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Munger's Comments From "Morning With Charlie"


Parsad
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I'd love to see detailed notes from someone who went. 

 

I was actually going to fly out to LA to watch Mr. Munger and spend the Fourth there, but had to cancel because something came up at work  :-\

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I'd love to see detailed notes from someone who went. 

 

I was actually going to fly out to LA to watch Mr. Munger and spend the Fourth there, but had to cancel because something came up at work  :-\

 

Wow.  That was his last meeting.  F---!

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Guest ValueCarl

Hello all, unfortunately I did not take copious notes as some may have during yesterday's meeting, nor did my son who had asked the dividend question on behalf of his elders as part of his family tree. All I can say is that, Mr. Munger's giving kept on giving and to hear him opine about a host of business and life related subject matters will remain indelibly impregnated on my mind. 

 

If there was one recurring theme I would relate to for value investors to contemplate, it was contained in the sage advice which was embedded in the history of Berkshire and Wesco to be consistently, and persistently patient over the long haul at the same time always refraining from doing stupid things. Without a doubt, "patience remains a virtue."

 

As for comments about LVLT, I have shared his feedback to me on the LVLT thread under the "Investment Ideas" tab.

 

Even though I would like to see Berkshire pay its owners a dividend sooner rather than later, I hope that Mr. Munger lives to be a Centurion for the world needs men like him with enough courage to speak their minds notwithstanding the angst inclusive of verbal retaliation by their detractors.   

 

 

 

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Any of you care to comment on the following piece of CM rationality? -

 

"Expensive items encourage competition to knock you out, but low cost items like coke do not."

 

This is an interesting observation.  It's possible that there may be causal factors behind such an association, but these factors may not be entirely related to relative expensiveness per se.  Cheap items are often consumables or replacement parts.  Businesses that provide these often have a moat that is related to a customer's inertia in making a change for what seems to be a trivial saving. 

 

Expensive items are more likely to be one offs that require due dilligence to consider alternatives, as the savings from a single purchase may be considerable.  Alternatives from start up companies that have no economic goodwill with customers may even be worthy of consideration if the price is right.  However, businesses selling expensive things that involve large switching costs (think Boeing planes VS Airbus planes) that are purchased frequently may have good economics, but probably not as good as with the sale of cheap items.  :)

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Buffett Talks Business (1993)

 

Wal-Mart’s selling Sam’s Cola. And Wal-Mart is a very, very potent force. One thing that’s helpful is that they were selling it as cheap as $4 a case here. And I don’t believe that’s sustainable. That’s 16 2/3 cents a can.

 

It’s been a while since I looked at aluminum—and it’s down. But I think the can is close to a six-cent item by itself. The can is far more expensive than the ingredients... Distribution costs, trucking, stocking and all that sort of thing have to be fairly similar. In a 12-ounce can, there’s 1.3 ounces of sugar—which at the domestic price, would be around 1 3/4 cents per can.  And that’s got to be the same whether it’s Sam’s Cola or Coca-Cola.

 

The Coca-Cola Company sells about 700 million 8-ounce servings—largely of Coca-Cola, but also of other soft drinks—worldwide every day. If you take 700 million and multiply it by 365 days, you come up with 250 billion or so 8-ounce servings of Coke or its products in the world each year.

 

The Coca-Cola Company made about $2 1/2 billion pretax last year. That’s one penny per serving.

 

One penny per serving does not leave a huge umbrella. The generic is not going to buy the can any cheaper. And they’re not going to buy the sugar any cheaper and so on. Their trucks aren’t going to be any cheaper.

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