Takeaways from Six-Hour Charlie Munger Interview

I Listened to the Whole Thing, so You Don’t Have to

A few takeaways from Munger’s interview on April 23, 2019 with WSJ reporters Nicole Friedman and Jason Zweig:

INVESTING STYLES. “All good investing involves getting a better investment than you’re paying for. And you’re just looking for it in different places, just as a fisherman can fish in one place or another. Some people look at it in stocks where the earnings are going up all the time, some look at consumer goods, some look at bankruptcies, some look at distressed debt. There are different ways to hunt, just like different places to fish. And that’s investing.”

CORPORATE CEO LEADERSHIP. “You take a big [corporate] bureaucracy and let the wheels of industry grind, the kind of people that come to the top, we know what they look like. They’re tall men and they’re the kind of men with reasonably high IQs, but not super-brilliant, who would have been elected head of a fraternity house. So that’s what rises, you know — what, 80% of the time? And of course that’s not perfect. And you want some kind of a philosopher king that can also do the work. You’re asking for a lot. It doesn’t happen very often. What most people don’t understand, and this is from a lifetime of experience, and Warren and I have reached exactly the same conclusion: At the top, you need a certain kind of a mind that automatically makes sense about investments and money. Warren calls it the money sense. ‘The money mind,’ he calls it. And what I have discovered in a long lifetime is that people have it or they don’t, and if they don’t have it, you can’t create it. It can’t be just taught to somebody. You just have it. You either have it or you don’t. And one of our secrets [at Berkshire Hathaway] has been that we try and throw the power to people who have it.” “What I do is I give power to unusually talented people. That’s the only thing I can do. And really ridiculous ideas I don’t let them do.”

TECH AND POLITICAL PRESSURE. “I don’t think that when these [tech] tidal forces of change come in, the politicians, it’s like pissing against the tide. It won’t work. It’s just, the tide is too strong. And my maternal grandfather was in wholesale dry goods. … And when the 1920s came and the chains and Sears Roebuck’s rose, every wholesale dry-goods house in the country went broke. Nobody misses them! Nobody could stop the tide, and nobody’s going to stop the internet that enabled me to get that table for $100. And everybody’s threatened by it. And it’s not going away. And it shouldn’t go away. Those tides are important. It’s bad for the people whose business gets hit. But it’s good for the world that the — what would it be like if we were all digging for potatoes together?” “It is humbling, but you shouldn’t be surprised. In a world where we all die and all the great institutions that led the world pass the torch to other countries, why should we be surprised that these individual enterprises die or get weak? From death comes life.”

CONSTANT EDIFICATION. “Part of the reason I’ve been a little more successful than most people is I’m good at destroying my own best-loved ideas. I knew early in life that that would be a useful knack and I’ve honed it all these years, so I’m pleased when I can destroy an idea that I’ve worked very hard on over a long period of time.” “I don’t even try to be smart. I just try and be not insane and pay no attention to the traditions.”

RATIONALITY. “People who say they are rational [should] know how things work, what works and what doesn’t, and why. That’s rationality. It doesn’t help if you just know what’s worked before, because if you know why, then you’ll be better at it. So rationality is: Across a broad range of disciplines, you know what works and what doesn’t and why.”

SEIZE OPPORTUNITIES. “You only get a few opportunities, and you have to grab them aggressively when they come because even in the most favored life, they’re really rare.” “How many, if I took the 30 biggest transactions out of Berkshire [in the past] 60 years, what would Berkshire be? Not much. I mean we wouldn’t be poor, but we wouldn’t be rich either. Maybe once every two years we had a major opportunity. Not very many.”

BUREAUCRACY. “I don’t go to meetings. Warren doesn’t go to meetings.
Put that in your article: There’s practically no meetings in the whole Berkshire culture. There are a few telephone calls and no meetings. I don’t care if you print this. Warren gets a headache if he’s in a big meeting where a lot of other people are saying dumb things. He gets a sick headache. He’s not feigning it. He actually does. So part of Berkshire’s secret is, we don’t have the meetings, we don’t have the bureaucracy. We’ve concentrated a lot of power in the Greg Abels and so forth. It works better averaged out.”