Transcript of Charlie Munger's 2016 Daily Journal Annual Meeting

Transcript of Charlie Munger's comments at the 2016 Daily Journal Annual Meeting.

Notable extracts:

1. They had a monopoly where every year they kept raising prices and every year people had to pay for it. A wonderful business.

2. There's an endless market for software in these public agencies, and it is a market that is sure to keep flourishing and needing more and better software.

3. It is agony to do business with a whole bunch of public bodies, so a lot of companies in software don't come near it, because they prefer the easy money.

4. Good investment opportunities are scarce, so one must act decisively when presented with one.

5. A fair amount of patience is required, followed by pretty aggressive conduct.

6. Electric forklifts= example of a very big idea.

7. Opportunity cost matters= if you have a rich uncle who will sell you his business for 10% of what it is worth, you don't want to think about some other investment.

8. We don't want any lousy businesses anymore.

9. We spend a lot of time thinking.

10. A constant search for wisdom and a constant search for the right temperamental reaction to opportunities, these will never be obsolete.

11. The nature of ordinary results is that they are ordinary.

12. The first time we bought Wells Fargo, we bought heavily, because we had an informational advantage, based on general thinking and collecting data. (Wells Fargo's lending officers are more conservative and operate better due to their backgrounds in the garment district.)

13. One should not invest in banking unless one has deep insight, especially on management shrewdness.

14. Synthesis is reality, but the reward systems of the world pays for extreme specialisation.

15. Being rationales mean avoiding awful things like anger, resentment, jealousy, envy, self-pity.

16. Good behaviour makes your life easier- you dont have to remember all your lies.

17. The big busts hurt us more than the big booms help us.

18. I don't think the auto industry will be a terribly easy place to invest in.

19. A lot of people think that if an axe murder happens in a free market, it has to be all right because free markets are always right.

20. People will cheerfully tolerate differences of outcome if they seemed deserved. Differences in outcome that seem to be undeserved tend to disrupt democracy. Inequality is a natural outcome of a successful civilisation that is improving for everybody.

21. Munger's Rule= large amount of money makes people behave badly.

22. I don’t think fundamental value investing will ever be irrelevant because of course if you’re going to succeed in investment you have to buy things for less than they’re worth instead of more than they’re worth. You have to be smarter than the market. That will never go out of style. That is like arithmetic. It’s going to always be with us.

23. Generally, I avoid circumstances which automatically causes reasonable fear.

Enjoy and Prosper,
Yours One-Legged