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Charles Munger Interview: The Power of Partnership with Warren Buffett
@ Life Stories
07/21/21
Takeaways
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Charles Munger
07/21/21
@ Life Stories
I met Warren Buffett in 1959 when I returned to wind up my father's law practice, and I immediately recognized his intelligence and shared interest in successful investing.
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Charles Munger
07/21/21
@ Life Stories
Warren had a passion for competitive success from a young age, which, combined with his high IQ and energy, gave him a significant advantage in investing.
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Charles Munger
07/21/21
@ Life Stories
Warren Buffett made a lot of money by buying thinly traded securities that were statistically cheap, allowing him to earn high returns on capital year after year.
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Charles Munger
07/21/21
@ Life Stories
Warren's investment strategy involved thorough research, as demonstrated when he bought American Express after the salad oil scandal, believing it was a minor setback.
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Charles Munger
07/21/21
@ Life Stories
Warren Buffett preferred to work in a solitary manner, sifting through data and thinking deeply, which he could do just as effectively in Omaha as on Wall Street.
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Charles Munger
07/21/21
@ Life Stories
Warren Buffett faced criticism for his candid views on unethical practices in the securities market, which led to some backlash from those in the industry.
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Charles Munger
07/21/21
@ Life Stories
Despite facing criticism, Warren Buffett's approach allowed him to make billions for many people, even those he didn't know, and he doesn't regret his choices.
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Charles Munger
07/21/21
@ Life Stories
Warren's ability to appraise his past decisions brutally helps him identify mistakes and avoid them in the future, contributing to his success.
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Charles Munger
07/21/21
@ Life Stories
Helping others replace wrong ideas with the right ones is incredibly valuable, as it aids in avoiding errors and improving lives.
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Charles Munger
07/21/21
@ Life Stories
Our solid middle-class backgrounds helped Warren and me, as we could learn from our fathers' successes and failures without the pressures of high society.
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Charles Munger
07/21/21
@ Life Stories
Warren Buffett's decision to invest in Berkshire Hathaway was influenced by an incident where the CEO tried to cheat him, which ultimately benefited his career.
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Charles Munger
07/21/21
@ Life Stories
Warren made significant profits by following Benjamin Graham's advice to buy very cheap stocks, regardless of the company's quality, but he knew this strategy was self-limiting. Getting into great businesses that either have a great manager or can prosper even under poor management is crucial.
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Charles Munger
07/21/21
@ Life Stories
Warren and I both wanted to buy good companies at cheap prices, which became essential when we started acquiring entire companies.
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Charles Munger
07/21/21
@ Life Stories
We never had an argument in our partnership; we just rolled with it easily, and if disagreements arose, I wouldn't fuss over them because the overall record was successful.
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Charles Munger
07/21/21
@ Life Stories
You should approach life with equanimity and rationality, as it leads to better outcomes.
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Charles Munger
07/21/21
@ Life Stories
I made millions value investing in poorly managed companies that I bought very cheaply, but it's much more enjoyable to watch someone you admire succeed than to see a poorly managed company fail.
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Charles Munger
07/21/21
@ Life Stories
The most useful idea Ben Graham had was to adopt the mindset of a long-term investor when buying into a business.
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Charles Munger
07/21/21
@ Life Stories
Warren has a history of buying stocks below their working capital per share, which often meant investing in companies that were not performing well.
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Charles Munger
07/21/21
@ Life Stories
We learned the importance of strong brands when we bought a company with a powerful trademark and a good culture, which led to significant profits.
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Charles Munger
07/21/21
@ Life Stories
The record of Berkshire Hathaway and Warren Buffett is based on continuous learning from every experience, which has improved our investment strategies over time.
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Charles Munger
07/21/21
@ Life Stories
A durable competitive advantage is essential; you want an advantage that will sustain itself without overwhelming skill for a long time.
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Charles Munger
07/21/21
@ Life Stories
We have bought businesses that initially seemed good but turned out poorly; we hold onto mediocre ones unless they present unsolvable problems.
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Charles Munger
07/21/21
@ Life Stories
Having a good reputation is incredibly helpful in life, as demonstrated when key decisions were influenced by trust in Warren.
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Charles Munger
07/21/21
@ Life Stories
Life is full of ironies, such as how one family member made a fortune while another, who made the right decision to sell, did not benefit as much.
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Charles Munger
07/21/21
@ Life Stories
We started with a collection of poorly performing businesses but managed to generate cash and eventually bought successful companies, transforming Berkshire into a massive conglomerate. Berkshire Hathaway's success stems from a lack of bureaucracy, allowing for quick decision-making and adaptability, unlike large organizations that struggle to change.
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Charles Munger
07/21/21
@ Life Stories
Warren Buffett's annual meeting celebration fosters teamwork and collaboration, reflecting his enjoyment of teaching and connecting with people.
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Charles Munger
07/21/21
@ Life Stories
Warren Buffett's approach to partnerships is rooted in trust and stewardship, treating all stakeholders, including suppliers and customers, with respect and care.
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Charles Munger
07/21/21
@ Life Stories
Berkshire Hathaway operates as a 'seamless web of deserved trust,' which is a powerful concept that enhances its business relationships.
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Charles Munger
07/21/21
@ Life Stories
The investment game allows for deep thinking about interconnected ideas and provides the pleasure of working with highly skilled partners, akin to being on a winning sports team.
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Charles Munger
07/21/21
@ Life Stories
Warren Buffett is highly competitive but prefers to win by playing fair and following the rules, avoiding games he is not skilled at.
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Charles Munger
07/21/21
@ Life Stories
Both Charles Munger and Warren Buffett believe that ethical behavior leads to better outcomes in business, recognizing the importance of integrity in their success. Additionally, Warren and I believe in soldiering through challenges without too much fuss, rather than complaining about difficulties.
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Charles Munger
07/21/21
@ Life Stories
I think the dumbest thing you can do in life is to ever feel like a victim; it leads to negative outcomes.
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Charles Munger
07/21/21
@ Life Stories
The Chinese worked their way out of poverty through hard work and perseverance, rather than relying on government intervention.
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Charles Munger
07/21/21
@ Life Stories
If you know the big ideas across various disciplines and apply that knowledge without becoming irrational, you can achieve success.
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Charles Munger
07/21/21
@ Life Stories
Warren and I were fortunate to have favorable outcomes in our investments, but we don't believe we deserve all the credit for it.
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Charles Munger
07/21/21
@ Life Stories
Rationality is a moral duty, and I learned this value from my grandfather, which has guided my approach to life and business.
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Charles Munger
07/21/21
@ Life Stories
Berkshire Hathaway exemplifies the 'lollapalooza effect', where multiple factors align to create significant success.
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Charles Munger
07/21/21
@ Life Stories
Warren wrote a letter objecting to the establishment of options exchanges, arguing that we don't need derivative markets.