{"id":632,"date":"2017-06-11T01:32:47","date_gmt":"2017-06-11T01:32:47","guid":{"rendered":"http:\/\/charliemungersays.com\/?p=632"},"modified":"2017-10-24T22:48:01","modified_gmt":"2017-10-24T22:48:01","slug":"101-wesco-annual-meeting-2008-part-5-tutelage-25-30","status":"publish","type":"post","link":"https:\/\/charliemungersays.com\/index.php\/2017\/06\/11\/101-wesco-annual-meeting-2008-part-5-tutelage-25-30\/","title":{"rendered":"101. Wesco Annual Meeting 2008 – Part 5 – Tutelage 25-30"},"content":{"rendered":"

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

2008 Wesco Annual Meeting –\u00a0 Notes courtesy of Peter Boodell<\/p>\n

http:\/\/valueinvestingresource.blogspot.com\/2008\/05\/2008-wesco-shareholder-meetingdetailed.html<\/p>\n

Tutelage 25. Berkshire\u2019s annual budgeting process: Eliminate Unnecessary Costs<\/strong><\/p>\n

Q20: CA. Why has commercial property not fallen as much as residential?<\/p>\n

Cap rates came way down and asset values went way up. Financing transactions are getting away from euphoric conditions. A lot of the real estate fortunes have been made with extraordinary leverage. Commercial real estate is not a good business for us but ok for the entrepreneurial types. We shouldn\u2019t be doing it.<\/p>\n

Q21: Matt from NYC. How does Berkshire thru its subsidiaries manage an annual budgeting process?<\/p>\n

We don\u2019t have one. Obsessing over budgets creates bad incentives. Just eliminate unnecessary costs. Budget committees tend to do just the opposite.<\/p>\n

Tutelage 26. Experience is what happens when you\u2019re looking for something else.<\/strong><\/p>\n

Tutelage 27. Read Cialdini<\/strong><\/p>\n

Q22: John, shareholder. Any recent books you recommend?<\/p>\n

I\u2019m a bug for history and science. Yes by Cialdini is good. Most of the psychology professors can\u2019t handle this real life material. It\u2019s not a perfect book and not as good as Influence. As Warren says, experience is what happens when you\u2019re looking for something else.<\/p>\n

Q23: Peter, Yonkers NY. Which is better, insurance based float or money management float?<\/p>\n

A: In terms of pure utilitarian perspective, you can make way more money in money management than insurance business. There are few businesses as good as money management.<\/p>\n

Average returns in insurance property and casualty have been pretty pathetic. Once you have enough money you stop accepting compensation and just manage money — it is more manly. At least 95% of the insurance businesses in the world are worse than ours.<\/p>\n

Tutelage 28. The more big ideas you have the easier. We exclude a whole lot of things because they are in the too tough pile. If you exclude, you do better.<\/strong><\/p>\n

Q24: Ashok from LA. Checklist?<\/p>\n

I don\u2019t have a simple checklist. You have to work at it a long long time. I still do dumb things after years of hard work. The more big ideas you have the easier. We exclude a whole lot of things because they are in the too tough pile. If you exclude, you do better.<\/p>\n

Then you must have field where rationality will be rewarded. Some of political ideas \u2013 it is very hard to know how they will work out over next few centuries. We are not trying to involve ourselves. We look for things that can be done. But I have no little short list.<\/p>\n

People who sell strong abs on TV at night might have one. I have no rule for a strong brain.<\/p>\n

Q25: Whitney Tilson. NY. You reported earnings, but not a single shareholder asked about it. I was hoping for a comment on Berkshire earnings, and on mark to market derivative losses.<\/p>\n

It was a very remarkable occurrence. Like the Sherlock Holmes story \u2013 about the remarkable happening with the dog\u2019s behavior. Sherlock Holmes asks about the behavior of the dog in the night. \u201cThe dog didn\u2019t make a sound.\u201d \u201cYes, that was remarkable.\u201d That perhaps is teaching a lesson. Those people trust us. They trust Warren, and rightly so.<\/p>\n

You saw an interesting example of deserved trust working in real world and in Omaha. By the way, we love that position. The accountants don\u2019t know what they are doing but I don\u2019t criticize them.<\/p>\n

Tutelage 29. On Oil Price: Neither question nor my answer will do much for my reputation.<\/strong><\/p>\n

Q26: LA. In 25 yrs, where would you see oil production? What year do you see the peak?<\/p>\n

This is very flattering, but I don\u2019t think question nor my answer will do much for my reputation. We don\u2019t know year, and the reason Warren picked up on my answer last weekend so strongly is that it is a radically different world where oil production is down 25 yrs from now, with radical adaptations necessary. Hubbert pretty accurately predicted peak. If it hasn\u2019t peaked, it soon will, and it will go down. At $120 \/ barrel, there are obvious strains in the production system.<\/p>\n

Tutelage 30. Uplifting Education: You Can Lift From The Top Or From The Bottom: Do What You Can Or Know Best<\/strong><\/p>\n

Q27: LA. I went to private school where you donated science building. For many minorities, there are low graduation rates. What can government do to help? What can we do?<\/p>\n

Very serious problem, anguish causing. CA had once the best public education system in USA. It is a very sad thing. The private system is very competitive. Warren has suggested that if no one was allowed to use private schools, citizens would make sure public system was good. Not sure Warren is right on this. Personally I am better at lifting top up than the bottom up. Why shouldn\u2019t I stick to game where I\u2019m better suited? If you want to know how to raise top higher, I think I could help you a lot. If you want to raise lowest, I don\u2019t know how to do it.<\/p>\n","protected":false},"excerpt":{"rendered":"

Excellent Book: Charlie Munger For All Seasons 2008 Wesco Annual Meeting –\u00a0 Notes courtesy of Peter Boodell http:\/\/valueinvestingresource.blogspot.com\/2008\/05\/2008-wesco-shareholder-meetingdetailed.html Tutelage 25.<\/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-632","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\/632","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=632"}],"version-history":[{"count":3,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/632\/revisions"}],"predecessor-version":[{"id":834,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/posts\/632\/revisions\/834"}],"wp:attachment":[{"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/media?parent=632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/categories?post=632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/charliemungersays.com\/index.php\/wp-json\/wp\/v2\/tags?post=632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}