Idiots get rich in easy businesses - MUNGER Quote

[LongHaul]

Munger mentioned how he saw so many idiots get rich in easy businesses.  See video link below.

 

Anyone have any stories of idiots getting rich in easy businesses or easy businesses that come to mind?

 

The local monopoly newspapers were an "easy" business.  Economies of scale were almost impossible to break especially if the dominant paper reacted.

 

Bill Paley also seemed like an idiot at CBS in his later years but the growth of TV and barriers to entry helped CBS do fine. 

(Capital Cities did far better though) 

 

Quick 3 minute video of Buffett and Munger

[Guest deepValue]

The context suggests he was talking about wide moat businesses. Just look at BRK's portfolio for examples.

[wisdom]

Munger came across this when he was a lawyer. He had several clients who were involved in real estate development.

 

He thought a lot of them weren't the brightest but, still managed to do well in real estate development. They made more money then him back when he practiced law. He decided to get into developing real estate.

[rpadebet]

Microsoft+Ballmer, who here thinks he is a genious?

 

[Palantir]

^ I do. I think Ballmer is brilliant, and most close accounts of him uphold that statement.

[DCG]

He certainly makes/made a lot of awful decisions for a Genius. Genius or not, I think we was a pretty weak CEO, and MSFT did pretty well despite of him instead of because of him.

[Guest valueInv]

Microsoft+Ballmer, who here thinks he is a genious?

 

The full effect of Ballmer's damage to Microsoft will become apparent in a couple of years after the leaves.

[hyten1]

i always find it funny, its always either a "genius" or "idiot"

 

how about just average

[BG2008]

I know of a lot of idiots in the RE business both in NYC and overseas who made a killing in the last 20 years.  You're making a leverage bet by borrowing 80% against the asset price.  So there's 5X implied leverage.  It's usually a big position rather than a small one that you tinker with.  NYC because of gentrification, getting rid of crime, and lower interest rate.  There were apartments buildings selling for 300K in the 90s that are now selling for $10mm.  Given that you only put 20% down.  That's a 166X return on your equity of $60K.  When the trend is your friend in RE, just buy and hold and you're going to get really rich.  When you buy a building, it is also likely 1/3-1/2 of your networth. 

[rpadebet]

i always find it funny, its always either a "genius" or "idiot"

 

how about just average

 

New list to rank

 

1. Dick Fuld and Joe Gregory/ Lehmann

2. Chuck Prince/ Citi

3. Stan O Neal/ Merrill Lynch

4. Joe Cassano/ AIG

 

Making loans with other people's money and writing insurance are the easiest things to do, especially if you don't bother with creditworthiness or risk or liquidity or any such pesky little things. Lot of people got rich of it.

 

[racemize]

I know of a lot of idiots in the RE business both in NYC and overseas who made a killing in the last 20 years.  You're making a leverage bet by borrowing 80% against the asset price.  So there's 5X implied leverage.  It's usually a big position rather than a small one that you tinker with.  NYC because of gentrification, getting rid of crime, and lower interest rate.  There were apartments buildings selling for 300K in the 90s that are now selling for $10mm.  Given that you only put 20% down.  That's a 166X return on your equity of $60K.  When the trend is your friend in RE, just buy and hold and you're going to get really rich.  When you buy a building, it is also likely 1/3-1/2 of your networth.

 

Same thing has happened in Austin.  I have an uncle that just invests in real estate and likely thinks he's a genius financially.  In reality, he was just lucky to be living in this particular city...