Bitcoin at 50,000 or Teslas fully diluted enterprise value of 1 trillion. Question: You identified the opportunity in electrification and invested in BYD. Charlie Munger spreads wisdom at the annual meeting for the Daily Journal. Thats interestingwho in the hell is voting against the accountants? By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. But Im flabbergasted at how well theyre doing. You once said to study the life and work of Lee Kuan Yew. So its a very theoretical discussion. Charlie Munger: I think Ill skip that one. WebDaily Journal Meeting Transcript 2021 fs.blog Page 1 of 32 Julia La Roche: Hello and welcome. Ill paraphrase here. Its just that some people look for values in strong companies and some look for values in weak companies. Youre better off concentrating your decision power on one person the way the Li Lu partnership does and then choose the right person. We were trying to save the whole economy under terrible conditions. All except for the legal advertising system which we had to build because nobody else has the volume that we have. Charlie Munger: Well, it certainly does and thats 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 betting on horses. He was old as I am. We are subject to the orders and directions of those counties which, before, really didnt impact anything. Put me down as skeptical. The death tax in China is zero. Gerald Salzman: Well, we dont think about mistakes. Charlie Munger: Well, its not easy to handle accumulated money in the current environment when these stocks are so high and partials of real estate of certain kinds are also very inflated. Its too volatile to serve well as a medium of exchange. Data may be intentionally delayed pursuant to supplier requirements. You can hardly think of anything more important in life than being reliable for the people who trust you. I cant help you. Sources: FactSet, Tullett Prebon, Commodities & Futures: Futures prices are delayed at least 10 minutes as per exchange requirements. On December 18, 2020the record datethere were 1,380,746 shares of common stock of the company outstanding. They just copied Adam Smith and left out the free speech and it worked fine for them. The total number of shares, represented by proxies at this meeting, are 995,682, which are more than enough to constitute a quorum making the meeting duly held. The wealth management industry has a crisis on its hands. At this rate, Question: You and Warren have been adept at quickly sizing people up, particularly business leaders and potential business partners. I knew a man once, Henry Singleton, who was not a chess champion. Theres an old German proverb Ive always liked. But, I hardly think the editorial quality could go way up when employees were going down. I think were into a lot less travel and a lot more Zooming. And, of course, thats a very dangerous way to invest. That recognized reality and worked way better than what other people were doing. Warren Buffett's highly anticipated annual Of course, people behave more sensibly when theyre spending their own money. And, of course, what Im saying is that if I were teaching business I would start the way Harvard Business School did a long time ago. 2021 Letter to Shareholders | Accenture That turned out to be a wonderful idea and thats one of the reasons we made all this money. They are joining the modern world very rapidly and theyre getting very skillful at operating. But, of course, you should start out by studying the history of capitalism, how it worked, and why before you start studying business. Were going to bust our ass to try and do a good job. Charlie Munger: I dont think so. But I wont be following him. Its been amazing that one little company starting up not that many decades ago could become as big as Costco did as fast as Costco did. I dont think well change on that. Thats one you can easily arrange. Charlie Munger: I dont have any wonderful new thoughts. In fact, what a lot of shareholders actually do is crowd in buying stocks on frenzyfrequently on creditbecause they see that theyre going up. Charlie Munger: I dont know anything about Haven. Charlie Munger downplays risk of Taiwan invasion, says And when things get as crazy as they were in the event youre talking about, there are threats of clearinghouse failure. Charlie Munger: Ben Franklin was one of the wisest men who ever lived. I think that shareholders should be more sensible and not crowd into stocks and buy them just because theyre going up and they like to gamble. You get crazy booms. I dont even know how much more difficultor how much more dangerousit would be to deal with hydrogen than it is to deal with gasoline which is also a dangerous substance. Charlie Munger: Well, I dont participate at all. Its doing a big public service. I think you should try and make your money in this world by selling other people things that are good for them. Amazon's 1997 Shareholder Letter Just time after time he would do something like that. And if you stop to think about it, that is also true at the Daily Journal. Do you agree that there is a close parallel to the late 90s and that this, therefore, must end badly?. But the accountants are duly elected. You have said that the single best way is to deserve a good spouse because a good spouse is by definition not nuts. Charlie Munger: I think Im alive because of a lucky genetic accident. That happystat has more to do with their happiness and their outcomes in life. Youve reached the limit of my circle of competence. How do you think about the hydrogen opportunity for transportation and how does it compare to the electric opportunity, specifically thinking about trucks versus cars. Question: How important is the analysis of company culture in the investment process? When you respond to software by the RFP process, its a very difficult, demanding business and its less profitable and less sure than what Microsoft does. One of the great advantages of the way Berkshire operates is that we associate with a lot of marvelous people. We are very excited to look forward to enabling the courts to function as we know that they want to and will in the future. A lot of the people who are doing this remote worka lot are going to work three days a week in the office and two days a week at home. Reddit and its partners use cookies and similar technologies to provide you with a better experience. But he previously worked for Rick Guerin and me in running a little mutual fund that we bought control of. 2021 Letter to Shareholders - About Amazon And I dont know whether hes right or not. Question: Mr. Munger recently raised the alarm about the level of money printing taking place. Ive seen the whole bus system shift from gasoline or diesel to gas and so it obviously isnt impossible, but youd have to create a whole new system of supply for it. Everybody is. WebShareholder Letter Q2 2022 AUGUST 9, 2022. The mantra he said over and over again is very simple. And, he was very good company and a splendid gentleman. That approach will never go out of style. So human greed and the aggression of the brokerage community create these bubbles from time to time. I predict that if they do that, a lot of people will leave Washington. When these people go, there is none replacing them. On the other hand, it could be handled. How do you decide to hold on to a stock or sell some? DAILY JOURNAL CORPORATION Munger's terse letter to Daily Journal shareholders. Charlie Munger: Modern monetary theory means that people are less worried about an inflationary disaster like Weimar Germany from government printing of money and spending it. Youve said recently that Sequoia is the greatest investment firm ever. They do way more good than harm. When it gets difficult, I dont think theres any automatic fix for difficulty. Were not enlarging it. I prefer the United States. :qpt1cMt8\2&avSY9-;S6 |jw&.\ "P/cdx>5[_:Vt _;hgf1!||tx8Oz}Y=eHcu65gl-T >Tkbb,OxW]Y?W8p`? LimT;IZ}La`9tFG;hB*4bI*Kt,U7e~kEVzVTmT$k*(4>uBXrW0L-MYz g\uz:~F ],ZgKUVyaq5muCWc*uNSS1e/~;$wqNw;jJkyVG*"ns*~e15{f +%>\o-^^U]UpJW',/ Copyright FactSet Research Systems Inc. All rights reserved. How can you not? They really need the world to stay the way it is. If you dont spend the money, you and your heirs get to spend it eventually. How would you advise these institutions to manage their endowments over the coming decades? SHAREHOLDERS ARE URGED TO DATE, FILL IN, SIGN, AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. Charlie Munger: Well, its natural for people to think their own civilization and their own nation are better than everybody else. Question: Last year, almost every ecommerce, internet, and internet adjacent stock was up 100 plus percent. But you know, most people dont do that. tzJ/wa*''=`R9+eJ}hv&iA+sn\/t`5q2(5l.h% dD2)ls.sz M4Z6X_h+ak,+,D^'a%&2K~SO@z'9f)xC? 6ZERFyGh.Q{BoM$k2YNNV'Vq3yd;6. Charlie Munger: Well, these things do happen in a market economy. Generally, what people do is they have financial reserves so they have some options if trouble comes, and they adapt the way Gerry has to require downsizings or require upsizings. What I think is interesting about chess is, to some extent, you cant learn it unless you have a certain natural gift. And since we are on the subject of selling potentially overvalued security, could you provide your systems for selling securities? Shareholders FactSet (a) does not make any express or implied warranties of any kind regarding the data, including, without limitation, any warranty of merchantability or fitness for a particular purpose or use; and (b) shall not be liable for any errors, incompleteness, interruption or delay, action taken in reliance on any data, or for any damages resulting therefrom. I think I would have lived a long time if I had lived a different life. Question: Why, almost two years ago, did you believe that Costco was the only U.S. stock worth buying? That thing circulates. What happened is that BYD is very well positioned for the transfer of Chinese automobile production from gasoline-driven cars to electricity-driven cars. BYD sells at nearly 200 P/E. Creating 360 value. I think management should tell it like it is at all times and not be a big promoter of its own stock. By using our website or by closing this message box, you agree to our use of browser capability checks, and to our use of cookies as described in our Cookie Policy. As a matter of fact, its not clear to me that China would have done better if theyd copied every aspect of English civilization. Charlie Munger: Yes, I think that is rising as we sit here. We use cookies and browser capability checks to help us deliver our online services, including to learn if you enabled Flash for video or ad blocking. We bought all these buildings cheaply. So it gets very dangerous. Source: FactSet. The disruption from the decline in newspapers has had a significant impact. It just created the most unholy mess. Theyve got a better reputation for providing value than practically anybody, including Amazon. With that one exception, Ive stayed out of Sequoias business because theyre so much better at it than I would be and I dont know how to do it the way they do it. Nothing is particularly obvious for everybody to do the same thing. And what are the implications, since Treasury assets underpin the value of every other asset? The JTI software has been configured for other judicial and justice agencies, including district attorneys, prosecutors, public defenders, probation, etc. But I dont think everybody can be a great investor or a great chess player. Its entirely possible that our system is right for us and their system is right for them. I think you can count on the fact that if we really like the company and we like the managementand that is the way we feel about BYDwere likely to be a little too loyal. Chinas economic record among the big nations is the best that ever existed in the history of the world. % Question: The Federal Reserve appears to be supporting asset prices. Question: Charlie, you are known as an advocate for learning from ones mistakes. And thats the way Eugene was in his community. I think people have the theory that any intelligent hardworking person can get to be a great investor. We dont have any other secrets, do we Jerry? Charlie Munger: Im a great admirer of Jeff Bezos whom I consider one of the smartest businessmen who ever lived. Could you share the secret to living a long, healthy, and happy life? I think office buildings are now in some trouble and, of course, commercial real estate rented to stores has been in a lot of trouble for a long time. As a matter of fact, it will be here for a long, long time if we stop using many hydrocarbons in transportation. Thats entirely due to the practical talent of Lee Kuan Yew. %%`EQ=@jMjkjJn. g5? 5T Its not generally noticed by the public but clearinghouses clear all these trades. Were beholden to the guidelines of the county of Los Angeles and other counties. He gasped and said, but hes never had anything to do with newspapers or anything else. I never buy any and neither does Daily Journal. All rights reserved. Charlie Munger Flags 'Speculative Frenzy' in Stocks, Lack of Bargains I think the Chinese have behaved very shrewdly in managing their economy and theyve gotten better results than we have in managing our economy. So, the shareholders have been lucky to have somebody like Gerry here who could learn what he didnt know and fix it. Do it right the first time. A lot of people assume that since England led the Industrial Revolution and had free speech early that free speech is required to have a booming economy as prescribed by Adam Smith. But he knew how to learn what he didnt know. You can imagine its in a wonderful position and that excited the people in China which has its share of crazy speculators. I tell a story on Rick that he took the Navys IQ test and got one of the highest scores ever recorded and left early. Thats what weve been doing throughout my whole lifetime. But, of course, if we got a chance to do it again, we would do it better. % He was a very smart man and he had a lot of good ideas. Im not going to change. Where does it appear most egregious? Its a very dishonorable low-grade way to talk. So, you can understand why Warren got disenchanted with Wells Fargo. You dont need to worry about them. Theyve served us well over the years. Question: Do you believe any psychological personality tests, such as the Myers-Briggs Type Indicator, to be of any good in choosing a compatible partner, given that choosing a spouse is probably the most important decision one can make in life. Both Berkshire and Li Lu own BYD Company which you spoke highly of in the past. And, for example, here, we must have 30 or 40 deaths. And I dont think youll find me engaged in the massive rezonings in the future. I dont think we have any great gift at making macroeconomic predictions. Question: If you had a chance to make an addition or revision to Poor Charlies Almanac, what would that be? I am more willing to hold stocks at high multiples than I would be if interest rates were a lot lower. I expect less out of bankers than he does. And weve had marvelous people here to help us do it through very difficult times and one of them is Gerry Salzman. shareholder letters And I applaud the result. So, I think for some folks, early-stage investing is best, and for other folks, what Ive done in my life is best. Absolute insanity. Some people have a natural trend toward good judgment, and with other people, their life is just a series of mistakes over and over again. and our Classified advertising is down significantly. Youll remember that when the first big bubble came, which was the South Sea bubble in England back in the 1700s, it created such havoc eventually when it blew up that England didnt allow hardly any public trading and securities of any companies for decades thereafter. In a shareholder letter, Barra said 2023 will be a "breakout year" for GM's Ultium-based EVs. WebDaily Journal Corp. balance sheet, income statement, cash flow, earnings & estimates, ratio and margins. I learned those tendencies well enough to synthesize it with the rest of knowledge. You can argue that I got close to Sequoia when with Li Lu we bought into BYD. We all live with that problem. What are the psychological implications of this type of market behavior? Charlie Munger: Well thats an easy one. Do you think that digital economy has reached a tipping point such that this time is different and that conventional valuation measures for these types of companies are dead, or does this environment remind you of 1999? Theyre just very simple. Lesson 1: Choose your words wisely. However, is there a price too high that the companys future profits simply cannot justify? Thats the reason he rose so fast in life. Shareholder Thats the good news. Have you considered amending this quote or lowering your standards? If you dont have master the rest of the knowledge you cant synthesize it with psychology. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. When the pandemic is over, I dont think were going back to just the way things were. See our Terms, Privacy Policy, and Disclaimer. They wouldnt be a lot happier if they were richer or a lot less happy if theyd been poor. Charlie Munger: I think I had the right temperament. I regard this as insanity. And its really stupid to have a culture that encourages as much gambling in stocks by people who have the mindset of race track betters. Bill Gates has written a book on this subject recently in which he concludes that it would be expensive but it could be handled. And why did you feel that Amazon had more to fear from Costco than Costco had to fear from Amazon? And, of course, when things get extreme you have things like that short squeeze. One is a big interest in Li Lus China fund, which is a limited partnership, and the other is a Vanguard index fund. I came to law school having learned the method of learning and nothing has served me better in my long life than continuous learning. In 2010, that was down to 165 full-time employees and 15 part-time employees. endobj Bookings in June 2022 totaled $217 million, up 8% (approximately 12% adjusted for the recent strengthening of the dollar against certain currencies) over WebMunger's terse letter to Daily Journal shareholders. Questions: Many observers see market behavior that reminds them of the Dot Com bubble: wild speculation, endless SPACs, and IPOs soaring on their first day of trading. Charlie Munger: Well, you know, I had a failed marriage, so I dont think Im in the perfect position to advise the young about marriage. This is cheap compared to Tesla currently valued at over 1100 times P/E and 24 times sales. Any tips on how to generate insight in these types of situations? I think that that will probably continue. God knows it was difficult but I dont think its a mistake. Question: Do you think its best to invest in the common stocks of businesses early or while they are more nascent and the industry is smaller, or wait until they are the clear winner of a more mature industry? Im not trying to move mountains. And thats the way we handled Gerry. I didnt get to where I am by going after mediocre opportunities. I was very lucky. 2021 Shareholder Letter Of course, thats a useful thing. GM raises its 2023 earnings outlook | Automotive News Question: Of the various types of moats and competitive advantages, which types do you think will be most important in the years ahead, and what combinations of competitive advantages can you imagine will create any new types of moats? And you mentioned technologythats very, very important. Question: You are one of the oldest and greatest thinkers of our time. 4. Charlie Munger: Well, I do have a tip. And what did the Chinese communists do with respect to death taxes? And, we have to function as an informal committee in that we have to bring our employees and our clients together to work out what they already know and how we can help them do a better joba more efficient job. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. And we probably have more of those shortcuts than others. But, of course, I think there will be more automation in transportation of all kinds in the future. I think they would have come out worse because their position was so dire and the poverty was so extreme, they needed very extreme methods to get out of the fix they were in. The votes in favor of that are 995,356 against 120. Charlie Munger: Well, of course, its very hard to fix the global warming problem when the poorer countries need to burn coal to stay alive and so on. Also, when you get reverses, if you just suck it in cope, that helps if you dont just fretfully stew yourself into a lot of misery. Change value during the period between open outcry settle and the commencement of the next day's trading is calculated as the difference between the last trade and the prior day's settle. I think the oil and gas industry will be here for a long, long time. Buffetts donations to the foundation have obviously helped to save many millions. Berkshires Performance vs. the S&P 500 What happens is that every human being tends to believe way more than he should in what hes worked hard to find out or where hes announced publicly that he already believes.
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