Charlie Munger in Conversation with Todd Combs | Singleton Prize for CEO Excellence

[ValueMaven]

Enjoy!

 

 

[dcollon]

Thanks very much for posting 

[LearningMachine]

Thanks @ValueMaven for posting.

 

Really liked the following quotes.

 

#1 is an axiom that can eliminate a lot of unnecessary thought patterns that people sometimes end up pursuing. 

• #1. "It's the nature of things that a bunch of democratically-elected politicians will eventually print too much money."
• #2. "Nobody thinks it's illegal for a bunch of sovereign nations to have a cartel in producing their own oil, and every reason it can't happen is that, 'Oh, they're a bunch of dumb this and dumb that.' But it could happen, and you could argue if solar would be a good business."
• #3. "The other thing that's similar is that there are only, what three or four players making the fertilizer.  And that's an interesting thing to watch, and I don't know how it's going to play out."
• #4. "Obviously, nobody knows, but there are going to be some sort of cartel-like things done by governments, and nobody will do anything about those.  Somebody will make money by predicting that stuff."
• #5. Todd: "The weak link is always the cartel breakdown." Charlie: "Yes, of course."
• #6. Todd: "So, we have $10 trillion in market cap amongst 5 phenomenal businesses that really don't require any capital whatsoever."
• #7. "What are the changes of a really major calamity? I don't know about you, but certainly it's at least 10%."

I'm curious what he meant by "it could happen" in #2-4 above.  Will start the discussion in one of the Energy threads. 

[ValueMaven]

Disagree with #6 ... R&D is a real expense and requires capital.  

 

With regards to point #3 - Berkshire would be a great home for CF Industries!

[gfp]

23 minutes ago, ValueMaven said:

Disagree with #6 ... R&D is a real expense and requires capital.  

 

With regards to point #3 - Berkshire would be a great home for CF Industries!

 

I believe he was specifically commenting on Potash.

[LearningMachine]

2 hours ago, ValueMaven said:

Disagree with #6 ... R&D is a real expense and requires capital.  

 

I think he meant businesses like AAPL, MSFT, GOOGL, META, and TCEHY, where R&D is already accounted for in operating expenses, don't have to make additional capital investments out of retained earnings, resulting in a lot of FCF.  Not only do they not have to invest additional capital from earnings, R&D that is already part of operating expenses, ends up helping grow the FCF.  

Edited March 27, 2023 by LearningMachine

[LearningMachine]

4 hours ago, gfp said:

 

I believe he was specifically commenting on Potash.

 

@gfp, indeed Charlie was talking about Potash.  Interesting that @bizaro86 had also brought that up in the Energy Sector thread. 

 

 

[gfp]

I came across a written version of this interview in case anyone is interested in saving a copy.

 

https://drive.google.com/file/d/132Aul_OH0hNP3B00S5jcIEtgAnbdV1Cq/view

 

Singleton Prize for CEO Excellence_ Charlie Munger in Conversation with Todd Combs_020623.pdf

[woodstove]

Wow, thank you!  I listened to it earlier, and even kept an audio copy, but this pdf is much better for sharing with others.