{"id":612,"date":"2017-05-17T03:20:57","date_gmt":"2017-05-17T03:20:57","guid":{"rendered":"http:\/\/charliemungersays.com\/?p=612"},"modified":"2017-10-24T22:52:17","modified_gmt":"2017-10-24T22:52:17","slug":"96-berkshire-annual-meeting-2017-part-6-wisdom-guide-31-35","status":"publish","type":"post","link":"https:\/\/charliemungersays.com\/index.php\/2017\/05\/17\/96-berkshire-annual-meeting-2017-part-6-wisdom-guide-31-35\/","title":{"rendered":"96. Berkshire Annual Meeting 2017 – Part 6 – Wisdom Guide 31 – 35"},"content":{"rendered":"

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

Ref: Adam Blum\u2019s 2017 Berkshire Hathaway Annual Meeting Notes – May 6, 2017<\/strong><\/p>\n

Guide 31. That reputation of being quick and simple and doing what we say has helped time and time again.<\/strong><\/p>\n

Q53 – utility business is ok – Electricity demand isn\u2019t increasing like it was, and there are some stranded assets. He will be surprised if 10 years from now, they didn\u2019t have significantly more money in wind\/solar\/utilities. Berkshire is the buyer of choice with many utility commissions.<\/p>\n

Munger: \u201cOur utilities are not normal. They\u2019re better regarded by customers and rate-payers. It\u2019s better to be associated with assets of that quality. If someone asked us to build a nuclear plant, we wouldn\u2019t do it.\u201d<\/p>\n

Buffett: \u201cWe are selling electricity in Iowa cheaper privately than in Nebraska\u2019s public wind environment even with the government getting a total tax benefit But if we were putting together a portfolio of stocks, wouldn\u2019t own any utilities.\u201d<\/p>\n

Q54 – McLane reporting \u2013 The SEC requires more disclosures of businesses based on sales. McLane has a huge sales volume – Walmart is its biggest customer. The business has a 1% pretax margin, so it is inflated based on how it looks in the financials. These kinds of businesses only work if turnover is extremely fast. It has an outsized appearance because of the gross sales volume. It\u2019s interesting that Walmart wanted to sell McLane to Berkshire. Walmart said they never had a deal that closed so fast.<\/p>\n

Munger: \u201cThat reputation of being quick and simple and doing what we say has helped time and time again. We bought a business (Northern Natural Gas) and funded it before the regulators approved, because the business sellers needed the money. Others couldn\u2019t have done this.\u201d<\/p>\n

Guide 32. At the funeral, if someone says that\u2019s the oldest looking corpse I ever saw, it\u2019s a compliment.<\/strong><\/p>\n

Q55 \u2013 asking about Warren and Charlie having iron bladders \u2013 \u201cwe won\u2019t tell you the secret to that – no contraption, you can come down and inspect.\u201d The real question was about their legacies.<\/p>\n

Buffett: \u201cAt my funeral, I want them to all be saying \u2018that\u2019s the oldest looking corpse I ever saw.\u2019\u201d<\/p>\n

Buffett really enjoys teaching; that\u2019s his best legacy is someone thinking he did a decent job at teaching.<\/p>\n

Munger: \u201cTo make teaching endurable, it has to have enough wiseassery in it. And we do.\u201d<\/p>\n

Buffett: \u201cWe can\u2019t forget what\u2019s on Wilt Chamberlain\u2019s grave: \u2018Alas I sleep alone.\u2019\u201d<\/p>\n

Guide 33. Look for the job you\u2019d take if you didn\u2019t need the job. Life must be evaluated backwards but moved forward.<\/strong><\/p>\n

Q56 – What\u2019s your dream?<\/p>\n

Buffett: \u201cLet\u2019s skip the first one, Charlie (implying something raunchy).\u201d<\/p>\n

Munger: \u201cOh, to be 90 again; if you\u2019ve got anything you really want to do, don\u2019t wait until you\u2019re 93 to do it.\u201d<\/p>\n

Buffett: \u201cLook for the job you\u2019d take if you didn\u2019t need the job. Life must be evaluated backwards but moved forward, as Kierkegaard said. Charlie says he wants to know where he will die, so he won\u2019t ever go there. What will make you feel good, and what will keep you going there in that direction?<\/p>\n

We don\u2019t want to be like the man who died, where the minister said at the funeral, \u2018now is there anyone here to say something nice about the deceased?\u2019 and the only person that stepped forward offered : \u2018his brother was worse.\u2019\u201d<\/p>\n

Guide 34. EBITDA can be very misleading.<\/strong><\/p>\n

Q57 \u2013 Buffett wishes he\u2019d met Charlie earlier. That\u2019s his biggest regret.<\/p>\n

Regarding EBITDA, depreciation is an expense and the worst kind. \u201cYou- spend the money first but then have the expense.\u201d It makes no sense to remove depreciation. It\u2019s a very misleading statistic used in very pernicious ways.<\/p>\n

Munger: \u201cYou\u2019ve understated the horrors of the subject and the disgusting nature of people who brought that term to business; it\u2019s like a real estate broker who said a 1,000 square foot apartment was actually 2,000 square feet. Nobody in his right mind would think depreciation is not an expense. Now they\u2019re teaching it in the business schools – that is horror squared.\u201d<\/p>\n

Guide 35. If an industry\/business is no longer viable, unemployment or dislocation can result. Unemployment insurance exists for that exact reason. The capitalist system always hurts some people; there\u2019s no way to avoid it. The governments should help.<\/strong><\/p>\n

Q58 – Should businesses make decisions beyond just economic impact? Trade should be and is enormously beneficial. Greater productivity will benefit the world. It\u2019s a shame to be the textile worker in New Bedford or the shoe worker at Dexter put out of work. Prosperity is enhanced by trade – doing what one does best \u2013 but the country needs an educator in chief who has to be able to explain the overall benefits of free trade and beyond that have policies that take care of the roadkill. Don\u2019t worry about investors. They can diversify and not get killed by a specific industry condition, but the worker in many cases can\u2019t do that unless the government takes care of people like that. They need to try to hit both objectives.<\/p>\n

Munger: \u201cUnemployment insurance exists for that exact reason. The capitalist system always hurts some people; there\u2019s no way to avoid it.\u201d<\/p>\n

Buffett: \u201cA rich society can take care of those people. The new tax bill instead reduces my taxes by 17%.\u201d<\/p>\n

Munger: \u201cDon\u2019t start spending the money yet. Otto von Bismarck said there are two things that no one should have to watch: the making of sausage and the making of legislation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Excellent Book: Charlie Munger For All Seasons Ref: Adam Blum\u2019s 2017 Berkshire Hathaway Annual Meeting Notes – May 6, 2017<\/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-612","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\/612","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=612"}],"version-history":[{"count":2,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/612\/revisions"}],"predecessor-version":[{"id":839,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/612\/revisions\/839"}],"wp:attachment":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/media?parent=612"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/categories?post=612"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/tags?post=612"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}