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PART 2 LINK BELOW
Charlie Munger likes giving riddles to the audience to apply the principles he’s talking sharing. Here is a Poor Charlie’s Almanack summary of several from the book:
- Business from first principles and inversion
- “Berkshire Hathaway just opened a furniture and appliance store in Kansas City, Kansas. At the time Berkshire opened it, the largest selling furniture and appliance store in the world was another Berkshire Hathaway store, selling $350 million worth of goods per year. The new store in a strange city opened up selling at the rate of more than $500 million a year. From the day it opened, the 3,200 spaces in the parking lot were full. The women had to wait outside the ladies restroom because the architects didn’t understand biology. It’s hugely successful.”
- “Now, tell me what explains the runaway success of this new’ furniture and appliance store that is outselling everything else in the world?”
- “Well, let me do it for you. Is this a low-priced store or a high-priced store? It’s not going to have a runaway success in a strange city as a high-priced store. That would take time. Number two, if it’s moving $500 million worth of furniture through it, it’s one hell of a big store, furniture being as bulky as it is. And what does a big store do? It provides a big selection. So what could this possibly be except a low-priced store with a big selection.”
- “But, you may wonder, why wasn’t it done before, preventing its being done first now? Again, the answer just pops into your head: It costs a fortune to open a store this big. So, nobody’s done it before. So, you quickly know the answer. With a few basic concepts, these microeconomic problems that seem hard can be solved much as you put a hot knife through butter.”
- Example 2
- “Now I’ll give you a harder problem. There’s a tire store chain in the Northwest that has slowly succeeded over fifty years, the Les Schwab tire store chain. It just ground ahead. It started competing with the stores that were owned by the big tire companies that made all the tires, the Goodyears and so forth. And, of course, the manufacturers favoured their own stores. Their “tied stores” had a big cost advantage. Later, Les Schwab rose in competition with the huge price discounters like Costco and Sam’s Club and before that Scars, Roebuck and so forth. And yet, here is Schwab now, with hundreds of millions of dollars in sales. And here’s Les Schwab in his eighties, with no education, having done the whole thing. How did he do it? I don’t see a whole lot of people looking like a light bulb has come on. Well, let’s think about it with some microeconomic fluency.”
- “Is there some wave that Schwab could have caught? The minute you ask the question, the answer pops in. The Japanese had a zero position in tires, and they got big. So this guy must have ridden that wave some in the early times. Then, the slow following success has to have some other causes happened here, obviously, is this guy did one hell of a lot of things right. And among the things that he must have done right is he must have harnessed what Mankiw calls the superpower of incentives. He must have a very clever incentive structure driving his people. And a clever personnel selection system, etc. And he must be pretty good at advertising. Which he is. He’s an artist. So, he had to get a wave in Japanese tire invasion, the Japanese being as successful as they were. And then a talented fanatic had to get a hell of a lot of things right and keep them right with clever systems. Again, not that hard of an answer.”
- How can you increase volume by increasing price?
- Luxury goods: Raising the price can improve the product’s ability as a ‘show-off’ item, i.e., by raising the price the utility of the goods is improved to someone engaging in conspicuous consumption. Further, people will frequently assume that the high price equates to a better product, and this can sometimes lead to increased sales.
- Non-luxury goods: same as second factor cited above, i.e., the higher price conveys information assumed to be correct by the consumer, that the higher price connotes higher value. This can especially apply to industrial goods where high reliability is an important factor.
- Raise the price and use the extra revenue in legal ways to make the product work better or to make the sales system work better.
- Raise the price and use the extra revenue in illegal or unethical ways to drive sales by the functional equivalent of bribing purchasing agents or in other ways detrimental to the end consumer, i.e., mutual fund commission practices. [This is the answer I like the most, but never get.]”
Top of Form
Bottom of Form
On Character and Living a Good Life
In all, Charlie Munger seems like a man of solid character, hard-working, humble, and always learning. Here is a Poor Charlie’s Almanack summary organizing his major thoughts on quality traits leading to a happy and productive life.
Key Biography Points
- Charlie worked for Buffett’s grandfather in a grocery store. Warren worked there a few years later.
- Charlie liked raising hamsters and traded them with other kids – early negotiating practice.
- Was captain of his high school’s varsity rifle team
- Started as lawyer, was admitted to and graduated from Harvard Law School without a bachelor’s
- Had 3 kids with his first wife Nancy, who divorced in 1953. Teddy died of leukemia soon after. He met Nancy and married in 1956.
- Developed real estate and started new law firm
- Charlie returned to Omaha when father died and met Warren at a dinner party. Warren convinced Charlie law was a bad use of talent.
- Charlie started an investing partnership, Wheeler, Munger; showed return over 14 years of 19.8%vs 5% for Dow.
- Joined Berkshire Hathaway after deciding he didn’t want to manage funds directly for investors, and instead to build equity through a holding company. He liquidated Wheeler, Munger and had shared in Blue Chip Stamps and Diversified Retailing, which then converted into Berkshire Hathaway stock
How to Live Happily
- “Have low expectations. Have a sense of humor. Surround yourself with the love of friends and family.”
- “Each of us must figure out his or her own lifestyle. You may want to work seventy hours a week for ten years to make partner at Cravath and thereby obtain the obligation to do more of the same.”
- “The safest way to try to get what you want is to try to deserve what you want.”
- Avoid self-pity. “I had a friend who carried a thick stack of linen-based cards. And when somebody would make a comment that reflected self-pity, he would slowly and portentously pull out his huge stack of cards, take the top one and hand it to the person. The card said, “Your story has touched my heart. Never have I heard of anyone with as many misfortunes as you.” Self-pity is always counterproductive. It’s the wrong way to think. And when you avoid it, you get a great advantage over everybody else, or almost everybody else, because self-pity is a standard response.”
- “Perverse associations are also to be avoided. You particularly want to avoid working directly under somebody you don’t admire and don’t want to be like.”
- “Assiduity. I like that word because to me it means: “Sit down on your ass until you do it.””
- “Two partners that I chose for one phase in my life made the following simple agreement when they created a little design / build construction team in the middle of the great depression: “Two-man partnership,” they said, “and divide everything equally. And, whenever we’re behind in our commitments to other people, we will both work fourteen hours a day, seven days a week, until we’re caught up.” Well, needless to say, that firm didn’t fail. And my partners were widely admired. Simple, old-fashioned ideas like theirs are almost sure to provide a good outcome.”
- “Who wants to go through life anticipating trouble? Well, I did, trained as I was. I’ve gone through a long life anticipating trouble.”
How to Live Miserably
- [building on Johnny Carson, an example of ‘invert, always invert’]
- Ingesting chemicals in an effort to alter mood or perception
- “Disraeli, as he rose to become one of the greatest prime ministers, learned to give up vengeance as a motivation for action, but he did retain some outlet for resentment by putting the names of people who wronged him on pieces of paper in a drawer. Then, from time to time, he reviewed these names and took pleasure in noting the way the world had taken his enemies down without his assistance.”
- Be unreliable
- Don’t learn from others’ mistakes. Use your own experience
- Become as non-educated as you reasonably can.
- Stay down when you get your first, second, or third severe reverse in the battle of life.
Moral Character and Honesty
- “When you borrow a man’s car, you always return it with a full tank of gas.” People notice these little things
- “I think track records are very important. If you start early trying to have a perfect one in some simple thing like honesty, you’re well on your way to success in this world.”
- “Trickery and treachery are the practices of fools that have not the wits enough to be honest.” – Benjamin Franklin
- “We believe there should be a huge area between everything you should do and everything you can do without getting into legal trouble. I don’t think you should come anywhere near that line. We don’t deserve much credit for this. It helps us make more money. I’d like to believe that we’d behave well even if it didn’t work. But more often, we’ve made extra money from doing the right thing.”
- “What’s the best way to get a good spouse? The best single way is to deserve a good spouse because a good spouse is by definition not nuts.”
- “You don’t want to be like the motion picture executive who had many people at his funeral, but they were there just to make sure he was dead. Or how about the guy who, at his funeral, the priest said, “Won’t anyone stand up and say anything nice about the deceased?” and finally someone said, “Well, his brother was worse.””
- “It’s hard for an empty sack to stand upright.” – Benjamin Franklin
Charlie’s Parenting Style
- His kids comment on his hard-working, perpetually reading, absent-minded nature. But they speak well of his lessons on character, good decision making, and discipline. All seem grateful for the parenting.
- “His favorite educational tools were the Morality tale, in which someone faced an ethical problem and chose the correct path, and the Downward Spiral Tale, in which someone made the wrong choice and suffered an inevitable series of catastrophic personal and professional losses…His Morality Tales were more straightforward. I remember the story my dad told his kids, then ranging from age five to twenty-five, about a financial officer at one of his companies who made a mistake that resulted in the loss of hundreds of thousands of dollars to the company. As soon as this officer realized his mistake, he went immediately to the president of the company and told him about it. My dad told us that the president then said, “This was a terrible mistake, and we don’t want you ever to make another one like it. But people make mistakes, and we can forgive that. You did the right thing, which was to admit your mistake. If you had tried to hide the mistake, or cover it up for even a short time, you would be out of this company. As it is, we’d like you to stay.” “ – Charles Munger Jr
- Warren Buffett hates adjusted earnings and not counting stock as compensation. “A CEO who, as his company revved up to go public, asked prospective auditors, “What is two plus two?” The answer that won the assignment, of course, was, “What number do you have in mind?”” – Warren Buffett, 2016 BRK shareholder letter
- “if you mix raisins with turds, you’ve still got turds. There is nothing in accounting that can prevent unscrupulous managers from engaging in a chain-letter type fraud.”
- “I think that, every time you see the word EBITDA [earnings before interest, taxes, you should substitute the words “bullshit earnings.”
Patience and Calm
- ‘All of humanity’s problems stem from man’s inability to sit quietly in a room alone.’ “It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait.”
- “A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.”
- “Look at those hedge funds— you think they can wait? They don’t know how to wait! In my personal portfolio, I have sat for years at a time with $10 to S12 million in treasuries or municipals, just waiting, waiting….”
- “There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash — and I don’t want to go back.”
Benefits of Old Age
- Agamemnon in the war on Troy “never once wished for ten more men with the strength of Ajax but, instead, wanted ten more with the wisdom of Nestor.”
- “it is unworthy that an old man would work to improve only what he would live to enjoy. For him the only life worth living is dedicated in substantial part to good outcomes one cannot possibly survive to see.“
- “The best Armour of Old Age is a well-spent life preceding it; a Life employed in the Pursuit of useful Knowledge, in honourable Actions and the Practice of Virtue: in which he who labours to improve himself from his Youth, will in Age reap the happiest Fruits of them; not only because these never leave a Man, not even in the extreamest [sic| Old Age; but because a Conscience bearing Witness that our Life was well-spent, together with the Remembrance of past good Actions, yields an unspeakable Comfort to the Soul.” – Cicero
- “The best source of new legal work is the work on your desk.”
- “What matters most: passion or competence that was inborn? Berkshire is full of people who have a peculiar passion for their own business. I would argue passion is more important than brain power.”
- “We read a lot. I don’t know anyone who’s wise who doesn’t read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or don’t know what to do with them.”
- “McDonald’s is one of our most admirable institutions. McDonald’s, providing first jobs to millions of teenagers, many troubled, over the years, has successfully taught most of them the one lesson they most need: to show up reliably for responsible work. Then I usually go on to say that if the elite campuses were as successful as McDonald’s in teaching sensibly, we would have a better world.”
- “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero.You’d be amazed at how much Warren reads — and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
- “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Slug it out one inch at a time, day by day. At the end of the day— if you live long enough— most people get what they deserve.”
- “I am a biography nut myself. And I think when you’re trying to teach the great concepts that work, it helps to tie them into the lives and personalities of the people who developed them. I think you learn economics better if you make Adam Smith your friend.”
- “He wants to get to the bottom of everything, whether it’s something of serious interest to him or not. Anything that comes to his attention, he wants to know more about it and understand it and figure out what makes it tick.” – Roy Tolles
- “When a better tool (idea or approach) comes along, what could be better than to swap it for your old, less useful tool?”
- “You need to have a passionate interest in why things are happening.That cast of mind, kept over long periods, gradually improves your ability to focus on reality. If you don’t have that cast of mind, you’re destined for failure even if you have a high I.Q.”
- “Rapid advance of civilization came only when man “invented the method of invention.” He was referring to the huge growth in GDP per capita and many other good things we now take for granted. Just as civilization can progress only when it invents the method of invention, you can progress only when you learn the method of learning.”
- “If you want to improve, be content to be thought foolish and stupid.” –Epictetus
- “Curiosity, concentration, perseverance, and self-criticism.” – Einstein
How to Learn
- “Good literature makes the reader reach a little for understanding. Then, it works better. You hold it better. It’s the commitment and consistency tendency. If you’ve reached for it, the idea’s pounded in better.”
- “Well if you’re like me, it’s kind of fun for it to be a little complicated. If you want it totally easy and laid out, maybe you should join some cult that claims to provide all the answers. If you figure it out and do the outlining yourself, the ideas will stick better than if you memorize ’em using somebody else’s cram list.”
- “I’m always asked this question: “Spoon-feed me what you know.” And, of course, what they’re often saying is, “Teach me now to get rich with soft white hands faster. And not only let me get rich faster, but teach me faster, too.””
- “It is not the possession of truth, but the success which attends the seeking after it, that enriches the seeker and brings happiness to him.” – Max Planck
- “You need a different checklist and different mental models for different companies. I can never make it easy by saying, ‘Here are three things.’ You have to derive it yourself to ingrain it in your head for the rest of your life.”
- Soft science should integrate the ethos of hard science:
- Rank and use disciplines in order of fundamentalness
- Master to tested fluency and routinely use the essential parts of all four constituents of the fundamental four-discipline combination, with attention given to disciplines more fundamental than your own.
- Use a “principle of economy” to explain things in the most fundamental principles possible.
- When step 3 doesn’t produce useful insight, hypothesize and test new principles. But do not use new principles inconsistent with the old one, unless you can prove the old principle is not true.
Training a Fighter Pilot
Training pilots has 6 elements. Munger suggests scaling this for multidisciplinary learning overall:
- His formal education is wide enough to cover practically everything useful in piloting.
- His knowledge of practically everything needed by pilots is not taught just well enough to enable him to pass one test or two; instead, all his knowledge is raised to practice-based fluency, even in handling two or three intertwined hazards at once.
- Like any good algebraist, he is made to think sometimes in a forward fashion and sometimes in reverse; and so he learns when to concentrate mostly on what he wants to happen and also when to concentrate mostly on avoiding what he does not want to happen.
- His training time is allocated among subjects so as to minimize damage from his later malfunctions; and so what is most important in his performance gets the most training coverage and is raised to the highest fluency levels.
- “Checklist” routines are always mandatory for him.
- Even after original training, he is forced into a special knowledge maintenance routine: regular use of the aircraft simulator to prevent atrophy through long disuse of skills needed to cope with rare and important problems.
His suggestions for improving multidisciplinary learning in law schools and academia:
- Make many more courses mandatory.
- Allow for problem-solving that cross several disciplines.
- Example from a law school exam: Two old ladies inherit a shoe factory making branded shoes and have all sorts of business problems. What do you counsel?
- Wrong answer: Pages of advice on how to solve the problems.
- Correct answer: Sell the company, because this is out of your league and you’ll have agency costs.
- Similar example: the Stanford MBA class where students were given $10 and told to maximize profits from it, then present for 10 minutes on their plan. Many tried to use it to buy cheap goods and resell, like ice water. Some realized the real value was their time, which they sold by standing in line at restaurants and such. The winning team sold the 10 minute slot to a company to recruit MBAs.
- This could also be solved using the Invert rule – how do you maximize value to the two old ladies at the end of the day?
- Example from a law school exam: Two old ladies inherit a shoe factory making branded shoes and have all sorts of business problems. What do you counsel?
- “Fathers ability to Chinese wall off the most intrusive distractions from whatever mental task he was engaged in— a practice alternately amusing and irritating if you were trying to get his attention— accounts as much as anything else for his success.” – David Borthwick
- “He knows how to take all of his brains and all of his energy and all of his thought and focus exactly on a single problem, to the exclusion of anything else. People will come into the room and pat him on the back or offer him another cup of coffee or something, and he won’t even acknowledge their presence because he is using one hundred percent of his huge intellect.” – Glen Mitchel
- “To hell with it. We’re either going to be #1 or #2 in every field we’re in or we’re going to be out. I don’t care how many people I have to fire and what I have to sell. We’re going to be #1 or #2 or out.” – Jack Welch
- Warren Buffett: “Look for someone both smarter and wiser than you are. Ask him not to flaunt his superiority so that you may enjoy acclaim for many accomplishments that sprang from his thoughts and advice. Seek a partner who will never second-guess you nor sulk when you make expensive mistakes. Look also for a generous soul who will put up his own money and work for peanuts. Finally, join with someone who will constantly add to the fun as you travel a long road together.”
- Warren Buffett: “A partner who is not subservient, who is himself extremely logical, is one of the best mechanisms you can have.”
- “People couldn’t believe that I suddenly made myself a subordinate partner to Warren, but there are some people that it is okay to be a subordinate partner to. I didn’t have the kind of ego that prevented it. There are always people who will be better at something than you. You have to learn to be a follower before you become a leader.”
Humor to convey points
- On Buffett’s teachings: “his words are often made more acceptable through use of insightful humor.”
- His going along with normal social customs and his sense of humor, he said, were what allowed his otherwise sometimes prickly temperament to harmonize with other people.
- “Durability has always been a first-rate virtue in my father’s view, along with ritual and tradition. He never had a desire to change his primary habits, sartorial or otherwise, once he had, like Franklin, acquired them.” – Philip Munger
- “Change, as in the case of the Internet, can be the friend of society. But it is the absence of change that is often the friend of the investor. While the Internet will change many things, it will not likely change the brand of gum people chew. Charlie and I like stable businesses like chewing gum and try to leave life’s more unpredictable things to someone else.” – Warren Buffett
Here’s a set of miscellaneous points
- Captain Cook and Scurvy
- “At the time, scurvy was the dread of the long voyage. Captain Cook noticed that Dutch ships had less scurvy than English ships on long voyages. So he said, “What are the Dutch doing that’s different?” And he noticed they had all these barrels of sauerkraut. So he laid in all this sauerkraut, which, incidentally, happens to contain a trace of vitamin C. But English sailors were a tough, cranky, and dangerous bunch in that day. They hated “krauts.” And they were used to their standard food and booze. So how do you get such English sailors to eat sauerkraut?
- “Well, Cook didn’t want to tell ’em that he was doing it in the hope it would prevent scurvy—because they might mutiny and take over the ship if they thought that he was taking them on a voyage so long that scurvy was likely. So here’s what he did: Officers ate at one place where the men could observe them. And for a long time, he served sauerkraut to the officers, but not to the men. And, then, finally, Captain Cook said, “Well, the men can have it one day a week.” In due course, he had the whole crew eating sauerkraut.”
- Advising morally bad clients
- “For instance, suppose you’ve got a client who really wants to commit tax fraud. If he doesn’t push the tax law way beyond the line, he can’t stand it. He can’t shave in the morning if he thinks there’s been any cheating he could get by with that he hasn’t done. And there are people like that. They just feel they aren’t living aggressively enough.
- “You can approach that situation in either of two ways: (A) You can say, “I just won’t work for him,” and duck it. Or. (B) you can say, “Well, the circumstances of my life require that I work for him. And what I’m doing for him doesn’t involve my cheating. Therefore, I’ll do it.” And if you see he wants to do something really stupid, it probably won’t work to tell him, “What you’re doing is bad. I have better morals than you.” That offends him. You’re young. lie’s old. Therefore, instead of being persuaded, he’s more likely to react with, “Who in the hell are you to establish the moral code of the whole world?”
- “But, instead, you can say to him, “You can’t do that without three other people beneath you knowing about it. Therefore, you’re making yourself subject to blackmail. You’re risking your reputation. You’re risking your family, your money, etc.”
- “Appealing to his interest is likely to work better as a matter of human persuasion than appealing to anything else.”
- “Once you know how to do it, there are real moral limits regarding how much you should do it. Not all of what you know how to do should you use to manipulate people. if you’re willing to transcend the moral limits and the person you’re trying to manipulate realizes what you’re doing because he also understand the psychology, he’ll hate you.”
Problems with Economics
- Hammer and nail problem – “Well, practically everybody (1) overweighs the stuff that can be numbered because it yields to the statistical techniques they’re taught in academia and (2) doesn’t mix in the hard-to-measure stuff that may be more important.”
- Physics envy – a craving for unattainable precision, which leads to messes like perfect rationality in markets
- “Economics professors are most economical with ideas. They make a few they learned in graduate school last a lifetime”
- Not incorporating virtues and vices
- “Envy was a great driver of proclivity to spend. And so, here’s this terrible vice, which is forbidden in the Ten Commandments, and here it’s driving all these favorable results in economics. There’s some paradox in economics that nobody’s going to get out.”
Problems with Psychology
- “Psychology to me, as currently organized, is like electromagnetism after Faraday, but before Maxwell —a lot has been discovered, but no one mind has put it all together in proper form.”
- [On missing multiple causes of Milgram’s prison experiment.] “For years, it was in the psychology books as a demonstration of authority—how authority could be used to persuade people to do awful things. Of course, that’s mere first-conclusion bias. That’s not the complete and correct explanation. Authority is part of it. However, there were also quite a few other psychological principles, all operating in the same direction, that achieved that lollapalooza effect precisely because they acted in combination toward the same end.”
- “How can smart people be so wrong? Well, the answer is that they don’t do what I’m telling you to do—which is to take all the main models from psychology and use them as a checklist in reviewing outcomes in complex systems. If they used a checklist, they’d realize the Milgram experiment harnesses six psychological principles, at least—not three. All they’d have to do is to go down the checklist to see the ones that they missed.”
- “I don’t believe that psychology professors in America are people whose alternative career paths were in the toughest part of physics. And that may be one of the reasons why they don’t get it quite right. Will such a super-gifted person instead choose academic psychology wherein lie very awkward realities: (A) that the tendencies demonstrated by social psychology paradoxically grow weaker as more people learn them, and, (B) that clinical (patient- treating) psychology has to deal with the awkward reality that happiness, physiologically measured, is often improved by believing things that are not true?”
- “When something was obvious in life but not easily demonstrable in certain kinds of easy-to-do, repeatable academic experiments, the truffle hounds of psychology very often missed it.”
- Two-track analysis
- What are the factors that really govern the interests involved, rationally considered? (eg microeconomics)
- What are the subconscious influences, where the brain at a subconscious level is automatically forming conclusions?
- Problem-Solving notions
- Decide the big no-brainer questions first
- Apply numerical fluency
- Apply elementary multidisciplinary wisdom, never relying entirely upon others
- Watch for combinations of factors – the Lollapalooza effect
- On asbestos and tort
- “What’s happened in asbestos is that a given group of people get mesothelioma—a horrible cancer that comes only from asbestos exposure and kills people. Then, there’s another group of claimants who smoked two packs of cigarettes a day and have a spot on their lung. Then you get a lawyer who gets a doctor to testify that every spot is caused by asbestos. Once you effectively bribe a doctor, then you can get millions of people to i sue on fears of getting cancer. But there’s not enough money [to pay all of the claimants], so people who are truly harmed don’t get enough…Once wrongdoers get rich, they get enormous political power and you can’t stop it, so the key is to nip things like this in the bud. It would be easy to fix the problem: The right way is to say we’re not going to pay off all these little claims.”
- On Microsoft and antitrust
- “Every business tries to turn this year’s success into next year’s greater success. It’s hard for me to see why Microsoft is sinful to do this. If it’s a sin, then I hope all of Berkshire Hathaway’s subsidiaries are sinners.”
- “When you mix raisins and turds, you’ve still got turds.” (Used repeatedly to reference immoral accounting, tech com benefits vs stock speculation.)
- On why lawyers can have bad clients
- “my father had another client who was a blowhard, overreaching, unfair, pompous, difficult man. And I must have been fourteen years old or thereabouts when I asked, “Dad, why do you do so much work for Mr. X—this overreaching blowhard—instead of working more for wonderful men like Grant MeFayden?” My father said, “Grant McFayden treats his employees right, his customers right, and his problems right. And if he gets involved with a psychotic, he quickly walks over to where the psychotic is and works out an exit as fast as he can. Therefore, Grant McFayden doesn’t have enough remunerative law business to keep you in Coca-Cola. But Mr. X is a walking minefield of wonderful legal business.””
Charlieisms (Funny Quotes)
- “I have nothing to add.”
- “I’m right, and you’re smart, and sooner or later you’ll see I’m right.”
- Warren would frequently call up Charlie and say, ‘I’m thinking of doing something’ and describe it, and Charlie would say, ‘My God, are you kidding? There’s this risk and that risk.’ They’d go right through all these risks that Charlie saw, and Warren would usually say, ‘I think you’re right.’ But once in a while, he would say, ‘Charlie, I’ve heard everything you said, but I think I’m going to go ahead.’ Warren said that it wasn’t until that instant that he’d learn what Charlie really thought because occasionally Charlie would respond, ‘Warren, if you do it, could I have a percentage of it?’
- “If mutual fund directors are independently then I’m the lead character in the Bolshoi Ballet.”
- “If you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one-legged man in an ass-kicking contest.”
- [about why investment advisers are bad but still get business] guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.”
- “The fun never stops. I suppose that it does stop eventually when you’re drooling in the convalescent home at the end.”
- “The company that needs a new machine tool, and hasn’t bought it, is already paying for it.”
- Hiring professors with extreme political ideologies “made regain of objectivity almost as unlikely as regain of virginity.”
- “The happier mental realm I recommend is one from which no one willingly returns. A return would be like cutting off one’s hands.”
- “I don’t use formal projections. I don’t let people do them for me because I don’t like throwing up on the desk.”
- On accountants who set up an incentive structure that rewarded destructive lending practices: “These people became the equivalent of an armored car cash-carrying service that suddenly decided to dispense with vehicles and have unarmed midgets hand-carry its customers’ cash through slums in open bushel baskets.”
- “To say accounting for derivatives in America is a sewer is an insult to sewage.”
- “Not ignorance, but ignorance of ignorance is the death of knowledge.” – Alfred Whitehead
- “The ‘silly’ question is the first intimation of some totally new development.” – Alferd Whitehead
- “There is no limit to what a man can do or where he can go if he doesn’t mind who gets the credit.” – Robert Woodruff
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