market folly

Thanks to Alex Rubalcava (@AlexRubalcava) for tweeting notes from Charlie Munger's Daily Journal (DJCO) 2014 meeting recently.  We've aggregated and posted the notes below with his permission:


Notes From Charlie Munger's Daily Journal (DJCO) Meeting

"We have a few shareholders and a bunch of groupies."

 Charlie talked about how the legal filings notice is in structural decline, made an analogy to Kodak.

Says Thomson Reuters successfully made the transition.  Also Berkshire ("We didn't have just one failing business at Berkshire.  We had three!" ~ textiles, department stores, stamps)

DJCO attempting a technological transition, working to manage expectations

Working with bureaucracy, government, regulators is one of the core competencies of DJCO's software biz

"I don't like derivatives."

"There is more dementia about finance than there is about sex."

On the Berkshire/THI inversion: "Anyone who thinks this is a travesty is stark raving mad."

Charlie argued for low corporate taxes and higher consumption rates

"People like you have bid our stock up to a price I wouldn't pay"

Charlie has spent at least twenty percent of his comments inveighing against gambling

"I've always read Paul Krugman because he's the smartest leftist I've ever read, and he uses the King's English very well."

On Alibaba:  "I know nothing about the company except that it's powerful."

Munger's asset allocation is basically Berkshire, Costco, and "an Asian fund" (Li Lu's Himalayan Capital?)

"All my holdings are making new highs. Am I doing it wrong?"

On avoiding mistakes: "All you have to do is take your head out of a place it shouldn't be."

Charlie praised Ron Chernow's biography of Rockefeller (Titan: The Life of John D. Rockefeller, Sr)

Do individual investors still have an advantage over institutions? Some can do it but it's very hard

On managing a portfolio of 200 stocks: "I would shrink from that responsibility."

Charlie says Buffett will write extensively in this year's annual report about the why and how of Berkshire's success and why it will continue after Warren and Charlie are no longer running it.  "You will find this year's report very, very interpreting."

"I think Elon Musk is a genius and I don't use that word lightly.  And he's one of the boldest men ever."

On Japan: "They've got so much stimulus you can't find a pothole on a side of a mountain anywhere in the country."

Praised a large money manager who indexes his US equities and searches for value in less efficient markets

On his partnership with Warren: "People don't ordinarily get a divorce after they've been together for fifty years.  I think Einstein needed someone to talk to."

"If I were the benevolent dictator of America we would have a single payer health care with an opt out provision."

"The thing about Berkshire is that the results are prodigious but the people producing the results aren't prodigies."

On his secret to success:  Get the no-brainers off his desk immediately

"I think two years from now MidAmerican will be the biggest utility company in the United States."

Charlie says he bought DJCO for $2.7 million, then dividended out the original $2.7 three years later.  Company is basically cost basis zero.


Thanks again to Alex and be sure to follow him on Twitter here: @AlexRubalcava


You can also check out more thoughts from Charlie via Jason Zweig here.