Charlie Munger
Charlie Munger
Charles Thomas Mungeris an American businessman, lawyer, investor, and philanthropist. He is vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett; in this capacity, Buffett describes Charlie Munger as “my partner." Munger served as chairman of Wesco Financial Corporation from 1984 through 2011. He is also the chairman of the Daily Journal Corporation, based in Los Angeles, California, and a director of Costco Wholesale Corporation...
NationalityAmerican
ProfessionEntrepreneur
Date of Birth1 January 1924
CountryUnited States of America
A lot of share-buying, not bargain-seeking, is designed to prop stock prices up. Thirty to 40 years ago, it was very profitable to look at companies that were aggressively buying their own shares. They were motivated simply to buy below what it was worth.
It took us months of buying all the Coke stock we could to accumulate $1 billion worth - equal to 7% of the company. It's very hard to accumulate major positions.
If all you succeed in doing in life is getting rich by buying little pieces of paper, it's a failed life. Life is more than being shrewd in wealth accumulation.
Wrigley is a great business, but that doesn't solve the problem. Buying great businesses at advantageous prices is very tough.
Kellogg's and Campbell's moats have also shrunk due to the increased buying power of supermarkets and companies like Wal-Mart. The muscle power of Wal-Mart and Costco has increased dramatically.
The basic concept of value to a private owner and being motivated when you're buying and selling securities by reference to intrinsic value instead of price momentum - I don't think that will ever be outdated.
The big money is not in the buying and selling ... but in the waiting.
I would argue that a majority of the horrors we face would not have happened if the accounting profession developed and enforced better accounting.
Accounting is a big subject and there are huge forces in play. The entire momentum of existing thinking and existing custom is in a direction that allows terrible follies to happen, and the terrible follies have terrible consequences.
Derivative trading with mark-to-market accounting degenerates into mark-to-model. Two firms make a big derivative trade and the accountants on both sides show a large profit from the same trade.
The Berkshire-style investors tend to be less diversified than other people. The academics have done a terrible disservice to intelligent investors by glorifying the idea of diversification. Because I just think the whole concept is literally almost insane. It emphasizes feeling good about not having your investment results depart very much from average investment results. But why would you get on the bandwagon like that if somebody didn't make you with a whip and a gun?
The total amount paid out in dividends is roughly equal to the amount lost in trading and investment advice, so net dividends to shareholders are zero. This is a very peculiar way to run a republic.
I think it would be a great improvement if there were no D&O insurance . The counter-argument is that no-one with any money would serve on a board. But I think net net you'd be better off.
It is an unfortunate fact that great and foolish excess can come into prices of common stocks in the aggregate. They are valued partly like bonds, based on roughly rational projections of use value in producing future cash. But they are also valued partly like Rembrandt paintings, purchased mostly because their prices have gone up, so far.