Thread by @tycoonmindset05

Charlie Munger Caltech interview 14th December 2020

@Gautam__Baid @Vivek_Investor @trengriffin @FocusedCompound @GSpier

Key takeaways 🧵👇

Early life
- There was a thing in law practice which he didn't like. As he had an army of children to support, he started investing more & spending less.

- End of first 13 year of law Munger had more liquid investment that could have been made in law practice.

- While discussing with Warren, Munger realized if he can make this much while doing part time disciplined investing, it would be much better to give it full time.

75 years of experience.
- There are very huge boom and huge burst. Government tried to do thing that will dampen down the fluctuation, and make recoveries in burst very faster.

View on investment:

"So many people have got into it
& have made so much & there has been many frenzy activity, and many people have entered in the market."

(contd.)

"This has been a huge development.
I don't welcome it all. It has made good amount of speculation and all but it's an good experience"

On Venture capital
- He did not make money with the help of cutting edge technology. He usually stays away from VC and technology

On Long term trajectory of a company
- Over the long term, companies of America behave more like biology. And in biology all the individual dies and so the species. And that's where economy too.

- Companies which were there during his childhood were receded, new companies came which were also about to die.

- Steel companies in US, newspaper, retail stores all died. This is how biology or economy functions in long-term and it's very interesting experience

Dealing with this change
- There are different ways. All successful investment involves trying to get into something where you are trying to get where it is worth more than your paying. Here help of technology can be taken.

- Sequoia who has been continuously investing in technology. Focus on company whether it is actually worthy that much or not

What would Munger do

1). Try to rub nose on eliminating mistakes.
2). Trying to keep fundamentals much simple.
3). Following Margin of Safety.

On Covid
- Covid is most likely to shrink its significance till next year. Just like the Polio.

On retail
- Retail has now been very tough business. With the help of technology this innovation has brought up many cost cutting things which has been tough for many businesses.

Do smart people predict the future better.
- Lot of smart people think they are way smarter than they and they do worst than dumb people. He & Warren always tried to avoid of being smart.

- Identify the things you are good at & the things you are not good, avoid the latter.

Next 10 years would deliver less return than last 10?

Munger- Yes. Because so many people are in it. Systems, reward system are foolish that I don't think to deliver more returns

Combination of QE and large fiscal deficit?

Munger- We are at highest money printing without ahh trouble. I think we are neat to the edge of fire.

On Bubble
- No one know when the bubble can be burst. Many things are going strange in finance.

- Last 30 year of China, they have had a real economic growth rate which has not been achieved by any country, and this has just been done by a few communist. This is remarkable.

- He has invested in China though the Pvt. equity which is managed by Chinese investors. They have fairly proven that a country can have remarkable growth with proper government framework

What is Munger proud of

Munger- I am proud of avoiding the things I don't like. I don't like Irrationality, and continue to avoid it. Caltech is one such Organization where I learned rationality a lot.

(contd.)

Munger - I am not proud of Philanthropy. I have given way money to family than for philanthropy and I am not proud of that. I would surely shift to that too.