{"id":455,"date":"2017-03-14T21:47:04","date_gmt":"2017-03-14T21:47:04","guid":{"rendered":"http:\/\/charliemungersays.com\/?p=455"},"modified":"2017-10-24T23:22:08","modified_gmt":"2017-10-24T23:22:08","slug":"59-charlie-mungers-wisdom-nuggets-djco-annual-meeting-2014-final-part-6-nugget-37-40","status":"publish","type":"post","link":"https:\/\/charliemungersays.com\/index.php\/2017\/03\/14\/59-charlie-mungers-wisdom-nuggets-djco-annual-meeting-2014-final-part-6-nugget-37-40\/","title":{"rendered":"59. Charlie Munger’s Wisdom Nuggets: DJCO Annual Meeting 2014: Final Part 7 Nugget 37-40"},"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
\nhttps:\/\/www.facebook.com\/groups\/charliemungersays\/<\/a><\/p>\n

Nugget 37: If Your Job Allows You To Approach Reality The Way It Is, It\u2019s A Big Plus.<\/strong><\/p>\n

Some of you will get imprisoned. I would hate to be in a place where I had to pretend to believe all the things I don’t believe in order to handle my daily work and discussions.\u00a0 I just described the working lives of practically everybody.\u00a0 But not Warren, not Charlie.\u00a0 Sure, there are a few subjects we’d consider taboo, but mostly we can approach reality the way it is. If you work for some big company there are catechisms, there are all kinds of behaviors that are forbidden.\u00a0 If you’re in academia there are all kinds of things constraining you.<\/p>\n

Q:\u00a0 I went through One Santa Fe today [a new real estate development close to the Daily Journal HQ], and I’m curious whether you might turn this into a development site .<\/p>\n

Munger: We already developed all the property we own.\u00a0 I think we bought these parcels fairly cheaply and we built these very nice, efficient buildings, and we have more than we need.\u00a0 Our business is shrinking.\u00a0 The last thing we’re thinking about is developing.\u00a0 If you\u2019d like to rent what we have, contact Gerry after the meeting. (laughter)<\/p>\n

\u00a0<\/strong><\/p>\n

Nugget 38: Businesses can be adversely affected by rapid technological obsolescence. Berkshire Tries To Avoid Them.<\/strong><\/p>\n

Q:\u00a0 I’m interested in your thoughts about how you think about Berkshire\u2019s intrinsic value relative to its book value?<\/p>\n

Munger:\u00a0 I think Warren’s ideas are pretty coherent and pretty right for Berkshire.\u00a0 I’ve got no disagreement with Warren on that.\u00a0 At a certain price, of course, we’d buy.\u00a0 But as long as we’re doing as well as we are, we don’t mind buying other things.\u00a0 We don’t mind all these bolt-on acquisitions we have.\u00a0 If you ask me how much Berkshire’s going to be able to spend intelligently, in just its utility business over the next fifteen years, it’s a perfectly enormous amount of money.\u00a0 The chance we won\u2019t have a good return on that business is about zero.\u00a0 I think two years from now we will be the biggest utility company in the United States.<\/p>\n

We\u2019ll deal with our assets at least as well as most people, probably better. We’ll have huge opportunities.\u00a0 I like it. The fact that in one state, when we were young and poor, we could find things that paid 12%, and now we may have to make utility investments at 9% or 10%, probably with float that cost us nothing, that\u2019s okay.\u00a0 We\u2019re slowing down a little.\u00a0 (laughter)\u00a0 We’ve very favored to have these opportunities when interest rates are approximately zero.\u00a0 The idea to create more power and transmission and so on and get a guaranteed return on the investment is quite a favorable one to have.<\/p>\n

Q:\u00a0 How did the advances in technology affect the natural course of competition?<\/p>\n

Munger:\u00a0 Berkshire, of course, has consciously avoided rapid technological obsolescence.\u00a0 We own a railroad, we own a bunch of utilities, we own big insurance companies.\u00a0 Obsolescence is what’s happened to the Daily Journal.\u00a0 We had a gold mine here for years.\u00a0 The advance sheets that lawyers need were published six weeks after the decisions were made.\u00a0 We had a big printing press.\u00a0 We could publish those daily, and the lawyers all had to subscribe, and we raised the subscription prices every year, substantially.\u00a0 It was wonderful.\u00a0 We looked like geniuses.\u00a0 Then, the technology changed.\u00a0 Now the lawyers get their stuff over the internet.\u00a0 It’s way worse, and that’s just the way the world is.\u00a0 So we don’t like these technological changes.\u00a0 But at Berkshire we have tried to avoid them as much as we can.<\/p>\n

Even where we look highly technical, like in carbide cutting tools [Iscar], we\u2019re one of the leaders in the whole world, and it’s complicated.\u00a0 It’s a good business, and I don’t mind the technological complexity where we totally dominate, or pretty close to it.\u00a0 We don’t solve the problem of technological obsolescence, we avoid it.\u00a0 I’ve failed you here at the Daily Journal.\u00a0 I’m sorry.<\/p>\n

Nugget 39: Look for gold where you have to step over little puddles rather than jump over seven-foot fences. (On Investing?)<\/strong><\/p>\n

And, of course, Berkshire’s failed in a lot of places. There are all kinds of things that happened to us.\u00a0 We couldn’t fix the textile companies in New England.\u00a0 Our jewelry stores are not going to set any records: there are too many jewelry stores, it’s just too tough.\u00a0 We haven’t found some miracle exemption from the laws of nature.\u00a0 We have ducked a lot of the problems other people have willingly taken on.<\/p>\n

Warren said, “We have not learned to jump over seven-foot fences.\u00a0 We found a way to step over little mud puddles and seize chunks of gold on the other side.”\u00a0 You see, there aren’t enough mud puddles with gold on the other side, but there have been just enough for us.\u00a0 We work at it.<\/p>\n

Nugget 40: The secret of human felicity is low expectations.\u00a0 <\/strong><\/p>\n

Q: Why did you feel comfortable grabbing Wells Fargo (ticker: WFC) in the depths of the downturn?<\/p>\n

Munger:\u00a0 It was too cheap and we had the money.\u00a0 As a matter of fact, we bought it within one day of the bottom tick, so that was remarkable. You can say I was a little lucky on that. But, it wasn’t hard to realize that something was cheap.<\/p>\n

Q: .\u00a0 You’re going to have a hard time convincing us that you failed at Daily Journal.<\/p>\n

Munger:\u00a0 That’s an interesting story.\u00a0 We bought Daily Journal for 2 million 7.\u00a0 We took the 2 million 7 back about three or four years later.\u00a0 Everything that’s here now is profit.\u00a0 In that sense it’s a good record, but it’s a not record like Berkshire.\u00a0 It’s pretty good for a failing business.\u00a0 (laughter)<\/p>\n

Q: How does having low expectations help?<\/p>\n

Munger:\u00a0 It’s much more fun constantly exceeding your expectations instead of being disappointed.\u00a0 The secret of human felicity is not vast ambition, it’s low expectations.\u00a0 Where you really need it is in a spouse.\u00a0 (laughter)<\/p>\n

On that comment I’m going to end. (applause)<\/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 37: If Your Job Allows You To Approach Reality<\/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-455","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\/455","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=455"}],"version-history":[{"count":3,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/455\/revisions"}],"predecessor-version":[{"id":876,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/455\/revisions\/876"}],"wp:attachment":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/media?parent=455"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/categories?post=455"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/tags?post=455"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}