market folly

Some of you may be unaware that Warren Buffett's partner at Berkshire Hathaway, Charlie Munger, has aided in the management of The Daily Journal (DJCO) portfolio where he's the Chairman.  Munger spoke yesterday at the Daily Journal meeting and the following notes are courtesy of Alex Rubalcava.

Notes From Charlie Munger's Daily Journal Meeting

- Munger talked about the embedded options in the public notice papers he bought for Daily Journal... Phoenix public notice paper generated "thousands of percent" return for Daily Journal

- "Many of you people are here because you're investment groupies, not Daily Journal shareholders."

- "I don't think anyone on the board or management of General Motors had one shred of guilt for destroying 100% of the equity of the greatest company in America."

- "It's hard to predict which comfortable two company duopolies will become ghastly competitive miasmas."

- Munger on ratings agencies: they were selling opinions, not guarantees.  But in front of a jury the internal emails will cause trouble.

- Munger, quoting Buffett "I'm waiting for a list of business that we declined because it was morally beneath us."

- On why other CEOs can't copy the Berkshire Hathaway (BRK.A) operating model: "They came to power at 58 and they're gone at 63."

- "I think the idea that everyone can have wonderful results from stocks is inherently crazy.  Nobody expects everyone to succeed at poker."

- "I made zero transactions in my PA (personal account) last year."

- Munger praised Pabrai for copying Buffett's Partnership model down to the last comma

- Question on BYD, Munger calls up Li Lu to talk: BYD compounded at 75% since its founding 15 years ago.  Talked about engineering, problem-solving culture at BYD.  Munger on it: "I don't want to compete with 180,000 young Chinese.  I'd rather partner with them."

- There was a question on why he's chosen not to disclose what's in the DJCO investment portfolio.  Munger says "many of you have already figured out what's in our investment portfolio."

- Munger recommended a book: A Universe out of Nothing by Lawrence Krause

- Munger is bearish on retailing, saying he switched from name brand toothpaste to Kirkland Signature (COST private label)

- Question: have you changed your investment philosophy due to macro concerns?  Nope

- Warren Buffett recommended a book to new Berkshire portfolio manager Todd Combs, called The Outsiders by William Thorndike.  Munger recommended it with enthusiasm.

- Munger talked about pricing power as the mark of a great investment.  (We've highlighted how pricing power is what Buffett is often looking for in an investment)


For more resources on this great investor, be sure to check out:

-  Charlie Munger and Warren Buffett's secrets to investing success.

- Charlie Munger on the psychology of human misjudgment

- An interview with Munger