Charlie Munger: I think Ive learned to avoid zoning work. It was absolutely incredible. Question: In your past speeches, you have mentioned the term functional equivalent of embezzlement to describe situations where bubbles can form because both parties involved in a bubble believe the asset to be worth more than it truly is. This years annual report suggests that the traditional business has 97 full-time employees. And, of course, he hated costs. Charlie Munger: Well, I dont participate at all. We have offices in all the major cities in California and also in Logan, Utah. And if you believe Jeff Bezos is one of the best businessmen you have ever known, would you consider investing early in any of the new projects he will inevitably focus his attention on now that he will not have to be as concerned about the day to day responsibilities of Amazon? I dont know which is worse. Charlie Munger: I think Im alive because of a lucky genetic accident. The psychology professors dont know all that much about the rest of knowledge and they have no incentive to master it. I think civilization would do better without it. God knows it was difficult but I dont think its a mistake. Reddit and its partners use cookies and similar technologies to provide you with a better experience. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. 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. 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. Below is the Report's Letter to Shareholders from GE Chairman and CEO Larry Culp: Dear Fellow Shareholder, 2021 was a year of historic change for GE. And my advice would be if you have a fixable disadvantage, remove it. I think the world is gonna be quite different. Mutual Funds & ETFs: All of the mutual fund and ETF information contained in this display, with the exception of the current price and price history, was supplied by Lipper, A Refinitiv Company, subject to the following: Copyright Refinitiv. And, we are really interested in doing a good job in Australia, in California, and all the other places where people have trusted us. Im not saying that oil and gas is going to be a wonderful business but I dont think its going away. Im not saying I wanted to live in China. :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',/ And I dont think youll find me engaged in the massive rezonings in the future. But you know, most people dont do that. Its one of the most ignorant professions in the world. Daily Journal Corp : Submission of Matters to a Vote of Security Holders (form 8-K) AQ. I was very lucky. Its a funny way to make money. Is it digital wallets like PayPal, Square, or Apple Pay? Charlie Munger: Well, I so rarely hold a company like BYD that goes to a nosebleed price that I dont think Ive got a system yet. And, I think that could happen, but, of course, thats not a sure thing. And when things get as crazy as they were in the event youre talking about, there are threats of clearinghouse failure. Lane Hickenbottom/Reuters Warren Buffett's longtime business partner called out a The meeting will come to order. Now 16 years have passed. He was old as I am. xZF}W3y%Y{mZ#fHSMR-Er``F(VuSE()|"MT/+AIE"WUVm &IN/ qD2OM~-e.kvwySQ;&m.rOqK[z=7r|>*a[9ATrv92==I>6n2- ` #? Think of whats died in my lifetime. He had a long and wonderful run. Question: You identified the opportunity in electrification and invested in BYD. So it gets very dangerous. Gerry, can you ever remember Rick down? Charlie Munger: Well, I think all stocks can fluctuate. Charlie Munger: Well, the business around here that has the most promise is our software business automating the courts. Charlie Munger: I dont know anything about Haven. Its hard to run a bank intelligently. My guess is we have suffered some editorial quality. All we can promise is that were gonna try and so far as I can tell, were doing pretty well. Question: Many believe that inequality accelerated by this pandemic has reached alarming levels that demand drastic solutions such as a wealth tax. Were all pretty forgiving of ourselves too which is probably a good thing. Or, has the digital revolution caused enormous productivity improvements in those businesses? I think that inequality is absolutely an inevitable consequence of having the policies that make a nation grow richer and richer and elevate the poor. s=QFO?TT ze(0$ $$JI6[t_j%Suf.`2QW They dont work that hard at figuring out what works and what doesnt. Its just that the investment banking profession will sell shit as long as shit can be sold. I predict that if they do that, a lot of people will leave Washington. Sure, we all love the kind of civilization we have. Everything you see is profit. One thing I can promise is that I wont contribute much to it because I dont understand it. There are certain behavioral rules. Thats what the communists are doing. Charlie Munger: Ladies and gentlemen, wherever you are, via Yahoo finances website. Theres a lot of temptation to do dumb things which will make the earnings next quarter go up but are bad for the long term. Thank you for all you do to educate us. Do you think the Daily Journal would have hundreds of millions of marketable securities now if Gerry didnt know how to learn something new? Never before in the history of mankind have we seen such a rapid eradication of poverty, pulling approximately 800 million people out of destitution. Charlie Munger: Well, of course, the places downsized. 2021 Letter to Shareholders. The bad news is its not clear whos gonna win all the business or how much money is going to be made. And if you stop to think about it, that is also true at the Daily Journal. Put me down as skeptical. 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. You have said that the single best way is to deserve a good spouse because a good spouse is by definition not nuts. This is cheap compared to Tesla currently valued at over 1100 times P/E and 24 times sales. Sources: FactSet, Dow Jones, Bonds: Bond quotes are updated in real-time. Cookie Notice Classified advertising is down significantly. Share Charlie Munger, a shareholder and board member for The Daily Journal, is set to speak at the newspapers virtual annual meeting Wednesday. When I saw that psychology was necessary and I didnt have it, I didnt just learn the little tendencies well enough to get As in psychology. All except for the legal advertising system which we had to build because nobody else has the volume that we have. Question: What is the wisdom behind holding bank stocks compared to other stocks. And the next time around the poor will get richer faster than the rich. Charlie Munger: I think Ill skip that one. And his conclusion is that mankind should just step up to it and do it. But, of course, its a very difficult field. 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. Questions: Many major businesses and high net worth individuals have been leaving California. Question: Do you believe the valuations for electric car manufacturers are in bubble territory? Charlie Munger: Well, the people doing the computer software are doing magnificently wellthe people under Gerry: Maryjo and Danny. Of course, we accomplished quite a bit working together. Thats one you can easily arrange. WebIn 2021, for example, we paid$3.3 billion while the U.S. Treasury reported total corporate income-tax receipts of $402 billion.Additionally, Berkshire pays substantial state and foreign taxes. Thats interestingwho in the hell is voting against the accountants? He took over a malarial swamp with no army, no nothing. The daily journal stock sells way above the price I would pay if I was buying new stock. In other words, I think the system of checks and balances and elections that our founders gave us actually gave us pretty much the right policies during my lifetime. Question: Why is Berkshire Hathaway selling shares of Wells Fargo as quickly as one can and the Daily Journal has sold one share? Charlie Munger: I think any rich nation ought to have a social safety net that expands a little with its wealth. Costco I do think has one thing that Amazon does not. A lot of the good rules of life are like that. But he knew how to learn what he didnt know. Question: Has your opinion on cryptocurrencies remained the same? So, you can understand why Warren got disenchanted with Wells Fargo. Join 4,000+ investment professionals and curious generalists by getting my latest articles, research, and insights directly to your inbox. And in biology, what happens is the individuals all die, and eventually, so do all the species. Theyd take you through the building of the canals and the building of the railroads and so on and so on. Bookings in June 2022 totaled $217 million, up 8% (approximately 12% adjusted for the recent strengthening of the dollar against certain currencies) over Delayed Nasdaq Always on point. Charlie Munger: I think everybody is willing to hold stocks at higher price-earnings multiples when interest rates are as low as they are now. And, pretty soon, he turned that into this gloriously prosperous place. Were going to bust our ass to try and do a good job. We paid two and a half million for it. And if youre selling them gambling services where you make profits off of the top, like many of these new brokers who specialize in luring the amateurs in, I think its a dirty way to make money. Charlie Munger: Well, I dont think I know exactly what the future of banking is and I dont think I know how the payment system will evolve. I said to Rick, were going to make Gerry the head of the Daily Journal. And, of course, thats a very dangerous way to invest. How would you advise these institutions to manage their endowments over the coming decades? Questions: Now that we are cash flow positiveassuming the software business is investing organically as much as it canwhat is the philosophical thinking with respect to capital allocation at the Daily Journal. For example, Coca-Cola in the past. But, but by and large, most of the knowledge has been available for a long time. 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. I was good at having low expectations and that helped me. Thats the good news. Charlie Munger: Ben Franklin was one of the wisest men who ever lived. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Question: I enjoyed your Caltech interview and wanted you to elaborate and provide more insights on your point of great investors and great chess players. That way, whatever happens, he feels smart. The first rule of a happy life is low expectations. In a shareholder letter, Barra said 2023 will be a "breakout year" for GM's Ultium-based EVs. And I think both of us have done the same thing; we just suck it in and cope. I dont think its easy for ordinary people to become great investors. 1 0 obj Of course, people behave more sensibly when theyre spending their own money. Question: You famously run investments through your mental checklist. February 11, 2022. Gerry, dont you think were doing pretty well? Charlie Munger: I think I had the right temperament. I own some apartment houses, so I like that investment, provided youve got a perfect management which is hard to get. Some people think that value investing is you chase companies that have a lot of cash and theyre in a lousy business or something. Facebook; Instagram; LinkedIn; Twitter; Youtube; Shop Amazon.com Nobody should believe that Robinhoods trades are free. Question: We have a couple of questions about J.P. Rick Guerin. It just created the most unholy mess. Charlie Munger: Im sure some are, but, by and large, thats not what Warren is known for. 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. Munger Is there anything that you wish you had added to your checklist sooner? Imagine a bunch of Chinese communists turning a whole lot of Chinese and the billionaires in a big hurry. Theres no question about the fact that Wells Fargo has disappointed long-term investors like Berkshire because the old managementwhich is now removedwere not consciously malevolent or thieving but they had terrible judgment in having a culture of cross-selling where the incentives on the poorly paid employees were too great to sell stuff that customers didnt really need. Just time after time he would do something like that. Im afraid thats the way we all have to leave our swords. Rose Blumpkin had quite an effect on the Berkshire culture. You can argue that I got close to Sequoia when with Li Lu we bought into BYD. Without the method of learning, youre like a one-legged man in an ass-kicking contest. Charlie Munger: I dont think I use much physics in solving my investment problems but it occasionally helps me. And thats the way we handled Gerry. That turned out to be a wonderful idea and thats one of the reasons we made all this money. 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. And thats the way Eugene was in his community. If so, how do you think society should address it, especially because poor countries require much more cheap energy to reduce poverty? 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. One is a big interest in Li Lus China fund, which is a limited partnership, and the other is a Vanguard index fund. He didnt know one damn thing about the Daily Journal when we made him head of it. Who gets rich faster by class is going to vary over time and I dont think anybody should be too concerned by it. As a matter of fact, what happens is to make a nation rich, you need a free market system. In other words, to some extent, its a self-correcting system. Its just that some people look for values in strong companies and some look for values in weak companies. 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. Question: Can you share some parting thoughts with the viewers who are watching all around the world? When it gets difficult, I dont think theres any automatic fix for difficulty. We do know one thing and that is that the courts of the whole world are going to be taken into the modern age. So you now know what I do in charitable institutions. Question: What books are you currently reading and what can you reccomend? But, I dont think Ive got a lot to contribute. I recognized early that Gerry could run anything he wanted to run. And even if you have a natural gift, you cant be good at it unless you start playing at a very young age and get huge experience. So, no I dont think its the responsibility of management to assure where the stock sells. Question: Previously, you have said; It takes character to sit with all that cash and do nothing. When these people go, there is none replacing them. Of course, its going to be difficult. He doesnt mind at all not getting credit for his charitable donations. If you stop to think about it, business success long term is a lot like biology. 02/15. If its not good enough for Berkshire, shouldnt we have the same standards? And another shareholder asked: Dear Mr. Munger, please share your thoughts on the recent /r/WallStreetBets GameStop short squeeze. Question: Youve spent much of your life contributing your wisdom to schools and hospitals. What do you make of these two pricings? Always intelligent. I call it deworsificationwhich I copied from somebody. Rick was part of the group which consisted of Warren Buffett, Rick Guerin, and Charlie Munger that bought control of Blue Chip Stamps when it was widely distributed in an anti-trust settlement. If youre willing to count small nations in the group, he had probably the best record that ever existed in the history of the world. Question: Should there be a tax on buying stock now that Robinhood trades are free? What do you think the long-term consequences will be? We hope theyll continue doing magnificently well. Take Gerry. [As for] marketable securities, we prefer owning common stocks to holding cash under current conditions and its kind of an accident that we have so much in marketable securities. One of the great advantages of the way Berkshire operates is that we associate with a lot of marvelous people. She created a business with like 500 depression dollars that became a huge business. 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. We miss Rick terribly. Question: The highly configurable JTI product may help e-suites integrate deeply into new jurisdictions as agencies and citizens become familiar with the courthouse software. Charlie Munger: Well, it helps to be able to leave the IQ test early with the highest score. I think were into a lot less travel and a lot more Zooming. Charlie Munger: I have seen an episode or two of the Queens Gambit. What could investors do to cope better with periodical frenzy? Charlie Munger downplays risk of Taiwan invasion, says I find it much easier to find four or five investments where I have a pretty reasonable chance of being right that theyre way above average. Privacy Policy. 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. Nothing is particularly obvious for everybody to do the same thing. If the seas were to rise 60 feet, which could happen in another 100 years or so, wed have to build enormous barriers to sea entry. In Singapore, you get a savings account the day youre born. 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. And, he was very good company and a splendid gentleman. So he was just a perfect banker if you wanted never to have any trouble. Florida would have a really serious problem. So, I think you can count on the fact that what were doing is going to be a big growing field. If you have unrealistic expectations, youre going to be miserable all your life. But I dont think thats going to end up with a mistake. Read the full transcript of the 2022 Daily Journal annual meeting featuring Charlie Munger and Gerald Salzman. Theyre no longer using peasant girls to beat the brains out of our little shoe companies in America. You can hardly think of a decision that matters more to human felicity than who you marry. At about the same time, we bought a newspaper in Phoenix and that worked out extremely well. I dont think we have any great gift at making macroeconomic predictions. I think all good investing is value investing. So, the shareholders have been lucky to have somebody like Gerry here who could learn what he didnt know and fix it. Or, is it impossible to realize a deterioration quickly enough to exit without a loss? Thats true whether youre Benjamin Franklin or Joe klutz. I would imagine that applies to the broad market too. Part of the reason for that was cultural. Charlie Munger: Well, the one charitable institution where I have had some influence for a very long time has a whole bunch of hotshot financiers in every branch of wealth management there is on the board. Everybodys got a different situation. I think Im a little more lenient. We are subject to the orders and directions of those counties which, before, really didnt impact anything. I knew a man once, Henry Singleton, who was not a chess champion. I hope that that will continue in the future. So, its a serious problem. But he previously worked for Rick Guerin and me in running a little mutual fund that we bought control of. 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. Charlie Munger: I would go further. And theyre all dyingevery damn one of them almost. And if you cant do that, youre not gonna win the great chess championships of the world and youre not gonna do as well in business as Henry Singleton did. I came to law school having learned the method of learning and nothing has served me better in my long life than continuous learning. I would be curious to know how you started your interest in Singapore and Lee Kuan Yew. I think the oil and gas industry will be here for a long, long time. Charlie Munger: Well, we dont really know where its all going. Can you provide similar insight regarding the future at the Daily Journal and would you consider implementing policies like those at Berkshire so shareholders can get to know the up-and-coming leaders in the organization? Sources: FactSet, Tullett Prebon, Currencies: Currency quotes are updated in real-time. Charlie Munger: I think Warren and I are better at buying mature industries than we are at backing startups like Sequoia. Theres hardly anything he touched he didnt improve. And would the Daily Journal consider Bitcoin or any other cryptocurrency as an asset on the balance sheet similar to what Tesla recently did? Web2021. I expect that and I welcome it. Theyve got a better reputation for providing value than practically anybody, including Amazon. Those are pretty good rules and theyre pretty simple. Charlie Munger: Its very hard to have a shrinking business. You know what her mottoes were? That is true and makes sense. I learned those tendencies well enough to synthesize it with the rest of knowledge. I think theyre a bad investment when interest rates are this low. Ill paraphrase here. But, no, I dont think Treasury securities are a big problem. It reminds me of the key phrase and Bunyans Pilgrims Progress in which he says: My sword I leave to him who can wear it. Theres a lot of competition and were a very small company compared to our main competitor. Question: Do you believe the market is going through a long-term value slump similar to 1999, or do you believe technology has caused a permanent change in how companies should be valued? We have our crotchets and I just dont know enough about it to want to go into that activity. A lot of things are going to change. Nobody else has ever taken a big country out of poverty so fast and so on. 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. I gave at the office is an unassailableassertion when made by Do you think this is a worthwhile policy objective given the effect it has on creating financial excesses and income inequality? FOURTH QUARTER 2021 FINANCIAL RESULTS AND SHAREHOLDER LETTER We generated $97 million of free cash flow in the quarter and $477 million for the year, inclusive of a $191 million increase in inventory of which approximately $60 million is due to increased transit times and the balance targeted to alleviate our unshipped Im not trying to move mountains. Question: In recent years, Berkshire Hathaway has provided much greater insight into the companys succession thoughts and has made available at the annual meeting the companys leading managers that will steer Berkshires future. And were gonna play that as hard as we can. If you suffered losses exceeding $100,000 investing in SVB stock or options (i) between January 22, 2021, and March 10, 2023, inclusive (the "Class Period"); and/or (ii) The meeting was held on February 24, 2021. At this rate, hell likely (hopefully) reach the longevity of Irving Kahn. Ive been engaged in recent years in trying to create a better type of student dormitory. The disruption from the decline in newspapers has had a significant impact. What are the psychological implications of this type of market behavior? In December 2019, we had a peak of 10 million daily meeting participants, but by April 2020, we were averaging 300 million daily meeting participants 30x growth in about three months. This is a highly desirable thing. What happened is that BYD is very well positioned for the transfer of Chinese automobile production from gasoline-driven cars to electricity-driven cars. What little newspaper company has come through the crisis of this destroying of all the newspapers better than the little Daily Journal? Stocks: Real-time U.S. stock quotes reflect trades reported through Nasdaq only; comprehensive quotes and volume reflect trading in all markets and are delayed at least 15 minutes. But he was 90 years of age. Of course, it really helped to know everybody in town. So, its a very interesting competitive field. See our Terms, Privacy Policy, and Disclaimer. He was very amiable the way he talked about it. Charlie Munger: I dont think so. Question: I was wondering if you could share some thoughts on Haven, particularly why it was ultimately closed. And there was one woman who was a year older than he was who was the first-ranked student in the school. Its like evolution in biology. Charlie Munger: Well, of course, if they bring in a brand new technology you dont understand at all, youre at something of a disadvantage. But, I hardly think the editorial quality could go way up when employees were going down. If anybody can fix it, he can. Of course, thats a useful thing. And some bankers yield to the temptations. What is interesting is that in wealth management, a lot of people think that if they have a hundred stocks theyre investing more professionally than they are if they have four or five. At times in my life, I have put myself to a standard that I think has helped me: I think Im not really equipped to comment on this subject until I can state the arguments against my conclusion better than the people on the other side. In fiscal 2021, we reached revenues of $50.5 billiona significant milestone that represents 11% growth in local currency and the addition of $6.2