“The Way of Munger” – Charlie Munger’s 1987 Speech at the Shareholders’ Meeting of Siko Finance

Original link: https://ljf.com/2023/07/17/1279/

1987 Speech at the Shareholders’ Meeting of Siko Finance

We run the insurance business, and the great thing about the insurance business is that the business has capacity for capital, and we can always put more money into the insurance business if we want to.

It takes a long time to really do acquisitions. It takes hard waiting and repeated twists and turns.

Good management is part of the asset, and Warren doesn’t pay a premium for good management.

Buffett did pay a higher price for management by investing in Metropolitan Communications. Here we need to understand what the concept of “higher prices” is for Buffett. Buffett turned out to be something that cost one yuan, and it was bought for fifty cents. Now, he is willing to pay a higher price, something that costs one yuan, about eighty-five cents.

In Buffett’s eyes, a good manager is like this: You throw him off the train and into a remote town without giving him money. Time to get rich again.

Large companies have the same thinking about hiring talents, graduates from business schools, excellent in character and learning, hardworking and honest, the results are not ideal. If this idea of ​​recruiting talents works, all American companies will be thriving, so there are so many disadvantages like they are now.

We have very few shots. Even when it came time to make a shot, we walked on eggshells, uneasy about the risks we might take.

There was a painting by Vincent van Gogh that fetched sky-high prices and was bought by the dumbest buyer ever. The painting went from $100 to $39 million. Although the price was sky-high, after such a long period of time from 1888 to the present, the compound interest is only 13%.

After a company has established a good culture, it can embark on the track of a virtuous circle.

We can achieve today’s achievements, not because our ability is much higher than others, but because we know the size of our own ability better than others.

There is a kind of person who actually has an IQ of 130 and thinks he is 128; another kind of person who actually has an IQ of 190 and thinks he is 250. It is better to associate with the former type of person, the latter type of person is very dangerous and will harm you.

Fully recognize the limitations of objective conditions, fully understand the limitations of one’s own abilities, and act cautiously within the limits. This is the trick to making money. This trick is not so much “humility” as “restrained greed”.

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