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Charlie Munger CNBC Final Interview 2023: Highlights & Transcript

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Charlie Munger held his last in-depth interview with CNBC’s Becky Quick in mid-November 2023. The interview was meant for a 1-hour special celebrating Munger’s 100th birthday, but was re-edited to become “Charlie Munger: A Life of Wit and Wisdom”. I don’t have cable TV anymore, but CNBC has thankfully released a full text transcript and will upload the full, uncut video the CNBC Buffett Archives site shortly (update: here is the extended version).

I highlighted a few Munger quotes below along with brief commentary. If you aren’t familiar with the “greatest hits” of Munger wisdom, definitely check out the full transcript or video. I will definitely miss mining through these interviews for the “new to me” gold.

Playing the hand you are dealt.

…I just played the hand I was dealt in order to get as much advantage as I could. And that’s what everybody else does too. They play the hand that was dealt to get as much advantage as they possibly can.

Think about the country/environment you were born, your parents, and your genetically-influenced gifts and challenges. Those are three huge things, and none of us had any choice in any of them. In fact, I’m certain many of you readers have overcome more obstacles than I can imagine. I hope to teach my children about appreciating their blessings, accepting their challenges, and to keep striving while giving grace to others. Heck, I hope to teach myself that too. Work in progress…

Stay in your circle of competence. I definitely believe that you need to enjoy what you’re doing to do it well, but I am also a firm believer in practical considerations.

And so I decided to stay the hell out of businesses where I would compete with people like Eddie Davis, Jr. and Eddie Davis, Sr. in their strong suit.

BECKY QUICK: Knowing your competencies.

CHARLIE MUNGER: Knowing your circle of competency. Right. And that kept me away from those businesses totally.

Maintain a margin of safety.

But really, it’s knowing you can have a very bad day. Do not live your life in such a fashion that a bad day can kill you.

But also be ready to take risks when the odds are in your favor.

But Grandfather Ingham just talked endlessly about the early days and how he’d surmounted all these hardships. And he says that it looks pretty easy, “looking back at it with retrospect, but it was damn hard, I want you to know.” And he said, “And in reviewing my life, what your grandchildren have to realize, it was his version of Robinson Crusoe, he told every grandchild, “Is when they give you a real opportunity, the world’s not gonna do it very often. And you’re only gonna get three or four of these invitations to the pie counter. And when you get your invitation, for God sakes, don’t take a small helping.” He basically said, “Lever up when you’re sure you’re right.” And of course that’s good advice. But be sure you’re right is what makes it hard. How can you be sure you’re right? Well, but you can’t. That’s the point. You can’t do it very often.

“Everyone struggles.”

BECKY QUICK: I mean, Charlie, people probably look at you and think you’re incredibly wealthy, you’ve had all these great opportunities and things that have happened in your life. But you’ve struggled too.

CHARLIE MUNGER: Of course. Everybody struggles. The iron rule of life is everybody struggles.

BECKY QUICK: I try and think back of what the toughest moments might’ve been and how you got through some of those. And, I mean–

CHARLIE MUNGER: Well, we all know how to get through them. The great philosophers of realism are also the great philosophers of what I call soldiering through. If you soldier through, you can get through almost anything. And it’s your only option. You can’t bring back the dead, you can’t cure the dying child. You can’t do all kinds of things. You have to soldier through it. You just somehow you soldier through. If you have to walk through the streets, crying for a few hours a day as part of the soldiering, go ahead and cry away. But you have to – you can’t quit. You can cry all right, but you can’t quit.

BECKY QUICK: You’ve had time in your life when you’ve done that?

CHARLIE MUNGER: Sure. I cried all the time when my first child died. But I knew I couldn’t change the fate. In those days, the fatality with childhood leukemia was 100%.

One of the things you’ll notice is that none of these quotes offer easy advice. It’s all annoyingly difficult stuff like keep plowing ahead, take smart risks, maintain reasonable expectations.

For some reason, I am always reminded of an old beer commercial (wish I could find the clip) where a man talks about raising his kids and finally sending them off to college. He basically says it was a long and hard journey and the other guy in the bar says something like “Well, you should be proud.” And the first guy realizes “Yeah, I should.” Nobody else knows all of your struggles. You don’t have to become a billionaire to be proud of your accomplishments.

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RIP Charlie Munger: Thank You For Sharing Your Wit and Wisdom

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Many investors around the world were saddened to hear that Charles T. Munger passed away on November 28th, 2023, only about a month before he would have turned 100 years old. Most people discovered him through his long friendship and business partnership with Warren Buffett, and many of us enjoyed the fact that he was more bluntly honest, more revealing at times, and overall a great compliment to Buffett.

For the certain type of self-motivated person, his message simply resonated. Lifelong learning. Frugality and delayed gratification. Putting up with adversity and not complaining. Spending your time as you want. There will be many tributes, and here I’ll simply share some of my favorite Munger quotes over the years. Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger (cover of new edition above) is another great repository of his past speeches and wisdom.

His desire for independence starting at a young age. From Damn Right! A Biography of Charlie Munger (my review):

When Charlie’s grandparents read and reread Robinson Crusoe to him, they planted a notion in his head. “He wanted to be rich so he could be completely independent, like Crusoe on his island, and not have to do what anybody else said.”

I had a considerable passion to get rich. Not because I wanted Ferraris – I wanted the independence. I desperately wanted it. I thought it was undignified to have to send invoices to other people. I don’t where I got that notion from, but I had it.

Working and saving hard early on to start your snowball. Charlie Munger was financially independent at age 38 in 1962.

The first 13 years I practiced law, my income [from practicing law] was $300,000 total. At the end of that 13 years, what did I have? A house. Two cars. And $300,000 of liquid assets. Everyone else’d have spent that slender income, not invested it shrewdly, and so forth.

I just think it was, to me, it was as natural as breathing, and of course I knew how compound interest worked! I knew when I saved $10 I was really saving $100 or $1,000 [because of the future growth of the $10], and it just took a little wait. And when I quit law practice it was because I wanted to work for myself instead of my clients, because I knew I could do better than they did.

Work for yourself an hour each day. Like the schoolteacher I just read about that now makes $10,000 a month creating worksheets and selling them to other teachers, Charlie looked beyond his current working situation. From The Snowball:

Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who’s my most valuable client?’ And he decided it was himself. So he decided to sell himself an hour each day. He did it early in the morning, working on these construction projects and real estate deals. Everybody should do this, be the client, and then work for other people, too, and sell yourself an hour a day.

The first $100,000 is the most difficult:

Munger has said that accumulating the first $100,000 from a standing start, with no seed money, is the most difficult part of building wealth. Making the first million was the next big hurdle. To do that a person must consistently underspend his income. Getting wealthy, he explains, is like rolling a snowball. It helps to start on top of a long hill—start early and try to roll that snowball for a very long time. It helps to live a long life.

If you do it right, you only have to get rich once.

The beauty of it is: you only have to get rich once. You don’t have to climb this mountain four times. You just have to do it once.

Lifelong, continuous learning. From a commencement speech within Poor Charlie’s Almanack:

“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent. But they are learning machines. They go to bed every night a little wiser than they were that morning.”

On living a happy life and surrounding yourself with good people.

You want to have reasonable expectations and take life’s results good and bad as they happen with a certain amount of stoicism. There’ll never be any shortage of good people in the world. All you got to do is seek them out and get as many of them as possible into your life. Keep the rest the hell out.

Simply avoid certain things. From How To Make Your Life Completely Miserable:

Let me use a little inversion now. What will really fail in life? What do you want to avoid? Such an easy answer: sloth and unreliability. If you’re unreliable it doesn’t matter what your virtues are. Doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability.

He has also advised keeping an extremely wide chasm between you and gambling, alcohol, and drug addiction. Why even mess around with things that could destroy your life completely?

Optimism for the future. He may sound cranky a lot, especially when he was a loud critic of crypto during it’s boom, but his overall message was of one of optimism. From the book University of Berkshire Hathaway:

However, Munger beamed that Berkshire’s best days of contributing to civilization are ahead. He noted that mankind is getting close to solving the technical problem of our time -solar power. Cheap, clean, storable power will change the world. Munger said, “As I get closer and closer to my death, I get more cheerful about the future I won’t see.”

[…] Munger may have surprised the crowd with a list of things he is quite optimistic about: The main problems of civilization are technical and solvable, all with energy, with huge benefits for civilization. Berkshire’s culture will continue to work for years to come. He likes to see people rising rapidly from poverty, and that is happening in China and India.

More sources of Charlie Munger wisdom:

Thank you, Mr. Munger. Learning from your wisdom and example has materially improved my own life (and indirectly that of my family) in many different ways.

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MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Charlie Munger Acquired Podcast Interview w/ Transcript (October 2023)

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The Acquired Podcast has new episode with Charlie Munger. As usual Charlie was candid and dropped some truth bombs, although we never quite get to hear what he really thinks about venture capital… 🤐 If you scroll down on the page, you’ll also find a full transcript of the interview.

Here are a few selected highlights (slightly edited by me at times to match the audio):

The extra-wide parking spaces at Costco! I always felt they were a competitive edge.

Ben: What was it about Costco that made you realize this is one of those few moments in a lifetime?

Charlie: They really did sell cheaper than anybody else in America and they did it in big, efficient stores. All the parking spaces were 10 feet wide instead of eight or nine feet or whatever they normally are. They did it all right and they had a lot of parking spaces. They kept out of their stores, all these people didn’t do big volumes, and they gave special benefits to the people who did come to the stores in the way of reward points [via the Executive membership 2% back].

Rational people don’t risk what they have and need for what they don’t have and don’t need.

David: But your relationship with Warren?

Charlie: We were both somewhat similar. We both wanted to keep our families safe and take a good job for our investors and so on. We had similar attitudes.

David: Did it change over the decades?

Charlie: No. Warren still cares more about the safety of his Berkshire shareholders than he cares about anything else. If we used a little bit more leverage throughout, we’d have three times as much now, and it wouldn’t have been that much more risk either. We never wanted to give them the least a chance of screwing up our basic shelter position.

The three things.

Person: Charlie, if you started with Warren today and you were both 30 years old, do you think you guys would build anything close to what Berkshire is today?

Charlie: The answer to that is no, we wouldn’t. We had… everybody that had unusually good results… almost everything has three things: They’re very intelligent, they worked very hard, and they were very lucky. It takes all three to get them on this list of the super successful. How can you arrange to have just […] good luck? The answer is you can start early and keep trying for a long time, and maybe you’ll get one or two.

Climb the mountain once.

Andrew: I don’t think you’re saying there are no opportunities whatsoever. I think you’re just saying low expectations and fewer bonanzas.

Charlie: The beauty of it is: you only have to get rich once. You don’t have to climb this mountain four times. You just have to do it once.

It was a great interview, and prompted me to add these other Acquired Podcast episodes to my playlist:

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Charlie Munger Fireside Chat with Todd Combs (April 2022): Full Recording and Transcript

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Charlie Munger held a fireside chat with Todd Combs back in April 2022 as part of a Singleton Prize for CEO Excellence event, and more recently a full audio recording and full text transcript has been made available. The talk covered a variety of different topics, which fans of Berkshire Hathaway/Buffett/Munger-style wisdom will likely value. Found via Neckar and Kingswell (both excellent substacks on value investing topics).

I enjoyed this quote about the power of combining internal motivation and long attention span:

Warren was around me and he used to say, “You really don’t need to be very smart to be a very successful investor.” And I think Warren was right. It’s a field where the temperament is, it’s good to have the extra mental horsepower that Henry Singleton had. That is helpful, but it’s perfectly possible to do splendidly well if you have the right temperament. Just go at it over a long time. You talked about me. I’m not a polymath. What I am is a guy who has been able to take moderate obsession and a long attention span and turn them into pretty good results. Of course, a long attention span will help you a lot, if you’re reasonably smart.

[…] I don’t know how to fix [inaudible]. I’d love to be able to wave my hand and solve that problem, but I don’t think that’s given to man, to fix some of those problems. So I just stay away from the problems that can’t be fixed and pick the ones that can – I don’t like unlimited failure. I don’t want to fish forever and never catch a fish. I have to have some reinforcement. And so I pick some things that can be done and do them. But I do think that if you’re reasonably obsessed with something, even if it’s intermittent, and you have a long attention span, you keep working over the serious problems, that you’ll stumble into an answer. That’s half the secret of life.

However, I also noticed he added in a point about picking the right problem to solve. I’ve previously shared this Venn diagram by Bud Caddell:

caddell620

You do need to pick something where you have a natural “obsession” or “passion” because it will help you keep at it and not give up. However, most mortals should add in a bit of practicality and pick an area for which you at least have a little bit of talent and that isn’t completely impossible or saturated with competition.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Charlie Munger Daily Journal Annual Meeting 2023 Video, Transcript, and Highlights

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Charlie Munger is now 99 years old and still answering blind questions on the fly at the 2023 Daily Journal Annual Shareholder Meeting. CNBC has posted the full 2+ hour interview with Becky Quick on YouTube. You’ll miss out on his snarky tone, but you may prefer to read the transcript, kindly provided at Steady Compounding (looks to be computer-generated… psst – the name is Rick Guerin!).

Munger remains refreshing in that he doesn’t filter everything into bland nothingness. He’s not afraid to offend with his opinions. I’ve included a few of my personal highlights below.

Only 5% of money managers have the skill required to consistently beat the index averages after costs.

And if you want an example of how denial is affecting things, take the world of investment management. How many managers are going to beat the indexes? All costs considered, I would say maybe 5% could consistently meet the averages.

Everybody else is living in the state of extreme denial. They’re used to charging big fees and so forth for stuff that isn’t doing their clients any good. It’s a deep moral depravity. If some widow comes to you with $500,000 and you charge her 1 point a year for, and you could put her in the indexes, but you need the 1 point. And so people just charge somewhat a considerable fee for worthless advice. And the whole profession is full of that kind of denial. It’s everywhere.

Crypto is (still) crap.

…when you’re dealing with something as awful as crypto sh*t, it’s just unspeakable. It’s an absolute horror. And I’m ashamed of my country that so many people believe in this kind of crap and the government allows it to exist is totally, absolutely crazy, stupid gambling with enormous house odds for the people on the other side.

And they cheat — in addition to cheating and like betting, it’s just crazy. So that is something. There’s only one correct answer for intelligent people there, just totally avoid it and avoid all the people that are promoting it.

Charles Munger is a billionaire, but rarely ever gambles in a casino or at a sports book. In terms of percent of net worth, Munger has bet the equivalent of the average person betting less than 5 bucks in their entire life.

Q: How do you feel about the gambling that took place at the Super Bowl and surrounding that and the legalized gambling taking place in this country at this point?

A: Well, it’s not as bad as crypto s***. I don’t think there’s much harm in betting a modest amount you can afford on a Super Bowl game. That strikes me as a pretty — thing if you do it with a friend and not with a bookie. So I don’t have the same feeling — I obviously don’t think you should have a gambling impulse around betting against odds. If you take all the money that I have bet against odds in my whole life, I don’t think it’s more than a few thousand dollars.

I’m all in favor betting with the odds.

Big picture thoughts on the future long-term performance of Berkshire and stocks in general:

Everybody that bought Berkshire and held it for 20 years has done well. I think that will be true for those who buy at the current price. I don’t think it will be as good in the future as it was in the past, but it will be okay considering how poorly everything else is going to do. Because the valuations start higher now and because government is so hostile to business.

I would say it will fluctuate naturally between administrations and so on. But I think basically, the culture of the world will become more and more anti-business in the big democracies. And I think taxes will go up, not down. So I think the investment world is going to get harder for everybody. And — but it’s been almost too easy in the past for the investment class. It’s natural that it would have a period of getting harder. I don’t worry about it much because I’m going to be dead.

The Daily Journal’s employee 401(k) plan has only one investment option: index funds.

…look at the Daily Journal Corporation. We just put in a 401(k) plan. What are the investment options for the people at work? Zero. It’s all index funds.

What percentage of American 401(k)s have our plan, index funds required? About zero. Am I right or am I wrong? Of course, I’m right. It’s a logical thing to do.

If you can afford to self-insure, you should do so. Insurance protects you against catastrophe, but there many extra costs built into the premiums (fraud, commissions, etc). Medical insurance is an exception because the insurance-negotiated cost is often much lower than the direct-consumer-pay cost.

In my own life, I’m a big self-insured and so is Warren. It’s ridiculous for me to carry fire insurance on my house because I could easily rebuild a house if burned down. So why would I want to bother fooling around with the claims process and all kinds of things.

So if insurance — you should insure against things you can’t afford to pay for yourself. But if you can afford to take the bumps, so unusual expense coming along doesn’t really hurt you that much. Why would you want to fool around with some insurance company. If your house burned down, I would just write a check and rebuild it. And all intelligent people do that way. I don’t say all, but — maybe I should say, all intelligent people should do it my way.

There should be way more self-insurance in life. There’s a lot of waste. You’re paying when you buy insurance for the other fellows frauds, and there’s a lot of fraud in life. And you can afford to take the risk yourself and not fool around with claims and this and that and commissions and time. Of course, you self insure, it’s simpler and so forth.

Think of what I’ve saved in my life. I narrowed it. I don’t care. I never carried — never. I think once — but with one exception, I never carried collision insurance on a car. And once I got rich, I stopped carrying fire insurance on houses. I just self insure.

Past years:

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Charlie Munger Daily Journal Annual Meeting 2022 Full Video, Full Transcript, and Highlights

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Charlie Munger is now 98 years old and still answering questions at the 2022 Daily Journal Annual Shareholder Meeting. Yahoo Finance livestreamed the event again, and you can view the full two-hour recording on YouTube (embedded below, starts at 24:47). You’ll miss out on his snarky tone, but you may prefer to read the entire transcript, kindly provided in PDF form via @DividendGrowth and via Junto Investments.

You don’t have to agree with everything he says, but some of it is just refreshing in that it’s not the same stuff you hear elsewhere. He has a clear opinion. I’ve included a few of my personal highlights below.

One philosophy that I appreciate (but don’t necessarily follow) is to simply stay completely clear of bad things that can destroy either your financial stability or your general happiness. If you don’t own crypto, you can still live a rich and happy life.

  • Avoid treating the stock market like a casino.
  • Avoid speculating in cryptocurrencies.
  • Avoid doing something because you see someone else get rich doing it.
  • Avoid anything so addictive to you that you give up everything else. For some, it could be alcohol. Others, it could be video games.
  • Avoid “pretentious expenditure”.

On the best way to invest:

Well, it may be that you have to choose the least bad of your options. That frequently happens in human decision making. The Mungers have Berkshire stock, Costco stock, Chinese stocks through Li Lu, a little bit of Daily Journal stock, and a bunch of apartment houses. Do I think that’s perfect? No. Do I think it’s okay? Yes. I think the great lesson from the Mungers is that you don’t need all this damn diversification. You’re lucky if you got four good assets. If you’re trying to do better than average, you’re lucky if you have four things to buy. To ask for 20 is really asking for egg in your beer. Very few people have enough brains to get 20 good investments.

On making macro-economic predictions and dealing with the boom and bust cycle:

I figure that I want to swim as well as I can against the tides. I’m not trying to predict the tides.

If you’re gonna invest in stocks for the long term, or real estate, of course there are going to be periods when there’s a lot of agony and other periods when there’s a boom. I think you just have to learn to live through them.

Should we go to cash and wait for better opportunities in the future?

In my whole adult life, I’ve never hoarded cash, waiting for better conditions. I’ve just invested in the best thing I could find. I don’t think I’m going to change now. The Daily Journal has used up its cash.

On living a happy life:

You want to have reasonable expectations and take life’s results good and bad as they happen with a certain amount of stoicism. There’ll never be any shortage of good people in the world. All you got to do is seek them out and get as many of them as possible into your life. Keep the rest the hell out.

Past years:

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MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Charlie Munger: A Double Layer of Risk Protection

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My current commute/workout/kid taxi listening is old Berkshire Hathaway shareholder meetings after finding them in podcast format. (I know, out of all the choices available, somehow I find these the most stimulating?!) Here is a educational excerpt from the 2008 BRK meeting (transcript and video available at CNBC) where Charlie Munger is discussing how Berkshire works to avoid low-probability problems that could destroy the company now and in the future.

CHARLIE MUNGER: Yeah. You can see how risk averse Berkshire is. In the first place, we try and behave in a way so that no rational person is going to worry about our credit.

And after we’ve done that, and done it for many years, we also behave in a way that, if the world suddenly didn’t like our credit, we wouldn’t even notice it for months, because we have such liquidity and are so unlikely to be — unable to be — pressured by anybody.

That double layering of protection against risk is like breathing around Berkshire. It’s just part of the culture.

[…]

We do not want to be dependent on anybody or anything else. And yet we want to keep doing things.

So, we’ve found a way to do it — we think we found a way — to do that. It may give up some of the — well, obviously gives up earning higher returns 99 percent of the time, and maybe 99.9 percent of the time.

Obviously, we could have run Berkshire with more leverage over the years than we have. But we wouldn’t have slept as well, and we wouldn’t feel comfortable — we’d have a lot of people in this room that have almost all their net worth in Berkshire, including me — and we wouldn’t feel comfortable running a business that way.

Why do it? I mean, it doesn’t — it just doesn’t make any sense to us to be exposed to ruin and disgrace and embarrassment and — for something that’s not that meaningful.

If we can earn a decent return on capital, you know, what’s an extra percentage point? It just isn’t that important.

Takeaways. The parallels for personal finance seem pretty straightforward:

  • Maintain an excellent credit reputation (score). Having a good credit score will help you borrow for a house, buy a car, lower your insurance premiums in many cases, and finance larger projects and transactions. However, that credit line may still disappear quickly in a crisis.
  • Maintain adequate liquidity separate from any credit lines. Imagine that you lose your job and can’t find a new one for six months. Can your household survive without major disruption? What if at the same time, your stocks also got a 50% haircut and everyone else is suffering as well? Do you have cash or liquid assets to tide you over?
  • Accept that this level of safety means you won’t earn the highest returns. You’ll do fine, but you may not do as well as someone else who bet it all (or more than all using leverage) what happened to be the right thing during the good times. That’s okay, because you won’t be exposed to ruin.
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This Becky Quick Quote Sums Up the Buffett and Munger Partnership

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After finishing up the 4-part CNBC Squawk Podcast containing the full “Wealth of Wisdom” interview with Warren Buffett and Charlie Munger, the journalist Becky Quick summed up the essence of their 60-year friendship and partnership (emphasis mine):

It’s not a complicated lesson, it’s probably just one we don’t sit on and reflect upon often enough. You should surround yourself with people who inspire you, and people you don’t want to disappoint. That’s what it’s all about, right? Making sure we are all our best selves. It’s such a universal truth. All of us can look at the relationships we’ve had over the years, and what inspires you to do better? It’s really those people who put faith in you, and wow, you don’t want to let them down.

Definitely something to reflect upon.

I enjoy all of these CNBC interviews with Becky Quick – you can see that she has a comfortable and respectful relationship with them, while still pressing them for clarity on certain issues. As soon as the interview officially ends, Becky Quick lets out a laugh and remarks:

You’d rather be in jail… than work at a corporation!?!”

Technically, Warren Buffet says he would rather be in jail with some interesting people and a good pile of books… rather than micro-managing the daily activities and hundred of employees of Berkshire subsidiaries. I get your point, Warren! 👍

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Buffett & Munger Wealth of Wisdom on CNBC: Full Video and Transcript

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Update: Apparently there was a lot of the interview that wasn’t shown in the CNBC video below, but is being released in a four part series on their podcast, Squawk Pod. Let me know if you find a transcript.

Original post:

For the Buffett and Munger fans out there, Becky Quick had another CNBC special interview with the pair about their longtime friendship and partnership, called Buffett & Munger: A Wealth of Wisdom on June 29th, 2021. Thankfully, you can watch the full video online and/or read the full text transcript.

All in all, this interview didn’t offer a lot of new insights if you already listened to the 2021 Berkshire Hathaway shareholder meeting and 2021 Daily Journal shareholder meeting (Robinhood still promotes gambling and Bitcoin is still a delusion), but it did provide a little more background into their personal histories.

Here is my single favorite quote from the interview (emphasis mine):

BUFFETT: And we’re still doing it, yeah. We made a lot of money. But what we really wanted was independence. And we have had the ability since pretty much a little after we met financially we could associate with people who we wanted to associate with. And if we had, if we associated with jerks, that was our problem. But we didn’t have to. We’ve had that luxury now for, you know, 60 years or close to it. And, and that beats 25-room houses and, you know, six cars or that stuff is, what really is great is if you can do what you want to do in life and associate with the people you want to associate with in life. And, now, it, it’s and, and we both had that, that spirit all the way through.

These two friends may be famous because they are rich, but they are happy because they are able to spend their time with people that they enjoy.

Buffett and Munger explicitly wanted to get rich, so they could be independent. True freedom is the ability to control how you spend your time. But that usually takes a certain amount of money, so we have the term “financial freedom”.

I think it’s okay to say “I want accumulate a lot of money for the next X months or years”, especially if you’re in debt. As Munger has also stated, the first $100,000 is the hardest. If you really want independence quickly, then you need to embrace some pain and sacrifice to earn your freedom. This is why I try not to criticize anyone taking “extreme” measures to improve their savings rate. Some people are willing to endure a very spartan lifestyle for independence sooner, while others aren’t, or they may have a higher income and not need to give up much.

At the same time, after reaching a certain level of financial stability, we then need to figure how what game we really want to play with our limited time on this planet, beyond simply buying more luxurious stuff. Buffett enjoyed the game of capital allocation and accumulating more dollars; that was his idea of fun. He even had a partner to play the game with him. For most people, I think continuing to make more money involves more stress and hard work.

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Charlie Munger Daily Journal Annual Meeting 2021 Full Video, Full Transcript, and Highlights

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It seems that every year, Charlie Munger and the Daily Journal Annual Shareholder Meeting gets more and more media attention. Which is great, as Munger is now 97 years old. Yahoo Finance livestreamed the event, and you can view the full two-hour recording on YouTube. It’s much faster to read the entire transcript, kindly provided at sites like Latticework Investing and Junto Investments. Munger covered a lot of ground, and it’s nice to see he hasn’t lost his edge. I’ve edited things down to my personal highlights below.

On the popularity of the short-term trading of stocks like Gamestop. It is nothing fancier than gambling.

…that’s the kind of thing that can happen when you get a whole lot of people who are using liquid stock markets to gamble the way they would in betting on racehorses. And that’s what we have going in the in the stock market. And the frenzy is fed by people who are getting commissions and other revenues out of this new bunch of gamblers.

A few shots at Robinhood.

I have a very simple idea on the subject. I think you should try and make your money in this world by selling other people things that are good for them. And if you’re selling them gambling services where you make profits off of the top, like many of these new brokers who specialize in luring the amateurs in, I think it’s a dirty way to make money. And I think that we’re crazy to allow it. […] Well, it’s most egregious in the momentum trading by novice investors lured in by new types of brokerage operations like Robinhood. I think all of this activity is regrettable. I think civilization would do better without it.

Nope, Robinhood is not free.

Robinhood trades are not free. When you pay for order flow, you’re probably charging your customers more and pretending to be free. It’s a very dishonorable low-grade way to talk. Nobody should believe that Robinhood’s trades are free.

On SPACs:

Well, I don’t participate at all. And I think the world would be better off without them. I think this kind of crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble. It’s just that the investment banking profession will sell shit as long as shit can be sold.

On Treasury bonds, government stimulus, and low rates:

Well no, I don’t think we have a bubble in Treasury securities. I think they’re a bad investment when interest rates are this low. I never buy any and neither does Daily Journal. But, no, I don’t think Treasury securities are a big problem.

I do think that we don’t know what these artificially low interest rates are going to do or how the economy is going to work in the future as governments print all this extra money. The only opinion I have there is that I don’t think anybody knows what’s going to happen for sure. Larry Summers has recently been quoted as being worried that we’re having too much stimulus. And I don’t know whether he’s right or not.

On higher stock prices due to low rates:

I think everybody is willing to hold stocks at higher price-earnings multiples when interest rates are as low as they are now. And so I don’t think it’s necessarily crazy that good companies sell at way higher multiples than they used to.

On the other hand, as you say, I didn’t get rich by buying stocks at high price-earnings multiples in the midst of crazy speculative booms. I’m not going to change. I am more willing to hold stocks at high multiples than I would be if interest rates were a lot lower. Everybody is.

On why DJCO kept its Wells Fargo shares when Berkshire Hathaway sold them all off:

Well, I don’t think it’s required that we be exactly the same on everything. We have different tax considerations. […] So, you can understand why Warren got disenchanted with Wells Fargo. I think I’m a little more lenient. I expect less out of bankers than he does.

On Bitcoin:

So, I don’t think Bitcoin is going to end up as the medium of exchange for the world. It’s too volatile to serve well as a medium of exchange. It’s really kind of an artificial substitute for gold, and since I never buy any gold, I never buy any Bitcoin. I recommend that other people follow my practice.

On Costco. Munger has said in the past that 1/3rd of his net worth is in Costco.

Costco I do think has one thing that Amazon does not. People really trust Costco will be delivering enormous value. And that is why Costco presents some danger to Amazon. They’ve got a better reputation for providing value than practically anybody, including Amazon.

How do you know you really understand something? Avoid confirmation bias.

Well, I do have a tip. At times in my life, I have put myself to a standard that I think has helped me: I think I’m not really equipped to comment on this subject until I can state the arguments against my conclusion better than the people on the other side. If you do that all the time; if you’re looking for disconfirming evidence and putting yourself on a grill, that’s a good way to help remove ignorance.

Can anyone become a great investor? Bad news.

I think people have the theory that any intelligent hardworking person can get to be a great investor. I think any intelligent person can get to be pretty good as an investor and avoid certain obvious traps. But I don’t think everybody can be a great investor or a great chess player. […] I don’t think it’s easy for ordinary people to become great investors.

What does Munger advise his charitable institutions to hold as assets? Munger also has 1/3rd of his assets run by Li Lu, and the final 1/3rd is Berkshire Hathaway shares.

Well, the one charitable institution where I have had some influence for a very long time has a whole bunch of hotshot financiers in every branch of wealth management there is on the board. And that institution has two assets in its endowment account. One is a big interest in Li Lu’s China fund, which is a limited partnership, and the other is a Vanguard index fund. As a result of holding those two positions, we have a lower cost than anybody else and we make more money than practically everybody else. So you now know what I do in charitable institutions.

Most people have “happiness thermostats”:

I think most people who are assuming tolerable success in life are about as happy as they were ordained to be. They wouldn’t be a lot happier if they were richer or a lot less happy if they’d been poor. I think most people are born with a happystat. That happystat has more to do with their happiness and their outcomes in life.

More on happiness:

The first rule of a happy life is low expectations. That’s one you can easily arrange. If you have unrealistic expectations, you’re going to be miserable all your life. I was good at having low expectations and that helped me.

On choosing a spouse:

A little wisdom in spouse selection is very desirable. You can hardly think of a decision that matters more to human felicity than who you marry. […] Well, you know, I had a failed marriage, so I don’t think I’m in the perfect position to advise the young about marriage.

Here are last year’s 2020 Daily Journal meeting video, transcript, and notes. Here are links to past Daily Journal meeting transcripts and lots of additional Munger material.

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Charlie Munger: Huge Compilation of Annual Shareholder Letters, Interviews, Op-Eds, Speech Transcripts

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Charles Munger is probably best known as the Vice Chairman of Berkshire Hathaway and longstanding investing partner of Warren Buffett. However, he has also been the CEO and/or Chairman of the Board of multiple other companies. This means there many additional sources of knowledge and wisdom beyond just BRK shareholder letters. I recently discovered this huge 1,000 page compilation (PDF) of everything Munger, including annual letters from Blue Chip Stamps, Wesco, and Daily Journal as well as his op-ed contributions and transcripts of speeches. Found at ValueWalk, the PDF includes links to most of the individual sources inside as well. Thanks to all the folks that worked hard to preserve this material.

There was no table of contents, so I started making a list of all the goodies inside:

Annual Shareholder Letters and Meeting Transcripts

  • Blue Chip Stamps, Annual Shareholder Letters, 1978-1982. Blue Chip Stamps was merged into Berkshire Hathaway in 1983.
  • Wesco Financial Corporation, Annual Shareholder Letters and/or Meeting Notes, 1983-2010. Wesco Financial was officially merged into Berkshire Hathaway in 2011.
  • Q&A sesssion with Charlie Munger July 1st, 2011. An event paid for by Charlie Munger after the Wesco merger.
  • Daily Journal Corporation Annual Meeting Notes and/or Transcript, 2013-2018.

Speech Transcripts, Op-Eds, Interviews, Etc.

  • Opinion Pieces, 1984.
  • Speech by Charlie Munger to the Harvard School, 1986.
  • Resignation of Mutual Savings from US League of Savings Institutions, May 30, 1989.
  • A Lesson On Elementary, Worldly Wisdom As It Relates To Investment Management & Business, 1995.
  • Practical Thought about Practical Thought?, 1996.
  • Investment Practices of Leading Charitable Foundations, 1998.
  • Foundation Financial Officers Group Master’s Class, 1999.
  • A Perverse Use of Antitrust Law, 2000.
  • Philanthropy Round Table, 2000
  • Optimism Has No Place in Accounting, 2002
  • The Great Financial Scandal of 2003
  • Herb Kay Undergraduate Lecture at the University of California, Santa Barbara Economics Department, 2003.
  • Munger speech at University of California, Santa Barbara, 2004.
  • The Pyschology of Human Misjudgment,
  • Charlie Munger – USC Commencement Speech 2007
  • Sacrificing To Restore Market Confidence, 2009.
  • Basically, It’s Over. A parable about how one nation came to financial ruin, 2009.
  • Wantmore, Tweakmore, Totalscum, and the Tragedy of Boneheadia: A Parody about the Great Recession, 2011.
  • A Conversation with Charlie Munger and Michigan Ross Dean Scott DeRue, 2017.
  • Charlie Munger, Unplugged, 2019.
  • Foreword to the Chinese Edition of Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger (by Louis Li).

This should keep me busy for a while!

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Charlie Munger Daily Journal Annual Meeting 2020 Full Video, Full Transcript, and Notes

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If you like hearing Warren Buffett and Charlie Munger talk at the Berkshire Hathaway (BRK) annual meeting, you should also watch or listen to Charlie Munger at the Daily Journal (DJCO) annual meeting. DJCO is his personal pet project, and each year he does a Q&A session where he answers any questions by himself. CNBC recorded the full 2020 DJCO annual meeting live (embedded below). I watched the entire 2+ hour session – it’s good but long… might be better as a podcast (although I like to take notes too).

Adam Blum of ValueWalk has generously shared his full transcript as well. It’s very complete so I am too lazy to compete with that. Instead, here are my (often paraphrased) personal notes and highlights:

  • Munger has no idea what the consequences will be that the biggest shareholder in all the biggest companies are index funds.
  • Munger likes the Daily Journal and Costco because it they try to do right by their customers, as opposed to casinos for example that make money by tricking people. You should always take the high road if you can. It’s less crowded.
  • Newspaper are going away, except for maybe the Wall Street Journal and New York Times. This is bad, as now you have misleading opinion media on both sides that just keep spewing hatred. Politics is even sillier than business.
  • Chinese companies are stronger with better growth prospects than US companies. Munger is invested there (and he jokes that you aren’t). Fish where the fish are.
  • Munger is partial to Canada and their working single-payer health care system, especially how they pay lower pharmaceutical prices.
  • There is too much wretched excess in investment management. There are troubles coming.
  • Index funds will still work best for most people, if you can be patient. He notes that the average holding period among Chinese investors is very short. This is not good. He is not a fan of the popularity of gambling among the Chinese.
  • Be a survivor, not a victim. Advocating for reform is important, but on a personal level it is important to to keep plugging along. Munger doesn’t like politicians that get ahead by trying to make everyone feel like a victim. Recognize you are in a bad situation and work to make it better.
  • Munger only knows enough about Crypto to know that he should avoid it. “Too hard” pile.
  • Regarding inflation and interest rates, we should all be modest about our knowledge of economics.
  • No new book recommendations.
  • Munger does not have a hostile attitude towards China. The US should try to get along with China. China should try to get along with the US. As an aside, Munger has admiration for Japan during their 25 years of economic stasis.
  • Learn to change your mind when you are wrong.
  • Tesla – Munger will never buy it, but also never sell it short. Don’t underestimate a man that overestimates himself.
  • We should appreciate our current living standards. What is extra money really going to do for you after you have enough to eat? Medicine has greatly improved. Even with more technological advances, will life be that much better?
  • Munger has no secrets to share about his longevity.
  • His only advice on parenting is to be a good example. Preaching to his kids never worked.
  • On negative interest rates, having worked once, governments will of course try it again, likely to excess.
  • The inversion process. Figure out the easiest ways to make yourself bankrupt, and then avoid them. (Consumer debt? Medical debt?)
  • Munger is known for being rational, yet he 96 years old, enormously rich, and cares a lot about what happens to a little company called the Daily Journal. He calls it insane.
  • Having a two-party political system is good. Power corrupts. It’s better when no one side gets too much power. The ebb and flow is good.
  • American healthcare, in many ways it’s the best in the world. It is powered by a lot of smart hard-working people. However, there is a huge amount of totally unnecessary activity that costs a lot and does nothing or even causes harm. Why? There are big financial incentives to make money with unnecessary care. Change the incentives. The insurance reimbursement system is too opaque. Kaiser system is an example of doing less unnecessary care.
  • People who are deferred gratifiers do better than the impulsive ones that demand immediate gratification. He is afraid the tendency towards one or the other might be genetic.

I actually appreciate when someone admits they don’t know something, as opposed to others who seem to form a strong opinion on everything under the sun. One of Munger’s lessons is that it is important to accept what you don’t know, and make strong bets only on what you do know. That’s the only way to get outsized results.

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