All Segments
A Conversation with Charlie Munger and Michigan Ross - 2017
37 segments available
To jump directly to the conversation with Charlie, click here: 2:57 To jump directly to Charlie's discussion of bitcoin and cryptocurrency, click here: 38:40 Charlie Munger, Vice Chairman of Berkshire Hathaway, joins Michigan Ross Dean Scott DeRue for a conversation about Mr. Munger's life, career journey, philanthropic legacy, and his thoughts on a few current global trends. Recorded Nov 30, 2017 in Los Angeles as part of an event for alumni of the Ross School of Business at the University of Michigan. Scott DeRue and Charlie Munger are introduced by John E. Conlin, President of NWQ Investment Management Co.
Segments Timeline
Charlie Munger's Early Life
Charlie Munger shares insights into his early life, including his upbringing in Omaha, Nebraska, and his educational journey. He discusses his time in the Air Force during World War II and his impressive academic achievements, including graduating magna cum laude from Harvard Law School without an undergraduate degree. This segment sets the stage for understanding Munger's foundational experiences that shaped his future.
"Charlie was born in Omaha Nebraska January 1st 1924 he graduated from Omaha Central High School and 41 attended the University of Michigan for one year and Caltech for a year I believe as well under t..."
The Rise of a Legal Pioneer
Munger reflects on his legal career in Los Angeles, where he co-founded a successful law firm, Munger Tolson Olsen. He highlights his transition into various business ventures and his significant role at Berkshire Hathaway as Vice Chairman under Warren Buffett. This segment emphasizes Munger's evolution from law to business leadership and his impact on the corporate world.
"Costco Wholesale company mr. Munger became a trustee of the Good Samaritan Hospital in 79 and served as the chairman since November 1987 he was a trustee and chief financial officer of Planned Parenth..."
Philanthropy and Community Engagement
In this segment, Munger discusses his philanthropic efforts, including his long-standing involvement with the Good Samaritan Hospital and Planned Parenthood Los Angeles. He emphasizes the importance of giving back to the community and how these roles have shaped his values and perspectives on social responsibility.
"really special and so I want to thank all of you for coming out this evening tonight I've got the the privilege and the honor of sharing the stage with with Charlie who needs no introduction for all o..."
Lessons from the Great Depression
Munger shares his vivid memories of growing up during the Great Depression, detailing the economic hardships faced by families and the societal impacts of that era. He reflects on how these experiences have influenced his views on money, wealth, and self-reliance, providing a unique perspective on resilience and adaptability in challenging times.
"flight over this morning I was thinking about and preparing for our conversation this evening and as I went through my notes I realised that we share an admiration for a historical figure in Ben Frank..."
The Influence of Family and Education
In this segment, Munger discusses the significant influence of his family, particularly his grandfather, a federal judge, on his moral and intellectual development. He highlights the importance of education and rationality as moral duties, illustrating how these values have guided his life choices and professional decisions.
"life and many of the moments in your life that have shaped how you think and and and what you've been able to accomplish and I'll ask a number of questions and at some point hopefully we'll have time ..."
Navigating Personal Beliefs and Ideologies
Munger reflects on the ideological influences in his life, particularly from his liberal aunt, and how they shaped his understanding of social issues. He discusses the importance of critical thinking and the need to guard against being misled by extreme views, emphasizing the value of evolving judgments based on new information.
"people no matter you know what they did I wasn't lost and I great metropolis and I was very fortunate in my nature of my parents my parents friends and I was fortunate in the public schools I attended..."
The Role of Rationality in Life
In this segment, Munger articulates his belief in the moral duty of rationality and the pursuit of knowledge. He shares anecdotes about his family and their attitudes towards education and self-improvement, reinforcing the idea that intellectual growth is a lifelong endeavor that shapes one's character and decision-making.
"to walk through a good amount that walked through it all the time and I was safer in that hobo jungle the depths of the 30s when people are starving practically and I am walking around my own neighbor..."
Reflections on Economic History
Munger discusses the economic lessons learned from historical events, particularly the Great Depression and its resolution through World War II. He draws parallels between past and present economic challenges, providing insights into how historical context can inform current economic strategies and policies.
"in Germany by the deliberate Keynesianism but he wasn't doing to stimulate the economy he wanted to get even with all the people he hated but he borrowed all this money and created all these armaments..."
The Importance of Adaptability
In this segment, Munger emphasizes the importance of adaptability in both personal and professional life. He shares experiences from his family's history and how they navigated economic challenges, highlighting the need for resilience and the ability to adjust one's mindset in response to changing circumstances.
"they were backward in kind of a self-reliant way that I think was helpful I've never regretted that I wasn't raised in a more liberal establishment I had a liberal aunt my mother's cousin but you I wa..."
Moral Obligations and Personal Growth
Munger concludes this segment by discussing the moral obligations he believes individuals have towards self-improvement and rationality. He reflects on the lessons learned from his family's experiences and the importance of maintaining a critical perspective on one's beliefs and actions throughout life.
"know evidence misleads you I'm a deeper reality you you've got to be a guard on that against that all your life in fact the whole trick in life is to get so that your own brain doesn't mislead you and..."
The Moral Duty of Rationality
Charlie Munger reflects on the life of a judge who overcame poverty through education and a strong moral duty to rationality. Munger emphasizes the importance of self-education and the moral obligation to become as knowledgeable as possible, highlighting how this mindset shaped the judge's character and decisions.
"nobody else would eat and that's what to Scalia schoolteachers lived on in those days and the very indignity of it bothered him so much that he just determined to get out of poverty and and never go b..."
Lessons from Family Resilience
Munger shares anecdotes about his family members during the Great Depression, illustrating their resilience and adaptability. He recounts how his grandfather saved his children from financial ruin by strategically managing assets, showcasing the importance of prudence and moral duty in tough times.
"rationality was a moral duty and he worked at it and he scorned people who'd on the other hand as a judge he started with the idea why would anybody rob a train or whatever a federal crime on those da..."
Coping with Hardship
In this segment, Munger discusses how his family coped with economic hardships during the 1930s. He reflects on the human capacity to adapt to difficult circumstances, sharing personal stories that highlight the importance of community and support in overcoming adversity.
"the bank examiners came in and they said you can't reopen and it was the only business he had well judge bunker had always saved his money and he had a lot of good first mortgages on homes occupied by..."
The Privilege of Growing Up in Omaha
Munger expresses pride in his upbringing in Omaha, Nebraska, emphasizing the values instilled in him by his family. He reflects on the importance of education, generosity, and a strong moral compass, framing his childhood as a privileged experience that shaped his character.
"could live on $109 a month amazing how poor everybody was and what happened to that grandfathers along came the FHA and they had a competitive civil service examination he was a very brilliant man of ..."
From Omaha to Michigan
Munger recounts his journey from Omaha to the University of Michigan, explaining the influence of his father's financial constraints on his educational choices. He shares insights into his early academic experiences and the cultural differences he encountered at Michigan compared to his hometown.
"boy and and so all those old-fashioned values family comes first be in a position so you can help others when troubles come prudent sense of a moral duty to be reasonable more important than anything ..."
The Value of Basic Mathematics
In this segment, Munger discusses his academic focus on mathematics at Michigan and how it shaped his thinking. He argues that practical business decisions can be made using simple algebra and geometry, dismissing the need for advanced calculus in everyday business applications.
"never regretted that at all at Stanford people came to Stanford in the 30s with their string of polo ponies and it was a very upscale fraternity sorority culture I used to call it the co-educational P..."
Navigating Military Service and Education
Munger reflects on his decision to study meteorology during World War II, sharing his thoughts on military service and the educational paths available to him. He discusses the challenges he faced and how his choices were influenced by his background and interests.
"but but but this will interest you in this world where a people have all these algorithms and computer science and fancy math and so forth neither Warner eyes ever have ever used any fancy math and bu..."
The Shift from Law to Investments
Munger shares his transition from practicing law to entering the investment world. He discusses the challenges of balancing a growing family with his career choices, illustrating how necessity and opportunity guided his professional journey.
"school yeah so when you went to Harvard Law why-why-why law well my grandfather and father had been lawyers and I knew I didn't want to do everything else it's very simple I didn't want to be a doctor..."
The Courage of Caution
In this segment, Munger reflects on his cautious nature when transitioning from law to investments. He shares how he maintained a safety net while exploring his new career, emphasizing that his approach was more about prudence than bravery. This insight reveals his strategic mindset in navigating career changes.
"House of course so so you practice law and then you leave law in the firm that you helped found and move over to investments well but that's actually an that sounds miraculous in fact it was rather in..."
Founding Wheeler Munger Company
Munger recounts the founding of his investment firm, Wheeler Munger Company, and his early successes in outperforming the market. He discusses the importance of financial independence and how his experiences in law shaped his investment strategies, providing a glimpse into his entrepreneurial journey.
"foot in the law firm while I tried my capitalist career but as soon as the capitalist career succeeded I intended to lift that second foot because I recognized that the potential of law practice as I ..."
Navigating Market Crises
In this segment, Munger shares his experiences during market downturns and the emotional toll it took on him as an investor. He reflects on the challenges of managing investor expectations and the importance of maintaining a long-term perspective, even in turbulent times.
"and so why did you then leave Willer monger and company and then move to now what you're doing well I had three or four million dollars which was a lot of money to them and I also knew how to handle t..."
The Early Days with Warren Buffett
Munger discusses his partnership with Warren Buffett, detailing how they approached investments and the lessons learned from their early experiences. He emphasizes the importance of adapting investment strategies over time and the evolution of their business philosophy.
"carbuncle my producer gene was giving me pain and I last the carbuncle I just lived on my own money no fees no overrides no celery just seemed more manly to do when I knew it would work and so at what..."
Learning from Mistakes
Munger reflects on the mistakes made in their early investment strategies, particularly the focus on undervalued businesses that were fundamentally flawed. He shares insights on the importance of learning from past errors and evolving their approach to investing.
"value so he bought a big giant fire all the business but the business was gonna die so the only way to go forward from there was to wring enough money out of this declining take those tax little busin..."
The Secret to Berkshire's Success
In this segment, Munger reveals the key factors behind Berkshire Hathaway's success, emphasizing the importance of acquiring businesses that require minimal managerial oversight. He discusses the pitfalls of hubris in management and the value of sound business fundamentals.
"require much managerial talent at headquarters everybody else thinks they've got a lot of managerial talent at headquarters and that's a lot of hubris if the business is lousy enough it gets a wonderf..."
Thinking Like an Owner
Munger stresses the importance of thinking like an owner rather than a careerist in business. He critiques the mindset of many executives who fail to recognize the realities of their companies, using General Motors as a cautionary tale of what happens when management loses sight of ownership principles.
"was an accountant I said he will fix your windmill company and Warren was desperate he he didn't he just hired him on the spot and Harry walked in the first day this little town this big collection of..."
Evaluating Talent in Business
Munger discusses the challenges of evaluating talent when acquiring businesses, emphasizing the need for leaders who think like shareholders. He shares insights on the importance of retaining existing talent and the difficulties of integrating new management into established companies.
"the shoulder mindset a lot of people running the businesses think like careerists and believe me you got to think like a grace to some extent if you're in a career but it also helps to look at the bus..."
The Value of Experience
In this concluding segment, Munger reflects on the significance of experience in business management. He highlights the challenges of teaching new skills to seasoned professionals and the advantages of retaining experienced leaders who understand the intricacies of their industries.
"you evaluate talent to see are they going to think more like a shareholder as a private equity frequently buy a business where the founder is going to leave then they go out on our talent to run it th..."
The Value of Experienced Leaders
In this segment, Munger highlights the significant contributions of experienced leaders, or 'old dogs,' in Berkshire Hathaway's success. He contrasts this with the common practice of hiring younger talent, arguing that the wisdom and experience of seasoned professionals are invaluable.
"interview and of course we're buying great paper records it's so simple but it's it's fascinating to me if we look around business generally the movement of people across firms and there's always new ..."
The Success of a Unique Hire
Munger recounts a successful hiring experience where an executive recruiter brought in a talented individual with no prior insurance experience. This hire transformed a small insurance operation into a major player in the reinsurance industry, showcasing the potential of unconventional talent.
"new dog department I almost despise the business of executive search because I find that they really want to sell you the best that's available even if there's no damn good and I don't like that but t..."
Skepticism Towards Bitcoin
Charlie Munger shares his critical views on Bitcoin and cryptocurrency, arguing that they are fundamentally flawed and prone to manipulation. He warns against the allure of easy wealth and emphasizes the importance of avoiding schemes that promise quick returns without substantial effort.
"been a gold mine there's at least 60 billion dollars in Berkshire of net worth that Ajith has created that we would not have created without him Wow and the value is way more than 60 billion I mean th..."
Life Lessons on Avoiding Pitfalls
In this segment, Munger offers life lessons on avoiding negative influences and schemes, including Bitcoin. He stresses the importance of recognizing harmful ideas and individuals, advocating for a cautious approach to investments and life choices.
"know it's one thing to think that gold has some marvelous store value because man has no way of inventing a more gold or getting it very easily so it has the advantage of rarity believe me man is capa..."
Thoughts on Tax Policy
Munger discusses current tax policy debates, expressing his belief that a tax bill will likely pass. He shares his views on corporate tax reductions, suggesting that they could have positive macroeconomic effects, while acknowledging the contentious nature of the topic.
"and it's so easy to simplify life from just all these things there beneath you yeah I don't even know people are crowding Bitcoin I don't wanna know my address so Charlie I kind of people Charlie what..."
The Complexity of Political Discourse
Munger reflects on the polarized nature of political discussions, advocating for a more civilized approach to disagreements. He warns against the dangers of hatred and anger in politics, emphasizing the need for rational discourse and understanding.
"well it causes the capital values of the companies to come up and there's a wealth effect from the increased market value of all the companies everybody recognizes there's an effect but people some pe..."
Careerism vs. Service Mindset
In this segment, Munger contrasts the careerist mindset prevalent in politics with a service-oriented approach. He critiques the groupthink that can lead to irrational behavior among politicians, urging for a focus on rationality and service to the public.
"point of view and the danger in and having that point of view is you start to assume with certainty that you're right absolutely totally crazy and and and I think what your point of view is is you nee..."
Excitement for Technology
Munger shares his thoughts on technology and its transformative potential. He reflects on the impact of technological advancements on society and hints at the importance of adapting to these changes while maintaining a critical perspective.
"so if that's what you want I you just if I found out how to do it behave like those people you see on television well the other thing that is both parties by the way the other thing that's true going ..."
The Compulsory Friendship with China
In this segment, Munger discusses the necessity of maintaining a friendly relationship with China, acknowledging the geopolitical realities that compel cooperation. He argues that despite the challenges posed by competition, a collaborative approach is essential for both nations to thrive, especially given the global power dynamics.
"can fix your inadequate knowledge of Ricardo and and but one of the interesting problems of that is you can't understand Ricardo properly and thinking about the United States visa fee free trade with ..."
Life Lessons from Charlie Munger
Munger shares invaluable life advice, emphasizing the importance of discipline, continuous learning, and the role of luck in achieving success. He reflects on the significance of marriage and personal choices, encouraging the audience to aim for independence rather than wealth. His insights provide a roadmap for navigating life's uncertainties.
"get a certain amount of misery at the people who are competing with the Chinese as a race of poverty with trade and so forth that was inevitable it's not the follow once youíve evil Republicans who do..."