A few weeks ago, the Daily Journal held their annual AGM. The little-known company’s annual shareholder meeting has turned into a mini-Berkshire Hathaway AGM for the super nerds out there, because its Chairman is the brilliant and blunt Charlie Munger, who also happens to be Vice Chairman of Berkshire Hathaway and Warren Buffett’s right hand man. We have been before and wanted to attend again but unfortunately live attendance was cancelled due to COVID.
We were happy to spend a few virtual hours with him and glad to see he is doing so well even at the age of 97! Here are a few key highlights:
What is Value Investing? Value investing the way I regard it will never go out of style, because value investing the way I conceive it is always wanting to get more value than you pay for when you buy a stock. And that approach will never go out of style. Some people think that value investing is you chase companies which have a lot of cash and they're a lousy business or something, but I don't define that as value investing. I think all good investing is value investing. It's just that some people look for values in strong companies and some look for values in weak companies, but every value investor tries to get more value than he pays for.
On concentrated/focused investing - What is interesting is that in wealth management a lot of people think that if they have a hundred stocks they're investing more professionally than they are if they have four or five. I regard this as insanity absolute insanity. I find it much easier to find four or five investments where I have a pretty reasonable chance of being right that they're way above average. I think it's much easier to find five than it is to find a hundred. I think the people who argue for all this diversification - by the way I call it deworstification - which I copied from somebody – and I'm way more comfortable owning two or three stocks which I think I know something about and where I think I have an advantage.
Rules to a happy life – The first rule of a of a happy life is low expectations and that is 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. Also, if when you get reverses, you just suck it in and cope that helps and you don't just fretfully stew yourself into a lot of misery. There are certain behavioral rules - Rose Blumpkin [founder of Nebraska Furniture Mart, bought by Berkshire Hathaway] had quite an effect on Berkshire culture. She created a business with like 500 depression dollars that became a huge business. You know what her mottos were? Always tell the truth and never lie to anybody about anything. Those are pretty good rules and they're pretty simple. A lot of the good rules of life are like that, they're just very simple. Do it right the first time [Lee Kwan Yew – key founder of Singapore] is really good rule.
Full video here.
More Charlie – Intro to Charlie 101
Our favorite Charlie Munger interview is still from Ross University back in 2017. If you don’t know him, this is a great place to start to. – http://www.canadianvalueinvestors.com/home/2018/1/19/charlie-munger-talk-at-ross-university-2017-full-transcript
And of course, we continually re-read his Standard Causes of Human Misjudgment. “When I saw this patterned irrationality [in life], which was so extreme, and I had no theory or anything to deal with it, but I could see that it was extreme, and I could see that it was patterned, I just started to create my own system of psychology, partly by casual reading, but largely from personal experience, and I used that pattern to help me get through life.” – See here http://www.canadianvalueinvestors.com/charlie-mungers-list
Berkshire Hathaway AGM Coming Up May 1st!
Also, for those that missed it, Warren Buffett announced that the Berkshire 2021 AGM will be in Los Angeles this year as mentioned by Warren in the 2020 BRK letter:
And now – drum roll, please – a surprise. This year our meeting will be held in Los Angeles...and Charlie will be on stage with me offering answers and observations throughout the 31⁄2-hour question period. I missed him last year and, more important, you clearly missed him. Our other invaluable vice-chairmen, Ajit Jain and Greg Abel, willbe with us to answer questions relating to their domains.
We did indeed Warren! Though this will be an online affair. A few of us were scheduled to attend the 2020 AGM in person, but I guess we will have to wait until 2022.