By Jen Wieczner
May 7, 2018

While Warren Buffett is known as the Oracle of Omaha for his sage investing wisdom, it’s his business partner Charlie Munger who often steals the show at the annual Berkshire Hathaway meeting.

Munger, who at age 94 is seven years Buffett’s elder, is known for his pithy jokes and one-line zingers—which sometimes poke fun at the Berkshire Hathaway (brk-a) CEO or compliment him in a sort of backhanded way, eliciting hearty chuckles from Buffett.

While answering nearly six hours of questions at the Berkshire Hathaway shareholder meeting Saturday, Munger was often more direct in expressing his political views and opinions on other controversial subjects, from cryptocurrencies such as Bitcoin to guns and Donald Trump’s trade policy.

Buffett, for his part, said at the Berkshire meeting that “Charlie has been a wonderful teacher” for him, often prodding him to act quickly. “Charlie says an ounce a prevention isn’t worth a pound of cure, it’s worth a ton of cure, and he’s pushed me all my life to make sure I attack problems when they surface,” Buffett added.

For a sense of the advice Buffett himself gets from his right-hand man, here are selected highlights of Charlie Munger’s best quotes from the Berkshire Hathaway meeting 2018.

On cryptocurrency

“I like cryptocurrencies a lot less than you do [Warren]. And so to me it’s just dementia. And I think that people who are professional traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide I can’t be left out.”

On Elon Musk and moats

“Elon says a conventional moat is quaint, and that’s true of a puddle of water. And he says that the best moat would be to have a big competitive position, and that is also right. It’s ridiculous. Warren does not intend to build an actual moat. Even though they’re quaint.”

On Wells Fargo and the #MeToo movement

“I think Wells Fargo is going to be better going forward than if these leaks had never been discovered. I think Harvey Weinstein has done a lot for improving behavior too. It was clearly an error. And they’re acutely aware of it and acutely embarrassed and they don’t want to have it happen again. But if I had to say which bank is going to behave the best in the future, it might be Wells Fargo.”

On health care

“I suspect that eventually, when the Democrats control both houses of Congress and the White House, we will get single-payer medicine, and I don’t think it’s going to be very friendly to many of the current PBMs [pharmacy benefit managers]. And I won’t miss them.”

On steel tariffs

“The conditions in steel were almost unbelievably adverse to the American steel industry. Even Donald Trump can be right about some of this stuff.”

On why Berkshire Hathaway won’t rule out gun investments

“Obviously you do draw a limit, Warren, on all kinds of things, which are beneath us even though they’re legal. But we don’t necessarily draw it perfectly because we’ve got some sort of supreme knowledge, we just do the best we can. And certainly we’re not going to ban all guns, surrounded by wild turkeys in Omaha.”

On management

“My theory, Warren, is if it can’t stand a little mismanagement, it’s no business.”

On not investing in Google

“We were not ideally located to be high-tech wizards. How many people of our age quickly mastered Google? I’ve been to Google headquarters. It looked to me like a kindergarten.”

(Added Buffett, “A very rich kindergarten!”)

On not investing in Visa or Mastercard

“We would have been a lot better at all of our stock picking if we could do it in retrospect. But at the time we had a big position in American Express, and there is one tiny cloud on the horizon of the payments processors, and that is the system of WeChat in China. And so it isn’t as though there isn’t a little cloud somewhere, and I don’t have the faintest idea of how important that cloud is, and I don’t think Warren does either.”

On the future of Berkshire Hathaway

“Those of you who after we are gone sell your Berkshire stock and do something else with it, I think are going to do worse. So I would advise you to keep the faith.”

On artificial intelligence

“I’m afraid the only intelligence I have is being provided by something that’s not a machine, and I don’t think I’m going to learn machine intelligence. If you ask me how to beat the game of Go with my own intelligence, I couldn’t do it, and I think it’s too old for me to learn computer science. Generally I think the machine intelligence has worked—after all the machine now can beat the best human player of Go—but I think there’s more hype in that field than there is probably achievement. So I don’t think the world is going to be changed that much by machine intelligence. Some, but not hugely.”

On politics

“There’s a tendency to think that our present politicians are much worse than any we had in the past. But we tend to forget how awful our politicians were in the past. I can remember a prominent senator arguing with absolute earnestness that mediocre people ought to have more representation on the United States Supreme Court. And he came from Nebraska. So we’re not quite as bad as that yet.”

On investing over the long-term

“If you’re going to live a long time, you have to keep learning—what you formerly knew is never enough. So if you don’t learn to constantly revise your earlier conclusions, and get better ones, you are—I always use the same metaphor—you’re like a one-legged man in an ass-kicking contest.”

On how to pick stocks

“I can’t give you a formulaic approach, because I don’t use one. And I just mix all the factors and if the gap between value and price is not attractive, I go on to something else. And sometimes it’s just quantitative. For instance, when Costco was selling for 12 or 13 times earnings, I thought that was a ridiculously low value just because the competitive strength of the business was so great and it was so likely to keep doing better and better. But I can’t reduce that to a formula for you. I liked the cheap real estate, I liked the competitive position, I liked the personnel system—I liked everything about it. And I thought even though its three times book or whatever it was then, that it’s worth more. But that’s not a formula. If you want a formula, you should go back to graduate school. They’ll give you lots of formulas that won’t work.”

On China

“Of course China is advancing faster than the U.S. because they started from a lower base and they’ve had a little bit more virtue than practically anyone else in the world, and they have a higher savings rate….American investors are missing China, and they’re missing it because it’s a long way away, it looks different, they’re not used to it, its complicated, the headlines confuse them. In other words, it just looks too hard, sitting in Omaha to outsmart the Chinese market. But I think you’re absolutely right, it’s where they should be looking.”

On the Federal Reserve and interest rates

“Well it really wasn’t fair for our monetary authorities to reduce the savings rates mostly to old people with savings accounts as much as they did, but they probably had to do it to fight the recession effectively but it really wasn’t fair. And it’s only happened once in my lifetime. And it benefited the people in this room enormously because it drove the prices of public securities up including Berkshire Hathaway stock. So we’re all a bunch of undeserving people.”

On succeeding in a globalized world

“It wouldn’t do you much good to be fluent in both English and Chinese if you were, say, a proctologist in China or a proctologist in Nebraska. So if you’re going to use your multicultural background, you’ve got to work at some interface between the United States and China. And you can raise money in the United States and invest it in China, or you can be some kind of an importer or a trade specialist. But you’ve got to get near that interface to benefit from being bilingual….Generally speaking, when you get multicultural, you can also be multidisciplinary. But generally I think people make more money if they’re very narrowly specialized, like the proctologist.”

On hostile takeover bids, and why Berkshire Hathaway won’t make them

“I don’t envy these people that are in these unfriendly uproars all the time. Imagine doing that after you were already rich. It’s insane.”

On why Berkshire Hathaway invested in newspapers

“Well the decline was faster than we thought it was going to be. So it was not our finest bet of economic prediction. And I think it’s even worse. To the extent we miscalculated, we may have done it because we both love newspapers and have considered them so important in our country. These little local newspaper monopolies tended to be owned by people who behaved well and tended to control the politicians. And we’re going to miss these newspapers if they disappear. We’re going to miss them terribly. And I hope to God it doesn’t happen, but the figures are not good, Warren.”

On aging

“Shareholders have one thing to be thankful for: Some of the age-related stupidity at headquarters has been ameliorated by Ted [Weschler] and Todd [Combs] joining us. We are looking at the world with the aid of some younger eyes now. And they’ve had a contribution, beyond their own investments. And so you’re very lucky to have them as shareholders because there’s a lot of ignorance in the older generation that needs removal.”

On why Berkshire Hathaway has never had an official budget

“It isn’t just the cost reduction. It’s the efficiency gained if you eliminate bureaucracy. I think bureaucracy is like a cancer. So we’re very anti-bureaucracy.”

 

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