Munger — Daily Journal AGM 2017
Charlie Munger · 2017 · 405 words
Charlie Munger — Daily Journal Annual Meeting 2017 (selected commentary)
On the long-term investing edge: The best way to get ahead in life is to find one thing that you can do exceptionally well and stick with it. The same applies to investing. Find a few businesses you genuinely understand and stick with them through cycles. The temptation to switch into whatever is hot is the great destroyer of investment returns.
On Costco: I think Costco is a wonderful, wonderful enterprise. Their growth has been astonishing. The discipline to keep prices low even when they could raise them is rare in business. The willingness to give the customer such a good deal that customers stay loyal for life is what creates the moat. They could raise prices and report higher earnings tomorrow — and instead they do not. That is a moat-building decision.
On compounding: The first rule of compounding is never interrupt it unnecessarily. Most investors interrupt compounding by trading too much, by chasing fads, by panicking when prices fall. The long-term holders of great businesses end up with most of the wealth.
On bias: We are all biased. The question is whether we know we are biased and adjust for it. The investor who thinks he is unbiased is the most dangerous of all. The investor who acknowledges his biases and seeks disconfirming evidence is the one who can navigate honestly.
On too-hard pile: When something is in the "too hard" pile, the right move is to leave it there. There is no shame in saying "I do not understand this." There is great shame in pretending to understand and losing money. We have a "too hard" pile for businesses we cannot evaluate. The pile is large.
On management: We try to find managers who think and act like owners — who measure success in per-share economic value, not in total revenue or empire size. The ones who keep buying back stock when it is cheap and stop when it is expensive are the ones to bet on. Most managers do the opposite.
On macro: We do not try to forecast the macroeconomy because we cannot. We assume we will live through inflations, recessions, panics, manias. We design our portfolio to survive those events, not to predict them. The investor who tries to time the macro is usually wrong twice — once on the call and once on the timing.
— Charlie Munger
On the long-term investing edge: The best way to get ahead in life is to find one thing that you can do exceptionally well and stick with it. The same applies to investing. Find a few businesses you genuinely understand and stick with them through cycles. The temptation to switch into whatever is hot is the great destroyer of investment returns.
On Costco: I think Costco is a wonderful, wonderful enterprise. Their growth has been astonishing. The discipline to keep prices low even when they could raise them is rare in business. The willingness to give the customer such a good deal that customers stay loyal for life is what creates the moat. They could raise prices and report higher earnings tomorrow — and instead they do not. That is a moat-building decision.
On compounding: The first rule of compounding is never interrupt it unnecessarily. Most investors interrupt compounding by trading too much, by chasing fads, by panicking when prices fall. The long-term holders of great businesses end up with most of the wealth.
On bias: We are all biased. The question is whether we know we are biased and adjust for it. The investor who thinks he is unbiased is the most dangerous of all. The investor who acknowledges his biases and seeks disconfirming evidence is the one who can navigate honestly.
On too-hard pile: When something is in the "too hard" pile, the right move is to leave it there. There is no shame in saying "I do not understand this." There is great shame in pretending to understand and losing money. We have a "too hard" pile for businesses we cannot evaluate. The pile is large.
On management: We try to find managers who think and act like owners — who measure success in per-share economic value, not in total revenue or empire size. The ones who keep buying back stock when it is cheap and stop when it is expensive are the ones to bet on. Most managers do the opposite.
On macro: We do not try to forecast the macroeconomy because we cannot. We assume we will live through inflations, recessions, panics, manias. We design our portfolio to survive those events, not to predict them. The investor who tries to time the macro is usually wrong twice — once on the call and once on the timing.
— Charlie Munger