Daily Journal Annual Meeting Notes

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Charlie Munger

Live an engaged life

“My hero is Maimonides. All that philosophy, all that writing he did after working all those hours a day as a practicing physician all his life. He believed in the engaged life. I recommend that you engage life. If you spend all your time on how some politician wants it this way or that way and you’re sure you know what’s right – you’re on the wrong track. You want to do something every day where you’re coping with reality. You want to be more like Maimonides and less like Bernie Sanders.”

Things have gotten much more difficult in the investing world

“In the old days, what we did was shoot fish in a barrel. It was so easy, we didn’t want to shoot fish while they were moving, so we waited until they slowed down and then we shot them with a shotgun. It was just that easy. It’s gotten harder and harder and harder. Now we get little edges. It isn’t any less interesting. Remember when Warren bought Exxon as a cash substitute? He never would have done that in the old days. We had a lot of cash and he thought that Exxon was better than cash over the short term. That’s a different kind of thing from the way Warren came up. He’s changed. He’s changed when he buys airlines. He’s changed when he buys Apple. Think of the hooey we built up over the years: we don’t understand it, it’s outside our circle of competency, the worst business in the world is airlines – and what appears in the holdings? Apple and a bunch of airlines. Have we gone crazy? I think the answer is, we’re adapting reasonably to a business that’s gotten much more difficult. I don’t think we have a cinch. We have the odds a little bit in our favor. We have to live on the advantages we can get. I used to say you have to marry the best person who will have you. I’m afraid that’s a rule of life. Things have gotten so difficult in the investment world that we have to be satisfied with the type of advantage we can get.”

There are lots of nerds here

“You come here as a cult to talk to the cult leader, let me take you back in history to see what an inferior person you’ve come to for instruction. When I was a freshman in Omaha High, there was a blonde goddess and I was a skinny 15-year-old and I took her to this dance. I wanted to impress this blonde goddess so I pretended to smoke, which I didn’t, and she was wearing a knit dress, and I set her on fire. So I poured Coke all over her to put the fire out. And that was the last I saw of the blonde goddess…This is the person you’re coming for miles to see. I didn’t get a new car. My life is just one long litany of mistakes and failures…. I tell you all of this because I know a nerd when I see one. There are a lot of nerds here.”

Indexes have created agony among investment professionals

“Indexes have created absolute agony among investment professionals because 95% of people have no chance of beating it over time…most people handle that with denial….I think the people who are worried and fretful are absolutely right. I would hate to manage $1 trillion in the major indexes. The success of Berkshire came from two decisions per year for 50 years.”

h/t Phil Demuth at Forbes http://www.forbes.com/sites/phildemuth/2017/02/16/charlie-munger-and-the-2017-daily-journal-corporation-annual-meeting/#27ac16007c7c