“I’ve always realized that if we worked really hard we could find a few things where we were right about and those few things were enough.” – Charlie Munger, Daily Journal Annual Meeting, 2019
This week Phil and Danielle discuss key takeaways from Charlie Munger’s Daily Journal Annual Meeting that took place at the end of February 2019.
In case you don’t know who Charlie Munger is, he is the Vice Chairman of Berkshire Hathaway and Warren Buffett’s longtime partner.
In the meeting, Charlie complained at fund managers try to beat the market and don’t, but still charge for it. Charlie’s main philosophy is to do less. They never had the illusion that they could get really useful information on all subjects. They realized that if they worked hard on a few things, and do those things really well, they would come out ahead.
Investing is about being capable of understanding what you own. Knowing that a business has an intrinsic characteristic that keeps it competitive for long periods of time. You need to know where it’s going to be in 10 years. You need to know it’s going to be bigger in 10 years than it is today so you don’t lose money on it. Finally, hope that it’s managed by intelligent, talented people with integrity.
People on Wall Street and people like Jim Cramer are doing something different than investing. Jim Cramer is an entertainer, not an investor. Fund managers aren’t investing, they’re just trying to pick stocks, get wins, and beat the market in the short run.
Charlie also had this to say on diversification:
“If you lived in a growing town and you own stock in three of the best enterprises in the town, isn’t that diversified enough? The answer is, ‘Of course it is’. If they’re all wonderful places. The whole idea of diversification if you’re looking for excellence is totally ridiculous. It doesn’t work. It gives you an impossible task. What fun is it to do an impossible task over and over again? I find it agony. Who would want to do it?”
Charlie Munger Daily Journal Annual Meeting Video
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