Munger_Disciple

Wow! That's very impressive!! Is that 17% an IRR number? And is it the return for just publicly traded stocks or does it also include (private) real estate investments?

Possibly some of them did so, and others might have simply reduced their exposure (without margin).

Yes, and the group includes Prem.

I think value investing in the US market perhaps doesn't work as well as it used to, say 20 years ago. There is way too much competition here in the US with every Tom, Dick & Harry obsessed with investing (no one here wants a "real" job any more); hence the edge is being competed away. Besides with the market endlessly picked over by both public & private fund managers and due to the effect of technology upending many "old guard" businesses, there are now way more value traps than real values. I agree with the comment that human emotions like greed and fear will always be with us but that doesn't necessarily mean that it hasn't become exceedingly difficult to beat the market index over the long haul. Even Berkshire roughly matched the index over the last 20+ years. However I disagree with Spier in that I don't think AI & LLMs have got anything do with it. They are simply tools which everyone will have just like Excel. They can't replace thinking & judgment. Charlie Munger used to say you have got to fish where the fish are. I think the fish are mainly outside the US these days.

Thanks for this article. This is pure gold from Warren, the! "The question always is, “How much do I put in number one (ranked by expectation of relative performance) and how much do I put in number eight?” This depends to a great degree on the wideness of the spread between the mathematical expectation of number one versus number eight.” It also depends upon the probability that number one could turn in a really poor relative performance. Two securities could have equal mathematical expectations, but one might have .05 chance of performing fifteen percentage points or more worse than the Dow, and the second might have only .01 chance of such performance. The wider range of expectation in the first case reduces the desirability of heavy concentration in it.” How can anyone say it better? Warren is saying that concentration depends not just on how much one expects the security to out-perform the broader market (mean of all potential outcomes) but also on the probability distribution of potential returns, most importantly on the left tail probability. He is basically saying it's an art form, not pure mathematics because the estimated prob distribution of outcomes is inherently subjective. It's almost like how Ajit writes big insurance policies like super-cat & reinsurance deals.

Good post! It's clear that you are self-aware & that's a good thing.

Another problem is that no one on this board has the investing abilities & mental fortitude of Munger. BTW Munger family also has close to $400-500mm of multi family real estate in the suburban LA area.

Terrible headline! This guy has nothing in common with Buffett. I am very disappointed with WSJ editor who approved this clickbait.

Thanks for the article @gfp! Sounds like an ominous development for regulated utility business.

You are not correct. From Buffett's 2023 letter to shareholders: "I did not anticipate or even consider the adverse developments in regulatory returns and, along with Berkshire’s two partners at BHE, I made a costly mistake in not doing so."

You are likely right @Cigarbutt. Perhaps this is short-medium term painful but possibly ok long term for BRK. But I think it opens up a new risk that wasn't previously considered by Buffett & Abel: that the rules can change in the middle of the game without prior warning. I suspect Warren & Greg will be a lot more cautious before putting new money into this business.

https://archive.ph/gaZWc US is suing Southern California Edison for January Fires. This is a horrible development IMO for BRK's regulated utility businesses. I wonder if this part of BHE is permanently impaired.

For singles, they work well for estates above $14mm.....

Great memory @wabuffo! Yes, I recall that deal now. The worst part of that deal was that Kraft not only overpaid for Cadbury but they also paid a huge amount of taxes when they sold the pizza business.

Warren is "disappointed" with Kraft Heinz split: https://www.cnbc.com/video/2025/09/02/warren-buffett-says-he-is-adisappointeda-in-kraft-heinz-split.html Imagine KHZ didn't give a shit about what Berkshire (their largest shareholder) thought! Apparently the company says no shareholder vote needed for the split.

It's not the same Bell Labs. It's a pest control company!

Makes perfect sense

Yeah the promissory note is a cool idea. You could simply reduce the principal amount of the note to satisfy your annuity requirements!

You just transfer $1M worth of stock in-kind back to yourself to satisfy the annuity requirement. No taxes owed (you are transferring from you to yourself). That's why it's called "grantor retained" annuity trust. Only the appreciation (above the "risk-free" rate as published by IRS) accrues to your heirs. That's my understanding anyway; please consult an expert.

Thanks @charlieruane! I will pursue this GRAT thing & DM with any questions that may come up.

@charlieruane I spent a little more time on your excellent follow-up GRAT post. Very interesting stuff. What does it cost to create a GRAT? If you prefer you can reply via a DM. You mentioned Charlie Munger's promissory note swap with his children. As I understand it, Munger received a promissory note from his children in exchange for the very cheap (post -GFC) BRK stock he gave them so I don't think that transaction is part of a GRAT but I am not sure. I assume it was a non-taxable exchange.

Great detailed information, thank you @charlieruane! I will need to go thru' this a couple of times carefully to digest it fully. GRAT definitely seems like a great wealth planning tool.

Thanks @charlieruane! Can the annuity payments to the grantor be made with in-kind securities in the GRAT?

Well I don't want to get into politics here but I have been in CA since 1987 & the infrastructure has degraded dramatically. I live in San Diego & the city is full of potholes that are never fixed. And I know LA isn't better. Almost every city in CA has a massive homeless problem. Let's not even talk about things like the bullet train which has been a huge waste of money with nothing to show for it. LA clearly didn't have firefighting infrastructure (no water or enough fire trucks) during the Palisades fire in January. I love CA. Nothing would make me happier to have a decent infra where I live but I have given up looking to my govt.

While you are at it, add the sales tax too. The reality is that taxes aren't the sole consideration for most people in choosing a place to live. The weather sucks in TX especially when compared to coastal CA. But the govt is CA is trying their best to mistreat its citizens so more and more middle class Californians are leaving for other states because they simply can't afford to live here. Sadly the state is becoming like many latin american countries; a very few rich/ very upper middle class at the top being served by vast servant class, with no middle class to speak of.