Tuesday, September 26, 2017

Quotes From Charlie Munger

Quotes From Charlie Munger, Warren Buffett's Right-Hand Man

Don't drift into self-pity because it doesn't solve any problems.


"Generally speaking, envy, resentment, revenge and self-pity are disastrous modes of thoughts. Self-pity gets fairly close to paranoia, and paranoia is one of the very hardest things to reverse. You do not want to drift into self-pity. ... Self-pity will not improve the situation."
Source: Charlie Munger USC Law Commencement Speech, May 2007






Those who keep learning, will keep rising in life.

Those who keep learning, will keep rising in life.
Stringer / Getty Images
 
"I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you."
Source: Charlie Munger USC Law Commencement Speech, May 2007

At a certain point, you have to suck it up and cope.


“There’s danger in just shoveling out money to people who say, ‘My life is a little harder than it used to be. At a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”

Life has terrible and unfair blows. Utilize them in a constructive fashion.

 
"Another thing, of course, is that life will have terrible blows in it, horrible blows, unfair blows. It doesn't matter. And some people recover and others don’t. And there I think the attitude of Epictetus is the best. He thought that every missed chance in life was an opportunity to behave well, every missed chance in life was an opportunity to learn something, and that your duty was not to be submerged in self-pity, but to utilize the terrible blow in constructive fashion. That is a very good idea."
Source: Charlie Munger USC Law Commencement Speech, May 2007

Real knowledge is knowing that you don't know anything.

 
"Confucius said that real knowledge is knowing the extent of one’s ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome. Some people are extraordinarily good at knowing the limits of their knowledge, because they have to be. Think of somebody who’s been a professional tightrope walker for 20 years – and has survived. He couldn’t survive as a tightrope walker for 20 years unless he knows exactly what he knows and what he doesn’t know.  He’s worked so hard at it, because he knows if he gets it wrong he won’t survive. The survivors know. ... Knowing what you don’t know is more useful than being brilliant."
Source: The Wall Street Journal

If you're lazy and unreliable, it doesn't matter what you're good at.

 
"What do you want to avoid? Such an easy answer: sloth and unreliability. If you’re unreliable it doesn’t matter what your virtues are. You're going to crater immediately. Doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability."

Source: Charlie Munger USC Law Commencement Speech, May 2007

There's a lot of stupidity on the part of major philanthropic groups.

There's a lot of stupidity on the part of major philanthropic groups.

"I’ve seen so much folly and stupidity on the part of our major philanthropic groups, including the World Bank. I really have more confidence in building up the more capitalistic ventures like Costco."

Don't overspend. Even Mozart couldn't get away with doing that.

 
"Another thing that does one in, of course, is the self-serving bias to which we’re all subject. You think the 'True Little Me' is entitled to do what it wants to do. And, for instance, why shouldn’t the True Little Me overspend my income. There once was a man who became the most famous composer in the world but was utterly miserable most of the time, and one of the reasons was because he always overspent his income. That was Mozart. If Mozart can’t get by with this kind of asinine conduct, I don’t think you should try."
Source: Charlie Munger USC Law Commencement Speech, May 2007

Avoid extremely intense ideology because it ruins your mind.

Avoid extremely intense ideology because it ruins your mind.
Wikimedia
 
"Another thing I think should be avoided is extremely intense ideology because it cabbages up one’s mind. ... When you’re young it’s easy to drift into loyalties and when you announce that you’re a loyal member and you start shouting the orthodox ideology out, what you’re doing is pounding it in, pounding it in, and you’re gradually ruining your mind."
Source: Charlie Munger USC Law Commencement Speech, May 2007

Keep it simple.

 
"One of the greatest ways to avoid trouble is to keep it simple. When you make it vastly complicated—and only a few high priests in each department can pretend to understand it—what you’re going to find all too often is that those high priests don’t really understand it at all…. The system often goes out of control."
Source: Wesco Financial annual meeting, 2008 (quoted in Stanford Business School paper)

Optimistic accounting leads to 99% of problems.


"Ninety-nice percent of the troubles that threaten our civilization come from too optimistic accounting. And yet these damn accountants with their desire for mathematical purity want to devote exactly as much attention to accounting that is too pessimistic as they do to accounting that is too optimistic — which is crazy. Ninety-nie percent of the problems come from being too optimistic. Therefore, we should have a system where the accounting is way more conservative."

Assets require more scrutiny than the liabilities.

 
"The liabilities are always 100 percent good. It’s the assets you have to worry about."
Source: Wesco Financial annual meeting, 2008 (quoted in Stanford Business School paper)

People who rise high enough in business have a moral duty to be underpaid.

People who rise high enough in business have a moral duty to be underpaid.
Justin Sullivan/Getty Images\
 
"People should take way less than they're worth when they are favored by life... I would argue that when you rise high enough in American business, you’ve got a moral duty to be underpaid— not to get all that you can, but to actually be underpaid."
Source: Wesco Financial annual meeting, 2008 (quoted in Stanford Business School paper)

Only those who are willing to leave at any point should hold high level corporate jobs.

 
"'No man is fit to hold office who isn't perfectly willing to leave it at any time,'... I think that ought to be more the test in corporate directorships. Is a man really fit to make tough calls who isn't willing to leave the office at any time? My answer is no."
Source: Berkshire Hathaway 1995 Annual Meeting (quoted in Stanford Business School paper)

"One solution fits all" doesn't work.

"One solution fits all" doesn't work.
Courtesy of TripAdvisor
 
"'One solution fits all' is not the way to go. All these cultures are different. The right culture for the Mayo Clinic is different from the right culture at a Hollywood movie studio. You can't run all these places with a cookie-cutter solution."
Source: Stanford University Director's College, June 26, 2006. (quoted in Stanford Business School paper)

Many successful organizations have fewer (rather than more) controls.

Many successful organizations have fewer (rather than more) controls.
AP Images
 
"A lot of people think if you just had more process and more compliance — checks and double checks and so forth — you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust."
Source: Wesco Financial annual meeting, 2007 (quoted in Stanford Business School paper)

Deserved trust is the most important thing.

Deserved trust is the most important thing.
Eric Francis/Getty Images
 
"The highest form that civilization can reach is a seamless web of deserved trust — not much procedure, just totally reliable people correctly trusting one another. ... In your own life what you want is a seamless web of deserved trust. And if your proposed marriage contract has forty-seven pages, I suggest you not enter."
Source: Wesco Financial annual meeting, 2008 (quoted in Stanford Business School paper)

Great investing requires a lot of delayed gratification.

Great investing requires a lot of delayed gratification.
REUTERS/Dominick Reuter
 
"It's waiting that helps you as an investor, and a lot of people just can't stand to wait. If you didn't get the deferred-gratification gene, you've got to work very hard to overcome that.”

He wanted to be rich in order to be independent.

He wanted to be rich in order to be independent.
Emanuel Leutze
 
"Like Warren, I had a considerable passion to get rich, not because I wanted Ferrari's – I wanted the independence. I desperately wanted it."
Source: Buffett: The Making of an American Capitalist

Wisdom acquisition is a moral duty.

 
"Wisdom acquisition is a moral duty. It’s not something you do just to advance in life. Wisdom acquisition is a moral duty. As a corollary to that proposition which is very important, it means that you are hooked for lifetime learning. And without lifetime learning, you people are not going to do very well. You are not going to get very far in life based on what you already know. You’re going to advance in life by what you learn after you leave here."
Source: Charlie Munger USC Law Commencement Speech, May 2007

School is not a prerequisite.

School is not a prerequisite.
Wikimedia Commons/HBS1908
 
“To this day, I have never taken a course anywhere, in chemistry, economics, psychology, or business.”
Source: Forbes

He learned by reading, not schooling.

 
"I met the towering intellectuals in books, not in the classroom, which is natural. I can't remember when I first read Ben Franklin. I had Thomas Jefferson over my bed at seven or eight. My family was into all that stuff, getting ahead through discipline, knowledge, and self-control."
Source: Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger

CEOs should be "empowered" to make decisions without extensive review by the board of directors.

CEOs should be "empowered" to make decisions without extensive review by the board of directors.
Paul Morigi / Stringer / Getty Images
 
"When you have a really complicated place and a good CEO, you want him to have power to speak for the place in dealing with outsiders.... Berkshire Hathaway of course is raised that way. Can you imagine Warren Buffett saying to somebody, 'Well I'm sorry I have to go back and check with my directors?' I mean, of course he has to go back to check with his directors, but he knows what they're going to say, and everybody knows that what he says is going to govern."
Source: Stanford University Director's College(quoted in Stanford Business School paper) 

Even Ben Graham had a lot to learn as an investor.

Even Ben Graham had a lot to learn as an investor.
Benjamin GrahamAP
 
"I don’t love Ben Graham and his ideas the way Warren does. You have to understand, to Warren — who discovered him at such a young age and then went to work for him — Ben Graham’s insights changed his whole life, and he spent much of his early years worshiping the master at close range. But I have to say, Ben Graham had a lot to learn as an investor. His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay."

The bailouts should've been ever bigger.

 
"Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens. So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.”

The fortunate should give back.

 
"Those of us who have been very fortunate have a duty to give back. Whether one gives a lot as one goes along as I do, or a little and then a lot (when one dies) as Warren does, is a matter of personal preference."
Source: Poor Charlie's Almanack: The Wit and Wisdom of Charlie T. Munger

Regarding quick trading of derivatives and stocks.

Regarding quick trading of derivatives and stocks.
REUTERS/ Brendan McDermid
 
It’s like the slaughter of the innocents. It makes the people who run Las Vegas seem like good people.
Source: The Wall Street Journal

On Wall Street.

 
"Wall Street has too much wealth and political power."
Source: Forbes

And his closing advice is...

 
"In the end I’m like an Old Valiant for Truth in The Pilgrim’s Progress: 'My sword I leave to him who can wear it.'"

Source: Charlie Munger USC Law Commencement Speech, May 2007

 

BONUS: Some additional Munger zingers.

BONUS: Some additional Munger zingers.
Lane Hickenbottom/Reuters
 
On global warming: "So what we are really talking about with global warming is dislocation. Dislocations could cause agony though. The sea level rising would be resolved with enough time and enough capital. I don't think it's an utter calamity for mankind though. You'd have to be a pot-smoking journalism to think that."

Regarding Buffett's cancer diagnosis: "I regarded it as a total non-event. I would bet a lot of money that I have more than he does, I don't event allow them to check for it. … So when my doctor puts down PSA test I just cross it out.”

On Donald Trump (according to Andrew Ross Sorkin): "Obviously I think he's a jerk."

On buying gold: "I think gold is a great thing to sew in to your garments if you're a Jewish family in Vienna in 1939 but I think civilized people don't buy gold."

On Bitcoin: "I think it's rat poison."

On bankers: "I do not think you can trust bankers to control themselves. They are like heroin addicts."

And on investment banking in general: "There's more honor in investment management than in investment banking."

And how he will be rememberedI may be remembered as a wise ass.

 

BONUS: Warren Buffett wants to be remembered as a teacher, not a businessman.

BONUS: Warren Buffett wants to be remembered as a teacher, not a businessman.
Grant Halverson/Getty Images
 
"And I like to ask Warren what he wants to be remembered as, and he says a teacher. Who else in America who is a CEO says he wants to be remembered as a teacher? I like it."
Source: CNBC interview

 



Source: Charlie Munger USC Law Commencement Speech, May 2007
 



Source: http://www.businessinsider.com/charlie-mungers-best-quotes-2014-9?op=1/#nt-drift-into-self-pity-because-it-doesnt-solve-any-problems-1




Monday, September 25, 2017

Charlie Munger's Wisdom






The Thinking of Charlie Munger: Speeches, Quotes, Videos, Transcripts, and Book Recommendations

“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Systematically you get ahead, but not necessarily in fast spurts. Nevertheless, you build discipline by preparing for fast spurts. 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.” — Charlie Munger
***
Charlie Munger is one of the great minds of the 20th century. Below is an attempt to capture that wisdom in one shareable place. 

Charlie Munger

Speeches

Wisdom

Videos

Articles

Books

Book Recommendations

The wit and wisdom of Charlie Munger:

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

“Just because you like it does not mean that the world will necessarily give it to you.”

“I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge.”




Link: https://www.farnamstreetblog.com/charlie-munger/




The Hollow Men: What the end of the world looks like...



What the end of the world looks like...

The Hollow Men

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper. 

by T. S. Eliot Written 1925






 

Wednesday, September 20, 2017

Lumber Markets

 

Trump's 'America First' Vow Turned Upside Down in Lumber Market

  • Shares of Canadian producers outperform U.S. counterparts
  • Gains driven by surge in lumber prices from trade dispute
Donald Trump’s policy on trade since becoming U.S. president has been all about putting “America First.” But in one corner of the commodity world, his actions are having the opposite effect.
In a move intended to protect the domestic lumber industry, the U.S. this year slapped duties of as much as 31 percent on imports of timber from Canada, which supplies more than a quarter of what American builders use each year. Prices surged, increasing costs for American buyers -- and boosting profit for Canadian producers.

Shares of Canadian softwood lumber producers Canfor Corp. and West Fraser Timber Co. are outperforming their American peers with gains of more than 40 percent this year, placing them among the top performers on the BI Global Paper and Wood Products Index. By contrast, shares of U.S. rival Weyerhaeuser Co. are up about 10 percent.
Lumber futures jumped 16 percent in 2017 as U.S. trade limits and western wildfires spark concerns over limited supplies, just as communities in Texas and Florida begin to rebuild after devastating hurricanes in the past month. That means more gains ahead for Canfor and West Fraser, which have more exposure to softwood-lumber prices than their American peers, including Weyerhaeuser and Potlatch Corp., according to Christoph Butz, a senior investment manager of timber funds at Pictet Asset Management in Geneva.
“There is no way lumber prices can nosedive,” said Butz, whose firm is one of the largest shareholders of Vancouver-based Canfor. Canadian producers “have a much stronger direct exposure, since that is really the bulk of the business,” he said.

Renewing Dispute

Disputes between the countries over softwood lumber have caused intermittent friction for years. Canada’s share of the U.S. lumber market averaged 28 percent under a previous trade agreement, Joshua Zaret, a Bloomberg Intelligence analyst, said in a March report, citing data from the Congressional Research Service.
Tensions escalated in April when the Trump administration imposed preliminary countervailing duties of as much as 24 percent on Canadian imports. Additional duties of as much as 7.7 percent followed in June. But most of those increases have been passed along to consumers.
“This is a strong market,” said Joshua Zaret, an analyst with Bloomberg Intelligence. “If it were a weak market, they wouldn’t be able to push through prices, and they’d have to eat the tariffs.”
Why the U.S. and Canada Are Fighting About Lumber: QuickTake Q&A
The U.S. tariffs sent lumber prices surging at a time when demand from home builders was already strong, Butz said. While the lion’s share of the Canadian producers’ business is directly linked to lumber, the American companies have more investments in private U.S. timberlands and mills in the nation’s south, where log prices haven’t increased as much, he said.


“Prices have gone up, and the U.S. market has absorbed the prices,” said Philippe Couillard, the premier of Quebec, Canada’s second-largest lumber-exporting province. In Canada, “not a single worker has been laid off, not a single plant has been closed,” Couillard said in an Sept. 18 interview. “So the people suffering from this battle are the U.S. consumer and the people wanting to build their homes or renovate their homes.”

Rising Costs

The trade dispute pushed up material costs for house builders in the U.S. by 20 percent, Jerry Howard, chief executive officer of the National Association of Home Builders, said last month.
On the Chicago Mercantile Exchange, lumber futures are up 25 percent over the past 12 months to $381.80 per 1,000 board feet. Prices have room to keep climbing, said Kevin Mason, managing director of Vancouver-based ERA Forest Products Research. Lumber could reach $400 over the next month if mills start running low on logs after wildfires in some key forest areas, Mason said.
Wildfires in western parts of Canada, along with some in the U.S., are threatening tree supplies and have prompted limitations on log harvesting, Mason said. An infestation of the mountain pine beetle also has eaten away at timber in the Canadian province of British Columbia, the world’s biggest exporter of softwood lumber.
Output threats can become a bit of a double-edged sword for Canada’s producers. On the one hand, they’re likely to keep lumber prices high. But wildfires and pests also could hurt sales and impede the ability of companies to deliver large volumes. That could mean a boost for other global suppliers.
“All that lumber needs to come from somewhere,” Butz of Pictet Funds said.
    Before it's here, it's on the Bloomberg Terminal.
     
     
      




    Source: https://www.bloomberg.com/news/articles/2017-09-19/trump-s-america-first-vow-turned-upside-down-in-lumber-market?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social




    Just what your home needs... a $36,000 clock that looks like a robotic octopus


    Just what your home needs... a $36,000 clock that looks like a robotic octopus
    https://bloom.bg/2xP50RE




     




     





    Tuesday, September 19, 2017

    Big Oil

     



    Investor. Any references to securities are not recommendations or solicitations to buy or sell anything. I may have positions in securities mentioned.