When fund manager Mark Nelson interviews Charlie Munger for the seventh annual Sohn conference in Australia on Friday he will have his work cut out for him.
As attendees of the Berkshire Hathaway annual meeting in Omaha well know, it is Munger’s friend and business partner, the genial Warren Buffett, who does all the talking, while the low key Munger sits next to him, eating See’s Candies and drinking a can of Coke, chiming in with “I agree with him”.
At the last annual Berkshire Hathaway annual meeting in May this year – this time online – Buffett talked about his regrets at his decision to sell some of his company’s shares in tech stock Apple, now a major part of the company’s vast share portfolio.
“Charlie, in his usual low-key way, let me know … you thought it was a mistake too, didn’t you Charlie,” Buffett said, turning to Munger.
“Yes,” said Munger, munching on more candy, adding nothing.
The 97-year-old Munger is a billionaire in his own right – estimated to be worth more than $2bn – and well known for his lengthy and successful partnership with Buffett.
The two have razor sharp minds, with their investment strategies honed by the interaction of their debates over investments, a relationship which goes back decades.
The way Buffett tells it, he is the one who is always overenthusiastic about a stock or an investment while Munger shoots down his potential follies with a few sharp observations, with Buffett (as Buffett tells it) emerging chastised but wiser from their verbal interplays.
Munger has plenty of views of his own but attendees at the Berkshire Hathaway AGM almost never hear them.
While Buffett will expound on his views on investments and the state of the US economy, Munger sits through hours of the AGM saying almost nothing, looking more like a silent sidekick that the main event.
Munger, a lawyer turned businessman and investor, has plenty of views of his own. The challenge for Nelson will be to draw them out.
Unlike Buffett, Munger doesn’t feel the need to be a teacher to the world or see himself as some sort of benevolent uncle dispensing wisdom.
Both Munger and Buffett were born in Omaha, Nebraska, but Munger moved west in the 1940s, now living in Pasadena, north of Los Angeles, where he founded and worked as a real estate lawyer with his LA-based firm, Munger, Tolles & Olsen.
(A later employee and partner of the firm was former US ambassador to Australia, Jeff Bleich, who is chair of embattled ASX-listed tech company Nuix.)
Munger is a moderate Republican (think George Bush rather than Donald Trump), while Buffett is a socially liberal Democrat. (Indeed, it is a reflection of Munger’s brand of liberal Republicanism that the law firm he founded hired Barack Obama-backer Bleich.)
Munger is as much a sceptic of derivatives and corporate follies as Buffett. The two have called derivatives financial “weapons of mass destruction”.
Munger has no qualms of having views which don’t run with the pack, openly disdaining those who follow the crowd, taking their views off some Wall Street echo chamber.
He used the term “Lollapalooza effect” – a term he explained during a speech in 1995 to Harvard University – talking about how natural human biases can interact and reinforce each other to create a herd mentality potentially leading to poor investment decisions.
People’s natural tendency, he argues, is to imitate what others around them are doing – a phenomenon which can have both good and bad outcomes, depending on the circumstances.
While he is a keen student of human psychology, Munger prefers to do his own thinking.
The longtime Californian is a big fan of American technology companies.
As a Republican, Munger is not a fan of overregulating them, cutting across the general view around the world today.
“It has been very important for America that we have done so well in this new tech field,” Munger said at the latest Berkshire Hathaway AGM.
“I personally would not like to see our present giants brought down to some low level by some anticompetitive reasonings. I don’t think they are doing a lot of harm, anticompetitively.
“I think they are a credit to the market and a credit to our civilisation. They are huge and that is good for us.”
Munger used to hold forth at his own annual meeting for his company Wesgo, in Pasadena, always held a few days after the Berkshire Hathaway meeting in Omaha.
His solo events were never as much fun and ended a few years ago.
Munger has also been a big fan of China, encouraging Berkshire Hathaway’s investment in Chinese electric car company BYD in 2008.
At the time there were few electric car companies in the world and Munger rightly saw BYD’s electric cars as ground breaking technology.
Eager shareholders at the company’s 2008 AGM in Omaha crowded around a Chinese made BYD car, asking when they would go on sale in the US.
Munger remains a fan of China, a view not politically correct in the current environment.
While he says he personally prefers America’s democracy to China’s authoritarian rule, he argues that there are merits of its system for managing the country.
“It’s true I prefer my own system,” he said in a recent interview with CNN.
“But considering the problems China has had, I would argue that their system has worked better for them than ours has for us.
“I don’t think we should assume that every other nation in the world, no matter what the problems are, should have our type of government.
“I think it is pompous and self-centred. Ours is right for us but maybe theirs is right for them.”
“It is one of the most remarkable achievements in the history of the human race what the Chinese have accomplished in the last 30 years.”
It is a testament to Munger’s success and his original thinking that his views are still being sought out by global investors as he approaches his centenary.
Or maybe it is his adherence to one of his famous sayings: “All I want to know is where I’m going to die, and I’ll never go there.”
This article was originally posted by The Australian here.
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