Daily Journal Meeting 2016

Charlie Munger Holds Court at the 2016 Daily Journal Meeting

There are few things in life better than learning from Charlie Munger, the irreverent billionaire investor and business partner of Warren Buffett.

In fact, since Farnam Street started, I’ve committed to two things Munger: (1) we will have someone at every single public event he speaks at; and (2) we will attempt to create the largest repository of Munger wisdom on the planet by transcribing everything we can get our hands on.

Of course, we’ve read Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger — but this masterpiece doesn’t quench our appetite for all things Munger. And while we don’t always agree with him, Munger is always worth reading and learning from.

At the Daily Journal Corporation annual meeting in Los Angles on Feb 10, 2016, Munger spoke at great length.

Farnam Street was there to capture Munger’s thoughts and comments. While the meeting ended sooner than normal, Munger didn’t disappoint with his thoughtful wisdom.

Below find some of his thoughts on IBM, multitasking, daily habits, and opportunity cost.

On IBM, a large Berkshire Hathaway holding, he says:

IBM is a lot like us. They had a traditional business that was very large and very sticky. Of course the world changed. A lot of what flourished in the new world, they were not the leader. Up came Oracle and Microsoft and all kinds of other people who were formerly not so large. Of course they didn’t do well eventually in the personal computers even though they pretty well started it.

IBM is in a position a lot like us, where they have an old business from which cash continues to flow, but they want a new product that’s a hit. Now, the product they have chosen to back is this…I call it the automated checklist. An automated checklist is a very good idea, and it may be particularly useful in things like medicine. But is it the kind of super market that may replace a lot of what made IBM great? I would say the jury is out on that. I don’t really have an opinion.

In other words, I’m neither a believer nor a disbeliever. I regard it as a mystery. It could happen and it could not happen as far as I’m concerned. I do think the old business of IBM is very sticky and will die slowly. It’s not a cinch. The truth of the matter is, that at Berkshire’s size, where we have to make great big bets and hold them for long periods, that’s a tough game.

We have to make bets that are not the kind of shooting fish in the barrel kind of bets we used to make. That’s one of them. If you want enlightenment on that one, the answer, my friend, is blowing in the wind.

It may work in a mediocre way. It may work big. I just don’t know.

On opportunity cost, he comments:

Most people don’t pay enough attention to opportunity cost. Bridge players know about opportunity cost. Poker players know about opportunity cost. American faculty members and other important people, they hardly know their ass from a plate of hot squash.

Commenting on daily habits and multitasking, he says:

There’re two things that Warren and I have done and Rick Guerin has done, too, to a considerable extent. One is that we spend a lot of time thinking. Our schedules are not that crowded. We look like academics more than we look like businessmen.

Our system has been to sift life for a few opportunities and seize a few of them. We don’t mind long periods in which nothing happens. Warren is exactly the same way. Warren’s sitting on top of an empire now. You look at his schedule sometime and there’s a haircut.

Tuesday, haircut day.

That’s what created world’s most successful business records in history. He has a lot of time to think.

That brings me to the subject of multitasking. All you people have got very good at multitasking. That would be fine if you were the chief nurse in a hospital. But as an investor, I think you’re on the wrong road. Multitasking will not be the highest quality thought man is capable of doing.

Juggling two or three balls at once, it’ll commit you on their schedule, not yours, is not an ideal thinking environment. Luckily a lot of you are so obscure that you have plenty of time to think.

We publish a complete set of notes from the meeting. The 2015 version clocks in at 56 pages, and the 2016 version, the one from last week, is 41 pages.

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