes up with every group going up exactly the same all the time is inevitable.<\/p>\n

Even if the government controlled everything, they’d still rig the system so some people went up and others went down.\u00a0 Just put me down as not too worried about a lot of this modern clap trap.<\/p>\n

Nugget 35: Know the edge of your own competency.\u00a0 Learn what to avoid.<\/strong><\/p>\n

Q: How do you and Warren balance the need for simplicity with the need to fully understand these complex ideas?<\/p>\n

Munger: The interesting thing about Berkshire is that the results are prodigious and the people who are getting the results aren’t prodigies.\u00a0 How did non-prodigies get prodigious results?\u00a0 This is a very interesting question that I hope we deal with in the annual report.\u00a0 The answer is: You’ve got a little better methods.\u00a0 One thing is absolutely essential: You know the edge of your own competency.\u00a0 That really helps and substitutes for a lot of IQ points.\u00a0 You know what you know and what you don’t know, and you work it.\u00a0 I’ve had that concept down.\u00a0 You learn what to avoid.<\/p>\n

Nugget 36: Get No-Brainers Off Your Desk Immediately. Zero Time Span For No-Brainers.<\/strong><\/p>\n

One of my habits is, I get the no-brainers off my desk immediately.\u00a0 Otherwise it gets cluttered.\u00a0 Some people just pile up the desk and then get totally dysfunctional.\u00a0 I hardly know another human being in the world who’s better at this than Gerry Salzman [Daily Journal CEO]. He would have been unable to do what he’s done in life without that one trick. He makes a decision, maybe it’ll be wrong, but his batting average is very high and the time span is approximately zero.\u00a0 That is just a huge trick to master.<\/p>\n

The other thing we do if the problem is really hard and important, we rag it.\u00a0 You keep working at it and going back to it and so forth.\u00a0 You have a lot of time to do that because of all the things you avoid that other people do.\u00a0 We just have a few tricks, and they work so well, but they’re not copied so much.<\/p>\n","protected":false},"excerpt":{"rendered":"

Excellent Book: Charlie Munger For All Seasons Ref: https:\/\/www.forbes.com\/sites\/phildemuth\/2014\/09\/19\/charlie-munger-and-the-2014-daily-journal-annual-meeting-a-fans-notes\/#7c92323d7d2c https:\/\/www.facebook.com\/groups\/charliemungersays\/ Nugget 31: The natural course of competition is that it<\/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":[3,4],"tags":[],"class_list":["post-452","post","type-post","status-publish","format-standard","hentry","category-investment","category-wisdom"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/452","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=452"}],"version-history":[{"count":3,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/452\/revisions"}],"predecessor-version":[{"id":877,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/452\/revisions\/877"}],"wp:attachment":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/media?parent=452"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/categories?post=452"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/tags?post=452"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}