Zerith retweeted
Charlie Munger was worth $2.6 billion, and his family owned basically 3 things. “We have a block of Berkshire, we have a block of Costco, we have a block of Li Lu’s fund, and the rest is dribs and drabs.”
When he started investing his little savings as a lawyer, he worked it out with high school algebra.
With a 10 percentage point edge every year, he figured he’d be about 99% sure to be fine over 30 or 40 years owning no more than 3 stocks.
“Diversification is a rule for those who don’t know anything.”
If you can actually figure something out, you’re just hurting yourself looking for 50 stocks when 3 will suffice. “Hell, one will suffice if you do it right.”
He called what business schools teach about it “balderdash.”
How many stocks do you own right now?
Charlie Munger was worth $2.6 billion, and his family owned basically 3 things. “We have a block of Berkshire, we have a block of Costco, we have a block of Li Lu’s fund, and the rest is dribs and drabs.”
When he started investing his little savings as a lawyer, he worked it out with high school algebra.
With a 10 percentage point edge every year, he figured he’d be about 99% sure to be fine over 30 or 40 years owning no more than 3 stocks.
“Diversification is a rule for those who don’t know anything.”
If you can actually figure something out, you’re just hurting yourself looking for 50 stocks when 3 will suffice. “Hell, one will suffice if you do it right.”
He called what business schools teach about it “balderdash.”
How many stocks do you own right now?
Zerith retweeted
Charlie Munger made $2.6 billion picking stocks. Then he said 95% of people have almost no chance of beating the S&P 500 over time.
He said index funds have caused “absolute agony” among the intelligent investment professionals.
Everyone with some money expects to hire someone who will beat the index. Sensible managers know they’re selling something they can’t quite deliver.
“Most people handle that with denial.” Then he joked, “I don’t want to think of my own death either.”
He reminded everyone of the Nifty 50. Wall Street herded investors into just 50 stocks, pushed them to 60 times earnings, and then everything fell by about two thirds.
His bet on the future: managing big money will pay 20 basis points, not millions.
Are you trying to beat the market, or just own it?
Charlie Munger made $2.6 billion picking stocks. Then he said 95% of people have almost no chance of beating the S&P 500 over time.
He said index funds have caused “absolute agony” among the intelligent investment professionals.
Everyone with some money expects to hire someone who will beat the index. Sensible managers know they’re selling something they can’t quite deliver.
“Most people handle that with denial.” Then he joked, “I don’t want to think of my own death either.”
He reminded everyone of the Nifty 50. Wall Street herded investors into just 50 stocks, pushed them to 60 times earnings, and then everything fell by about two thirds.
His bet on the future: managing big money will pay 20 basis points, not millions.
Are you trying to beat the market, or just own it?
Zerith retweeted
Warren Buffett said that with a 1% management fee, Berkshire shareholders would have paid $8 billion just for managing. Then he explained the real trick of Wall Street.
“The trick in life is to get somebody else’s capital, and get an override on it.”
Fund managers get paid whether you win or lose. And then they charge you a lot more if they do well.
“That is capitalism.”
He and Charlie did it themselves for about 12 years. The difference: they put all their own money in and shared the losses.
Then he described America. A magnificent cathedral that built an economy like nothing the world has ever seen, with a massive casino attached.
The temptation now is to go over to the casino, because that’s where the most money is promised to you.
Are you building in the cathedral or playing in the casino?
Warren Buffett said that with a 1% management fee, Berkshire shareholders would have paid $8 billion just for managing. Then he explained the real trick of Wall Street.
“The trick in life is to get somebody else’s capital, and get an override on it.”
Fund managers get paid whether you win or lose. And then they charge you a lot more if they do well.
“That is capitalism.”
He and Charlie did it themselves for about 12 years. The difference: they put all their own money in and shared the losses.
Then he described America. A magnificent cathedral that built an economy like nothing the world has ever seen, with a massive casino attached.
The temptation now is to go over to the casino, because that’s where the most money is promised to you.
Are you building in the cathedral or playing in the casino?
Zerith retweeted
Warren Buffett said that with $1 million, you could earn 50% a year. Then he explained how he’d do it. It starts with a 1,500 page railroad manual.
At 20 or 21, he read the Moody’s Transportation Manual cover to cover. A couple of times.
Hundreds of tiny railroads. One was the Green Bay and Western, nicknamed “Grab Baggage and Walk.” Its bond acted like a stock and its stock acted like a bond.
That’s where the mispriced opportunities hide.
His rule: “I would try and know everything about everything small.”
That knowledge of tiny companies is part of what first impressed Charlie Munger about him.
But he added one condition: “you have to be in love with the subject.”
Would you read 1,500 pages for 50% a year?
Warren Buffett said that with $1 million, you could earn 50% a year. Then he explained how he’d do it. It starts with a 1,500 page railroad manual.
At 20 or 21, he read the Moody’s Transportation Manual cover to cover. A couple of times.
Hundreds of tiny railroads. One was the Green Bay and Western, nicknamed “Grab Baggage and Walk.” Its bond acted like a stock and its stock acted like a bond.
That’s where the mispriced opportunities hide.
His rule: “I would try and know everything about everything small.”
That knowledge of tiny companies is part of what first impressed Charlie Munger about him.
But he added one condition: “you have to be in love with the subject.”
Would you read 1,500 pages for 50% a year?
Zerith retweeted
Warren Buffett is sitting on $335 billion in Treasuries. A shareholder asked if he’s hoarding it so Greg Abel looks good after him.
“I wouldn’t do anything nearly so noble.” And if Greg gets any edge from what he leaves, “I’ll resent it.”
Then the real answer. Berkshire would spend $100 billion on a deal that makes sense. The problem is that great deals don’t come along in an orderly fashion.
Charlie always thought he did too many things. About five big moves in a lifetime would beat 50.
What if someone forced him to invest $50 billion a year until the pile was gone? “That would be the dumbest thing in the world.”
“Things get extraordinarily attractive very occasionally.”
Would you sit on cash and wait, or stay fully invested?
Warren Buffett is sitting on $335 billion in Treasuries. A shareholder asked if he’s hoarding it so Greg Abel looks good after him.
“I wouldn’t do anything nearly so noble.” And if Greg gets any edge from what he leaves, “I’ll resent it.”
Then the real answer. Berkshire would spend $100 billion on a deal that makes sense. The problem is that great deals don’t come along in an orderly fashion.
Charlie always thought he did too many things. About five big moves in a lifetime would beat 50.
What if someone forced him to invest $50 billion a year until the pile was gone? “That would be the dumbest thing in the world.”
“Things get extraordinarily attractive very occasionally.”
Would you sit on cash and wait, or stay fully invested?
Zerith retweeted
At 20, Warren Buffett put $2,000 into a gas station and lost all of it. Years later he calculated what that mistake really cost him: $6 billion.
He bought half of a Sinclair filling station with a buddy from the National Guard.
$2,000 was 20% of everything he had.
“A big price to pay for wiping a few windshields.”
He jokes that he actually likes it when Berkshire stock drops, because it reduces the cost of that mistake.
But he says his biggest mistakes were the ones he never made.
He could have bought all of Fannie Mae for practically nothing and passed. “I’ve probably cost Berkshire at least $5 billion by sucking my thumb.”
What’s the deal you still regret not taking?
At 20, Warren Buffett put $2,000 into a gas station and lost all of it. Years later he calculated what that mistake really cost him: $6 billion.
He bought half of a Sinclair filling station with a buddy from the National Guard.
$2,000 was 20% of everything he had.
“A big price to pay for wiping a few windshields.”
He jokes that he actually likes it when Berkshire stock drops, because it reduces the cost of that mistake.
But he says his biggest mistakes were the ones he never made.
He could have bought all of Fannie Mae for practically nothing and passed. “I’ve probably cost Berkshire at least $5 billion by sucking my thumb.”
What’s the deal you still regret not taking?
Zerith retweeted
Charlie Munger was worth about $2.6 billion when he said this on camera: “I basically screwed up.”
He was 99. The CNBC host asked what he would do differently.
His answer: “I might have had multiple trillions instead of multiple billions.”
He said he’d have started earlier and compounded longer. “I know I would be the richest man on Earth.”
Then he pointed at the house they were sitting in. He’d lived there for 70 years. Buffett, about 60 in his.
They watched rich friends build fancy mansions. In practically every case, Munger said, it made them less happy, not happier.
Billions in the bank, a basic house, and still thinking he started too late.
What’s the one thing you wish you’d started earlier?
Charlie Munger was worth about $2.6 billion when he said this on camera: “I basically screwed up.”
He was 99. The CNBC host asked what he would do differently.
His answer: “I might have had multiple trillions instead of multiple billions.”
He said he’d have started earlier and compounded longer. “I know I would be the richest man on Earth.”
Then he pointed at the house they were sitting in. He’d lived there for 70 years. Buffett, about 60 in his.
They watched rich friends build fancy mansions. In practically every case, Munger said, it made them less happy, not happier.
Billions in the bank, a basic house, and still thinking he started too late.
What’s the one thing you wish you’d started earlier?
Zerith retweeted
February 28, 2006. Anna Nicole Smith walked into the US Supreme Court to fight for a share of a $1.6 billion oil fortune.
She had married J. Howard Marshall when she was 26 and he was 89. He died 13 months later and left her nothing in his will.
Dozens of cameras followed her up the steps.
Two months later the justices ruled for her, 9 to 0.
She never got to use the win. She died in February 2007 at 39.
Her estate went back to the same court in 2011. This time it lost, 5 to 4.
Two Supreme Court cases. Not one dollar from his estate.
Did she deserve a cut of his fortune?
February 28, 2006. Anna Nicole Smith walked into the US Supreme Court to fight for a share of a $1.6 billion oil fortune.
She had married J. Howard Marshall when she was 26 and he was 89. He died 13 months later and left her nothing in his will.
Dozens of cameras followed her up the steps.
Two months later the justices ruled for her, 9 to 0.
She never got to use the win. She died in February 2007 at 39.
Her estate went back to the same court in 2011. This time it lost, 5 to 4.
Two Supreme Court cases. Not one dollar from his estate.
Did she deserve a cut of his fortune?
Zerith retweeted
Warren Buffett ran Berkshire Hathaway for 60 years. $1,000 invested the day he took control would have grown to about $55 million.
The same $1,000 in the S&P 500 grew to about $390,000.
19.9% a year for six decades, almost double the market.
He was asked how he feels looking back.
“Everything I wanted to have happened has worked out.”
Then he corrected himself. Not everything he did worked. But he couldn’t imagine more fun than he had running Berkshire.
One of the greatest track records ever, built by a man who called it fun.
Would you rather be rich or love what you do for 60 years?
Warren Buffett ran Berkshire Hathaway for 60 years. $1,000 invested the day he took control would have grown to about $55 million.
The same $1,000 in the S&P 500 grew to about $390,000.
19.9% a year for six decades, almost double the market.
He was asked how he feels looking back.
“Everything I wanted to have happened has worked out.”
Then he corrected himself. Not everything he did worked. But he couldn’t imagine more fun than he had running Berkshire.
One of the greatest track records ever, built by a man who called it fun.
Would you rather be rich or love what you do for 60 years?
Zerith retweeted
Anna Nicole Smith married an 89 year old oil billionaire when she was 26. Thirteen months later he was dead. His will left her nothing.
J. Howard Marshall was worth an estimated $1.6 billion.
She said he promised her half. His son fought her in court for years.
A bankruptcy judge awarded her $474 million. Another judge cut it to $88 million. Then that was thrown out too.
The case went to the US Supreme Court. Twice.
She died in 2007 at 39, still fighting.
Her estate kept going for 7 more years. In 2014 it lost for good.
Not one dollar of the inheritance ever reached her.
Love story or cash grab?
Anna Nicole Smith married an 89 year old oil billionaire when she was 26. Thirteen months later he was dead. His will left her nothing.
J. Howard Marshall was worth an estimated $1.6 billion.
She said he promised her half. His son fought her in court for years.
A bankruptcy judge awarded her $474 million. Another judge cut it to $88 million. Then that was thrown out too.
The case went to the US Supreme Court. Twice.
She died in 2007 at 39, still fighting.
Her estate kept going for 7 more years. In 2014 it lost for good.
Not one dollar of the inheritance ever reached her.
Love story or cash grab?