market folly

Last week we highlighted Charlie Munger's talk at the Daily Journal annual meeting for 2017.

Someone has also posted videos of Munger's Q&A session after the meeting.  There's 22 short videos in total with a playlist at the bottom.


Here's a few takeaways:

- He always reads 3 or 4 newspapers every morning: WSJ, New York Times, Financial Times, LA Times

- Thinks a single-payer healthcare system would work a lot better

- They're doing a lot of stuff (investment wise) these days that they wouldn't have done in the 'old days.'  Specifically mentioned Apple (AAPL): "It's a very odd thing for us to do.  And obviously we've got no special insights as to how sticky Apple's business is."

-  "I think young people should learn more and shout less."

- "The trouble with real estate is everybody else understands it.  And the people you're competing with specialize in little blocks and they know more about the industry than you do."

- "I think a lot of easy money that comes into finance just ruins practically everything."

- BYD is another stock they never would have done back in his younger day.  Partly he's betting on the horseman there as he's fanatical about his business.

- Amazon's Jeff "Bezos is utterly brilliant and utterly remorselessly ambitious.  I would never bet against Jeff Bezos."

- Interested in the 'agricultural revolution' like gene splicing etc and says the world needs it as we have to get more out of our existing land.

-  "If you haven't prepared (for the opportunity) then you won't seize it."

- "If you run a business where people have to trust your food, you just can't afford to have a scandal." re: Chipotle (CMG). 

- Do you think Walmart (WMT) can turn into Sears (SHLD)?  "Well, not for a long time."

- On the airlines: it's more concentrated (fewer players) and there's no real substitute for air travel.  "I don't regard it as a perfect model."  Considering how the world's changed, they thought it was a decent opportunity... but it's "not a cinch."  "It's a sector bet, not a bet on individual airlines."

- Munger says he read Barrons for 50 years and found 1 investment opportunity... made $80 million on it.  Then gave that money to Li Lu, who turned it into $400-500 million.  Munger's also read Fortune for 60 years but never bought a stock due to it.

- "I don't like to gamble against up odds.  If the odds are against me I just don't play."

- Nowadays it's tough in merger arbitrage as it's too crowded

- On John Malone: he's something of a genius and doesn't like to pay taxes and has been very successful and Munger's just ignored it.  "I've always been troubled by the cable industry."  Munger doesn't like the movie business either.

- Doesn't talk to Ted Weschler and Todd Combs a ton, but some.  "They're both good in their own way and they both love Berkshire and they've both made contributions."  Sounds as though the younger portfolio managers helped Charlie and Warren Buffett think differently about things like the airlines and Apple. 

- "I don't want to be in the bottom 80% of the auto dealerships."

- On 'cloning' in investing: "I do it all the time."  He added, "Of course it's useful."  He talked about the trouble with it is if you pick investors later in their game (i.e. Berkshire Hathaway) you basically inherit their problems of being constrained by size because they have to invest a certain way.  So Munger encouraged younger people to look at slightly younger investors, though admitted it's harder to pick out the right people to follow.

- On mistakes: "We learned a lot vicariously, but also learned a lot from unpleasant experiences. You'll learn." 


Embedded below is the video playlist of Munger's Q&A session after the Daily Journal meeting.  Just let the videos keep playing to see the next one out of the 22 total short clips:



Be sure to also check out Charlie Munger's talk at the Daily Journal annual meeting for 2017 as well.