We are subject to the orders and directions of those counties which, before, really didnt impact anything. Charlie Munger: Well, of course, if they bring in a brand new technology you dont understand at all, youre at something of a disadvantage. And if you stop to think about it, that is also true at the Daily Journal. Generally, what people do is they have financial reserves so they have some options if trouble comes, and they adapt the way Gerry has to require downsizings or require upsizings. At this rate, But Henry was a genius. Commission-free trading is not free. It was totally required. I think that shareholders should be more sensible and not crowd into stocks and buy them just because theyre going up and they like to gamble. Thats what the communists are doing. When these people go, there is none replacing them. And I dont know whether hes right or not. You used examples of Lee Kuan Yews good judgment in choosing someone with brains over certain physical attributes in your past interview. That recognized reality and worked way better than what other people were doing. I prefer the United States. If you do that all the time; if youre looking for disconfirming evidence and putting yourself on a grill, thats a good way to help remove ignorance. Theyve got a better reputation for providing value than practically anybody, including Amazon. I think Im a little more lenient. Question: What have you done to live such a long life? The word 'customer' occurs 25 times. No, I dont think I have anything to contribute. Ive been pretty quiet. Scan this QR code to download the app now. WebAnnual reports, proxies and shareholder letters. I think theyd run rings around me. Theron Mohamed Jan 22, 2021, 11:41 AM Charlie Munger. Source: FactSet, Markets Diary: Data on U.S. Overview page represent trading in all U.S. markets and updates until 8 p.m. See Closing Diaries table for 4 p.m. closing data. 2022 . Charlie Munger: Well, we dont really know where its all going. Question: In this years annual letter, you mentioned the share price increase was driven by speculative frenzy and forced index buying. This is a highly desirable thing. It doesnt happen anymore. Berkshires Performance vs. the S&P 500 Bitcoin at 50,000 or Teslas fully diluted enterprise value of 1 trillion. And he made a very favorable impression. Question: Does management, in your opinion, have a moral responsibility to have their shares trade as close to fair value as possible? Thats a really good rule. All the buses. Shareholder Letters So he married her. I think were into a lot less travel and a lot more Zooming. So he was just a perfect banker if you wanted never to have any trouble. What, for example, is to stop the Chinese government from simply deciding one day to nationalize BYD? Question: Mr. Munger recently raised the alarm about the level of money printing taking place. tzJ/wa*''=`R9+eJ}hv&iA+sn\/t`5q2(5l.h% dD2)ls.sz M4Z6X_h+ak,+,D^'a%&2K~SO@z'9f)xC? 6ZERFyGh.Q{BoM$k2YNNV'Vq3yd;6. Value Investing will never go out of style. When I saw that psychology was necessary and I didnt have it, I didnt just learn the little tendencies well enough to get As in psychology. I gave at the office is an unassailableassertion when made by When you respond to software by the RFP process, its a very difficult, demanding business and its less profitable and less sure than what Microsoft does. The JTI software has been configured for other judicial and justice agencies, including district attorneys, prosecutors, public defenders, probation, etc. Charlie Munger: Theres one thing that were quite passionate about and that is serving the customers who have trusted us. And I just think it was academically inconvenient for them. Join 4,000+ investment professionals and curious generalists by getting my latest articles, research, and insights directly to your inbox. Ive been around for a long time and my policy has always been to just write them out. And were gonna play that as hard as we can. WebDaily Journal. Charlie Munger: Its hard to know what exact macroeconomic policy is correct. endobj I think that inequality is absolutely an inevitable consequence of having the policies that make a nation grow richer and richer and elevate the poor. Question: We have a couple of questions about J.P. Rick Guerin. This is cheap compared to Tesla currently valued at over 1100 times P/E and 24 times sales. Do you agree with the premise and if so how would you address inequality? That is true and makes sense. Have you considered amending this quote or lowering your standards? The directors are Gerry Salzman, Peter Kaufman, Mary Conlin, Gary Wilcoxwhos retiring nowand myself. FOURTH QUARTER 2021 FINANCIAL RESULTS AND SHAREHOLDER LETTER We generated $97 million of free cash flow in the quarter and $477 million for the year, inclusive of a $191 million increase in inventory of which approximately $60 million is due to increased transit times and the balance targeted to alleviate our unshipped I wouldnt change my life all that well. Question: Previously, you have said; It takes character to sit with all that cash and do nothing. I dont think Ive got any great insight about hydrogen. Also, fortunately before the pandemic, we got out of the conference-type events and we were not subjected to the problems of no conferences nobody to attend. Florida would have a really serious problem. Warren Buffett is set to release his annual shareholder letter Saturday morning along with the conglomerates quarterly earnings. Thats the nature of capitalism. Thats entirely due to the practical talent of Lee Kuan Yew. On the other hand, as you say, I didnt get rich by buying stocks at high price-earnings multiples in the midst of crazy speculative booms. The first rule of a happy life is low expectations. People really trust Costco will be delivering enormous value. He was a very smart man. And I think, by and large, we made the most practical decisions that were available to us. Is there any new material? While there were only 410 shareholders of record of Daily Journal's common stock as of Dec. 15, according to its annual report, Munger attracts a sizable Furthermore, hed gone through the Great Depression. I do think that we dont know what these artificially low interest rates are going to do or how the economy is going to work in the future as governments print all this extra money. We expect many of our employees to always be at client court offices because we work with them very closely to make sure they get what they need. Its hard to run a bank intelligently. Charlie Munger: Well, commission-free trading is a very good candidate for that if you want to emphasize disgusting-wise. Do you think this is a worthwhile policy objective given the effect it has on creating financial excesses and income inequality? Question: How important is the analysis of company culture in the investment process? Yahoo Finance to stream Daily Journal annual meeting featuring I tell a story on Rick that he took the Navys IQ test and got one of the highest scores ever recorded and left early. By the way, the Harvard Business School, when it started out way early, they started out with a history of the business. I dont know which is worse. DAILY JOURNAL CORPORATION : Shareholders Board Dimon, the banks chairman and CEO, laid out all of this and more in his annual letter to shareholders, released early Wednesday. 2021 Letter to Shareholders | Accenture But I do think politics is getting more full of hatred and irrationality than it used to be in America and I dont think thats good. This years annual report suggests that the traditional business has 97 full-time employees. And its a shame that the economics textbooks dont emphasize how much a growing economy needs poverty in order to get out of poverty. Question: Your advice given on choosing a good spouse in Poor Charlies Almanac is terse. So, Im kind of pleased that Im still functioning at all. They lose their money fast enough. Could you please elaborate on the subject and could you consider giving a talk on this particular subject? Ellen Ireland will be inspector of elections. But theres no rule that life has to be easy on the mental side. Charlie Munger: Its quite importantpart of the success of a company like Costco. At about the same time, we bought a newspaper in Phoenix and that worked out extremely well. Mutual Funds & ETFs: All of the mutual fund and ETF information contained in this display, with the exception of the current price and price history, was supplied by Lipper, A Refinitiv Company, subject to the following: Copyright Refinitiv. So we have one basic system configured in a number of different ways, including workers comp for a large state in the United States. Remember the Dot Com boom when every little building in Silicon Valley ran into a huge price and a few months later about a third of them were vacant. And what he does is he sells about half of them always. So its very difficult. Any tips on how to generate insight in these types of situations? Has the quality gone down? And I think thats what shareholders do. [The questioner] would like to know what Charlies method of learning is. Charlie Munger: Well no, I dont think we have a bubble in Treasury securities. Theyre in a place thats gotten more valuable. WebThe U.S. economy is strong. WebCash Flow. Question: What books are you currently reading and what can you reccomend? So, of course, I admire him. Question: You are one of the oldest and greatest thinkers of our time. So far the evidence would be that maybe the monetary modern monetary theory is right. I was very lucky. Charlie Munger: No, I would say that of course, theres some new material in misjudgment. Do you agree that there is a close parallel to the late 90s and that this, therefore, must end badly?. I find it much easier to find four or five investments where I have a pretty reasonable chance of being right that theyre way above average. If you stop to think about it, business success long term is a lot like biology. In fiscal 2021, we reached revenues of $50.5 billiona significant milestone that represents 11% growth in local currency and the addition of $6.2 I just see more and more of the rich people leaving. Question: Do you believe global warming is an existential threat to humankind? Both Berkshire and Li Lu own BYD Company which you spoke highly of in the past. I dont think its like the newspaper business. When you look at whats happened in California [in terms of] the price of real estate and rentals, weve reduced the number of offices we have both for Journal Technology and for the Daily Journal. Question: You often advocate for learning from other peoples big calamities and stupidities. With that one exception, Ive stayed out of Sequoias business because theyre so much better at it than I would be and I dont know how to do it the way they do it. Charlie Munger: Well, heres what I meant. I do think the present CEO is an extraordinarily able man and the directors made a very wise choice when they put him in charge. He loved to kid people. And when the evidence came in that the system wasnt working very well because some of the employees were cheating some of the customers, they came down hard on the customers instead of changing the system. You once said to study the life and work of Lee Kuan Yew. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. What do you look for in a leader? Charlie Munger: Well, its not easy to handle accumulated money in the current environment when these stocks are so high and partials of real estate of certain kinds are also very inflated. Shareholder Letter You are on record as a zealous fan of the Chinese work ethic and Confucian value system. I think you can count on the fact that if we really like the company and we like the managementand that is the way we feel about BYDwere likely to be a little too loyal. He was death on corruption which was a very good idea. Bitcoin reminds me of what Oscar Wilde said about fox hunting. We use cookies and browser capability checks to help us deliver our online services, including to learn if you enabled Flash for video or ad blocking. Now 16 years have passed. And that is why Costco presents some danger to Amazon. And thats what we have going in the stock market in a frenzy thats fed by people who are getting commissions and other revenues out of this new bunch of gamblers. And I think the world would be better off without them. Due to the COVID-19 As a result of holding those two positions, we have a lower cost than anybody else and we make more money than practically everybody else. Always on point. WebShareholder Letter Q2 2022 AUGUST 9, 2022. One is a big interest in Li Lus China fund, which is a limited partnership, and the other is a Vanguard index fund. I cant help you. We made the rich richer, not as a deliberate choice, but because it was an accidental byproduct of trying to save the whole civilization. They just copied Adam Smith and left out the free speech and it worked fine for them. I dont think its easy for ordinary people to become great investors. He knew everybody and everything. All the good things. And what did the Chinese communists do with respect to death taxes? Charlie Munger: Well, I dont think its required that we be exactly the same on everything. And so I dont think its necessarily crazy that good companies sell at way higher multiples than they used to. I think this kind of crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble. For shareholders and others who are interested, a book that compiles the full unedited versions of each of Warren Buffetts letters to shareholders between 1965 and 2014 is available for sale at this link. When people gave me a good idea and I could see it was a good idea, I quickly mastered it and started using it for the rest of my life. Question: It seems like everyoneincluding actors, athletes, singers, and politiciansis getting into the business of promoting their own SPAC. I tend to avoid the ones which Im not good at and Im not good at a lot of different problems. When the pandemic is over, I dont think were going back to just the way things were. Charlie Munger: I dont have any wonderful new thoughts. In a shareholder letter, Barra said 2023 will be a "breakout year" for GM's Ultium-based EVs. Those are pretty good rules and theyre pretty simple. Question: My question concerns China. Theres a lot of competition and were a very small company compared to our main competitor. Charlie Munger: Well, I never owned a share of General Electric because I didnt like the culture. There are factories in China that are just absolutely full of robots and are working beautifully. Gerald Salzman: Charlie refers to the courts, many times. What do you think the long-term consequences will be? Think of all the monopoly newspapers that used to be, in effect, part of the government of the United States. I do think that Im way less afraid of inequality than most people who are bleeding about it. Never before in the history of mankind have we seen such a rapid eradication of poverty, pulling approximately 800 million people out of destitution. Sources: FactSet, Dow Jones, Bonds: Bond quotes are updated in real-time. In other words, its your money. Question: Do you believe the market is going through a long-term value slump similar to 1999, or do you believe technology has caused a permanent change in how companies should be valued? That was a big error in judgment. Its just not gonna work. Thats been greatly curtailed. You know what her mottoes were? When I was young, I rezoned some properties very successfully. <> A lot of the good rules of life are like that. Put me down as skeptical. 5. Is it digital wallets like PayPal, Square, or Apple Pay? A rich civilization can afford to do it if we absolutely have to. Gerald Salzman: Well, we dont think about mistakes. Theyre no longer using peasant girls to beat the brains out of our little shoe companies in America. Theres a lot of temptation to do dumb things which will make the earnings next quarter go up but are bad for the long term. And my advice would be if you have a fixable disadvantage, remove it. The second proposal is to ratify the appointment of our certified public accountant: Baker Tilly US, LLP. Daily Active Users (DAUs) totaled 53.3 million in June 2022, year versus 3.571 billion hours in May, up 10% over May 2021. And if there is one thing the world could learn from Singapore, what would that be? Fundamental company data and analyst estimates provided by FactSet. Charlie Munger: Well, its most egregious in the momentum trading by novice investors lured in by new types of brokerage operations like Robinhood. Every value investor tries to get more value than he pays for. And we immediately ascended, we put Gerry in, and hes made every decision wonderfully ever since. What, for example, would you recommend as course materials? The best venture capital operation probably in the whole world is Sequoias and they are very good at this early stage investing. Washington State is actually considering a wealth tax at the state level. Question: It seems likely that the current Fed policy of keeping interest rates near zero will only exacerbate the income disparity in this country by benefiting those who own the financial assets. You can hardly think of a decision that matters more to human felicity than who you marry. And you mentioned technologythats very, very important. In other words, to some extent, its a self-correcting system. But its hard for anybody. What do you think of all of the SPACs and the promoters pushing them? We were together in that for a long, long time, and then Rick and I did the Daily Journal together on another occasion. I think when difficulty comes, I expect to have my share. Lesson 1: Choose your words wisely. We discuss the company Berkshire Hathaway and the economic context in which it operates. Charlie Munger: Well, Im constantly making mistakes where I can, in retrospect, realize that I should have decided differently. I feel the same way about those choices. And theyre all dyingevery damn one of them almost. And he was just so good. I think that would be insanity. Question: You identified the opportunity in electrification and invested in BYD. Whoever dreamed when I was young that Kodak and General Motors would go bankrupt. And, of course, thats a very dangerous way to invest. And when the old CEO of the Daily Journal died, Gerry was managing the business affairs of the Munger Tolles law firm. He was just so damn smart. Buffetts donations to the foundation have obviously helped to save many millions. So, I dont mind a little inequality and what I notice is that the rich families generally lose their power and wealthand pretty fast. Because we have the proxies those directors are now reelected. Read the full transcript of the 2022 Daily Journal annual meeting featuring Charlie Munger and Gerald Salzman. Today, it hovers around 9500. And interested and up to speed and didnt have to take a lot of time to get background information to make his comments. He doesnt mind at all not getting credit for his charitable donations. It reminds me of the key phrase and Bunyans Pilgrims Progress in which he says: My sword I leave to him who can wear it. You have to be concerned about employees lives. Charlie Munger: Well, I dont think I know exactly what the future of banking is and I dont think I know how the payment system will evolve. I think that to some extent the complaint about the rich getting richer as a result of the COVID panic is a misplaced concern. That turned out to be a wonderful idea and thats one of the reasons we made all this money. Charlie Munger: Well, you know, I had a failed marriage, so I dont think Im in the perfect position to advise the young about marriage. But the accountants are duly elected. Would you mind elaborating on how a professor or individual should go about building a curriculum around this approach? What are the main sources of ancillary revenue expected once the products have gone live and how meaningful will the products like eFile-it, ePay-it, cloud hosting services, and others become? Question: Eugene Abegg seems like he was one of the best bankers of the last century, achieving both extremely low loan loss rates and earning around 2% on assets over a long time period. Question: Last February, you spoke about the wretched excess in the financial system. There are certain behavioral rules. That word focuses Bezos and focuses the people that look to him for guidance. The former majority owners of Bank of Blue Valley and Morill & Janes Bank, Bob Regnier and Kurt Saylor respectively, both signed the shareholder letter. They really need the world to stay the way it is. Has there been anything that has surprised you, and what would be your best advice to someone starting a business now? On December 18, 2020the record datethere were 1,380,746 shares of common stock of the company outstanding. Larry Summers has recently been quoted as being worried that were having too much stimulus. D07"Kn Thats very, very important. If you try and reduce the poverty too much, its counterproductive. We have offices in all the major cities in California and also in Logan, Utah. Charlie Munger: Well, I dont participate at all. Our editorial system and our advertising system are all in the cloud. And I dont think youll find me engaged in the massive rezonings in the future. For a quarter in which we made only a handful of portfolio changes and essentially broke even, lot Im satisfied with the way things have worked out and Im not gnashing my teeth when other people are doing better. When you get into these hard questions, theres a lot of very intelligent honorable people who reach opposite conclusions. Youre better off concentrating your decision power on one person the way the Li Lu partnership does and then choose the right person. It seems to involve a lot of your standard causes of human misjudgment. Question: What do you hope the future of the Daily Journal Corporation looks like in a decade? Change value during other periods is calculated as the difference between the last trade and the most recent settle. But I do admire what the Chinese have done. You can hardly think of anything more important in life than being reliable for the people who trust you. Charlie Munger: Yes, I think that is rising as we sit here. Give me a new question. So you now know what I do in charitable institutions. 2021 Shareholder Letter And if its unfixable, learn to live without it. Charlie Munger: Real estate has always been a difficult field. Of course, people behave more sensibly when theyre spending their own money. But, I hardly think the editorial quality could go way up when employees were going down. As a matter of fact, it will be here for a long, long time if we stop using many hydrocarbons in transportation. But, a very wise man said on an earlier occasion: The trouble with banking is that we have more banks than we have bankers. Question: With all the work from home with Zoom and other technology, what do you think the future of commercial real estate looks like? Absolute insanity. Could you share the secret to living a long, healthy, and happy life? So, its a serious problem. And I was like Rip Van Winkle; when I tried to come back to it, I found that the world had changed. But, of course, its a very difficult field. If a civilization can progress only when it invents the method of invention, you can only progress when you learn the method of learning. <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 18 0 R 19 0 R] /MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> What can you learn from the Barry Duttons bookstore building deal in Brentwood and how would you apply that new knowledge or experience in the future? Charlie Munger: Ben Franklin was one of the wisest men who ever lived. Question: Given all of your donations to physics, what is your favorite way of applying physics to societys problems and also to investing?

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