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Charlie Munger: (Inaudiblyaddressing the formal business of The Daily Journal for approximately fiveminutes) Unidentified AudienceMember: Can you please turn the mic up? Charlie Munger: Isthis better? (Audience cheers) Some of you may remember that thissame thing happened at a Wesco meeting once. Back to the Daily Journal. Likemany newspapers it was once a fine business. Of course the world changed a lot,as it has for other newspapers. But somethings have gone well, like our stock holdings. We made a lot of money in theforeclosure boom. We had more than 80% of the foreclosure notice business. Itwas huge prosperity for us and that gave us a lot of money, and we then usedthat money to buy securities at low prices during the panic. We were aided bythat peculiar circumstances, and it offset the deterioration of our newspaperbusiness. Of course, we’ve also entered the software business. And what’shappened now is that we have more software properties than print properties andthose businesses are doing much better. And the business is doing betterbecause our product is way better than that of our main competitor. And thereis an endless market for this stuff. District attorneys, courts; it’s hard toimagine anything more certain to flourish. It’s agonyto do business with public bodies and their bureaucracies and agencies, butit’s the agony that keeps many other software companies from coming into themarket. If you’re Microsoft you’re into easy money. They did buy one of thesebusinesses once, and it was not a success. The really big boys find it hard,and they tend to stay out. I think our prospects are thus better than our mainopposition. What youhave here is a sort of venture capital approach to the software business. We’vetacked on a software business to a newspaper. Our stock may be reasonable ifyou like VC investments, but it’s not right for Ben Graham groupies. I’m notsaying it won’t work, but if it does, you don’t deserve it. (Audiencelaughs) With that I’ll take questions. Questioner One: Tell usabout one or two opportunities in technology and also give us one or two risks. Charlie Munger: The one Iwas most excited about was getting into(inaudible, but could have been JournalTechnologies). Crucial milestone. We bought this little nothing softwarecompany and now it has 80 or 99 employees. The new business is interestingbecause it’s in a big market. I think whoever gets entrenched in it will be ina very sticky business. At least wewill have entered a business where we’ll be hard to dislodge. The hurdle isthat we want to be most important player in this new niche, which is a bigniche. I don’t regard that as going poorly. It’s going well. (Authors note:Journal Technologies is a subsidiary of DJCO and supplies case managementsoftware to courts and justice agencies). Questioner Two: I’m fromStanford. Thanks for donating the Munger building. You’ve said you want to knowwhere you’re going to die, so you never go there. A few years ago Warren Buffetbought IBM, and some people say he walked out of the circle of competence. Canyou comment in relation to the first comment?
(译注：此问是对IBM看法，很多人质疑巴菲特买IBM。) Charlie Munger: IBMis a lot like us. They have a traditional business that is very sticky, butthen the world changed. And of course, in the new world they are not theleader. Up came Oracle and Microsoft. IBM didn’t do too well with the rise ofthe PC. But IBM isin a position where they have an old business and a newbusiness. (Inaudible). The automated checklist is a great idea. Itwas particularly useful for Edison. But now IBMis a kind of super market and I don’t really have an opinion about it. I’mneither a believer nor disbeliever in the new business. It could happen or itcould not happen. I do think the old business is very sticky and will dieslowly. On the Berkshire side, we have to play a long game. It may work in amediocre way, it may work big. Questioner Three: Iwant to thank you for sharing your wisdom with all of us. Two questions: Whatadvice do you give to your grandchildren? Second question: do you have afavorite investment story you can share with us? Charlie Munger: Well,regarding grandchildren I was not able to change my children very much. Mysituation reminds me of what Clarence Darrow said about the great poem: “I amthe master of my fate master of soul. Master of my fate? I can’t even pull anoar!” That’s the way I feel about grandchildren. (Authorsnote: Clarence Darrow, a prominent 19th century lawyer was quotingand challengingthe spirit of the poem “Invictus” by William Ernest Henley.Darrow said “Instead of being the captain of his soul, as I have sometimesexpressed it, man isn’t even a deck-hand on a rudderless ship! He is justfloating around and trying to hang on, and hanging on as long as he can.”Source: [url=]http://darrow.law.umn.edu[/url])
（作者注释：Clarence Darrow，一个著名的十九世纪律师，引用并挑战WilliamErnest Henley所作的“invictus”一诗的精神。Darrow 说：“别说是作为灵魂的船长了，正如我有时候表达的那样，人甚至不能做一个无舵航船的水手！他仅仅漂浮着，尝试着坚持，尽他最大可能地坚持。”来源[url=]http://darrow.law.umn.edu[/url]) Charlie Munger: Whatwas the second question? Questioner Three: Doyou have a favorite investing story? Charlie Munger: Well,I have many investment stories from my younger days, but not many that Ihaven’t told before. Al Marshall and I did something in 1962, where we werebidding for some oil rights. I soon realized that under the rules of the rightsthe only people who would bid for these oil royalties were oil brokers and theywere a bunch of bastards. I realized the oil royalties business was populatedby shady characters, who could be outmaneuvered easily. The Mungers weregetting a $100k a pop for a while. (Authors note: Munger gave much moredetails regarding this trade / arbitrage but they were not audible) The troublewith that business, is it didn’t work for very long, and that’s true of mostinvestment stories. The trick is to get one or two or three. Questioner Four: Howdoes the current investment energy environment compare to the 1980s? Charlie Munger: We ownedWesco for a long time. They did a lot of transactions. But it was only five orsix outcomes that carried most of the freight. Now that is really interesting.To try and do a zillion little things is hard. Try to do a few things well, andit will work out. A few good decisions over a long period of time can lead togreat success. You make your money by the waiting. A fair amount ofpatience is required. Like when we had all this money flowing in from theforeclosure boom, and we deployed it in a day. It wasn’t luck we had the moneyon hand. Questioner Five: HistoricallyBerkshire was built around its insurance model. What other models did you tryand pursue? Charlie Munger: In theearly days we thought we had a special advantage in any float business. Now wehave enormous float but it’s not that useful. It’s not a tragedy but the floatbusiness in Berkshire is large and it’s not getting a great return. Questioner Six: TheDaily Journal is in software. What do you think of the attractiveness of theaverage software business? Charlie Munger: Softwarebased businesses are like any other business. Some of them are the dumps, someof them are the best on earth. Good spots and bad spots. Questioner Six: Itseems like Journal Technologies is growing slower than its competitors, butpeople are paying high multiples for it. Would you ever consider sellingJournal Technologies? Charlie Munger: Well,never say never. We’ve had problems and opportunities. It’s a peculiar part ofthe software business. We can’t judge it like a normal business or even like anormal growth company. It’s venture capital. You have a venture capitallike business that’s not venture capital. Thoselittle businesses are not acquisitions of the very best businesses that aregoing to be foolproof like we do at Berkshire. We are going to make a venturecapital like assault on the software business. Don’t judge those things by normalstandards. Questioner Seven: Ifyou were to design CEO compensation for an insurance company or a bank, whatwould you do? Charlie Munger: Wellboth Berkshire and the Daily Journal have our own ways of doing things, and wejust try and do whatever makes sense. That’s our system here. Questioner Eight: Whatare your expectations for BYD? Charlie Munger: Thattoo is a venture capital like company. The founder started by borrowing$ 300K from the Bank of China, and was going into the smallbatteries business. He succeeded in grabbing a small part of that market. He’sa very remarkable man, doing an insanely ambitious thing. Last month he sold10,000 electric cars in China, which is more than Tesla sold. Most people havenever heard of BYD. Berkshiredoesn’t do this venture capital stuff, and I hope that the Daily Journal worksout half as well. BYD is in a position to benefit from this electrificationtrend. It’s very helpful when people are dying in the streets of Beijingbecause they can’t breathe the air. We haveelectric forklifts in this country. Do you really want carbon dioxide in thewarehouse? It’s a very interesting venture capital investment. It was anaccident that the Daily Journal is doing a venture. I only wish we came acrossmore BYDs. Questioner Nine: Howdo you use the discount rate to calculate intrinsic value? Charlie Munger: Wedon’t use numeric formulas that way. We take into account quality factors. It’slike a bridge hand, you have to think about a lot of things. There is nevergoing to be a formula. If that worked, every mathematical person would be rich,but that’s not the way it works. Questioner Nine: Butyou value a company… Charlie Munger: Opportunitycost is crucial, and the risk free rate is one factor. Questioner Nine: Doyou use the same rate for different businesses? Charlie Munger: Theanswer is no, of course not, different businesses need different rates. They all are viewed in terms of value, and they’re weighed one againstanother. But a person will pay more for a good business than for a lousyone. We really don’t want any lousy businesses anymore. We used to make moneybetting on reinventing lousy businesses and kind of wringing money out ofthem, but that is a really painful, difficult way to make money, especially ifyou’re already rich. We don’t do much of it anymore. Sometimeswe do it by accident, cause one of our businesses turns lousy, and in that caseit’s like dealing with your relatives you can’t get rid of. We deal with thoseas best we can, but we’re out looking for new ones. Questioner Ten: Mentalmodels question….what are your favorites? CharlieMunger: Well, we’re always talking about multiple models, and that means Ihave many. That’s the nature of reality. There’s no way that it can be easy.You are all in the investment business ? do you find it easy? Anybody who findsit easy is wrong. You are looking at an illusion. Occasionally you’ll get aneasy one, but not very many. Mostly it’s hard. How many people find ithard? (Most of audience raises hands) Intelligent group of peoplehere. We collect them. (Audience laughs) Questioner 11: You saidyou try to reduce errors by avoiding auctions. What do you do in your dailylife to reduce errors? Charlie Munger: Thereare two things Warren and I have done. One is that we spend a lot of timethinking. Our schedules are not that crowded, and we sit around and thinkconstantly. In a way, we look more like academics than businessman. My systemhas always been to sit quietly for a few hours. I don’t mind if there are longperiod where nothing happens. Warren’s the same way. He’s sitting on top of anempire now. Sometimes he clears his schedule for a haircut. His calendar willsay “Tuesday: Haircut day”. All youpeople are very good at multitasking, and that’s fine if you are the chiefnurse at a hospital. Otherwise, multitasking is bad. Juggling three balls atonce is not ideal. Luckily, a lot of you are so obscure you’re not thatbusy (audience laughs).That advice worked for me, and it should work foryou. If it didn’t work for me, I didn’t have a backup plan. I was not going todance lead in the Bolshoi Ballet. But I dothink that the constant search for wisdom and the right reactions can help.Being angry will never serve you. You can apply that to your life. But it’shard to do. The nature of ordinary results is that they’re ordinary. Questioner 12: Youbought Wells Fargo. Why was that a good investment? Charlie Munger: WellI’ll take you back to when Berkshire bought Wells. The world was coming apart.Real estate was the source of the chaos. Wells Fargo had a huge exposure. Butwe knew that the lending officers at Wells Fargo were not normal bank lendingofficers. They were grownups, and they had a somewhat cynical view, and theywere appropriately careful and it was the right way to run a bank. And we knewthey were better, and we knew they wouldn’t lose at much because they chosebetter and managed better. So we had an informational advantage. We were awarethey had that special capacity, so we bought heavily. Secondlywhen the Daily Journal bought Wells we again knew that bankers at Wells weremore rational than normal. It’s a different kind of superiority andrationality. I don’t think anyone should buy a bank if they don’t have a feelfor the bankers. Banking is a business that is a very dangerous place for aninvestor. Without deep insight, stay away. Questioner 13: Twopowerful mental models are the concept of specialization and taking aninterdisciplinary approach. How do you reconcile the two? Charlie Munger: Youcan’t say live without synthesis. Synthesis is reality. Of course weneed synthesis to understand anything. The question doesn’t make sense.However, the reward system of the world does not favor focusing on synthesis.Extreme specialization is the way to succeed. Most people are way better offspecializing than trying to understand the world. Being goodat synthesis is good only for some people, but it’s not great career advice formost people. Most people should get very good at one thing. Even then,synthesis should be your second attack on the world, and it’s also a reallygood defense. Without synthesis we’d be blind. Questioner 14: You’vesaid that rationality was the most important thing to you. How would you adviseus to become more rational? Charlie Munger: Ifyou start working at it young, it’s a good idea. And it’s a lot of fun. I canhardly think of anything that’s more fun. I’d say you’re on the right track. Noteveryone gets to be the Emperor of Japan. Beingrational means you avoid certain things. Try the alternatives. Try jealously,try anger. They don’t work. Yet some people wallow in those feelings, and ofcourse it’s a total disaster. Self-pity is not going to improve anything. Getself-pity out of your repertoire. Questioner 15:Increasingly, men and some women don’t find ROI in a long-term relationshipworth it. What is your evaluation of this? A: Well Ithink different folks can live in different ways, but I think all the evidenceis that marriage is the best practical alternative for most people, and thestatistics show it. They live longer. They measure happiness physiologically,smiling and all that…. It isn’t that a lot of marriages don’t fail and a lotaren’t made in Hell and all that, but considering how difficult the world is,it’s your best chance for most people. And of course it should be valued.That’s one of the things I like about the Asian cultures. The Confucian ideathat the family is really important . . . too, for that matter, is a very soundidea. If we ever lost family values we would have a hell of a lot of [trouble] ---- AuthorsNote: Following Mr. Mungers formal remarks and Q&A session, he lingered onstage to take pictures with attendees. This author was able to ask him a finalquestion while having my photo taken with him. Jesse Koltes: Ifyou were starting a hedge fund right now with a much smaller amount of moneywould you still care as much about quality? Charlie Munger: I’dalways care about quality. But if I was running a smaller fund, I wouldn’t haveto choose been Exxon and IBM. There would be a lot more interesting places tolook.
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发表于 2016-8-3 10:58:09
