CHARLIE MUNGER: I think the corporate types
— the corporate managers —
ought to study investing better because they’d be better managers.
And I think that everyone who thinks through the investment process
learns more about how the world really works.
And I think that’s very worth having.
But I do not like
as big a percentage of GDP as we now have
going to money management and its attendant frictions.
And I don’t like the percentage of the nation’s brainpower
that is now in
all of these different forms of highly-compensated money management.
I don’t think it’s a good thing for the country,
and
and I
hate the fact that we’ve contributed to it by our own
predilections.
WARREN BUFFETT: Charlie is only sitting up here next to me
as part of his outreach program, actually.
(Laughter)
Please don’t take any pictures that you could blackmail him with,
being associated with me.
Charlie made a very good point there about
about how managers would do better if they understood investments.
I find it absolutely fascinating, and I’ve seen this throughout my life,
I’ve seen it close up.
I will have friends who are CEOs of companies
and
they’ll have somebody else handle their money.
If you say to them, you know,
should you buy Coca-Cola or Gillette or something like that,
they’ll say that’s much too tough.
I don’t understand that sort of thing.
What do I know about investing?
And then some investment banker walks in the next day with
the idea they buy a $3 billion company,
which is just buying a lot of shares of stock in one company,
and they’ll run through some little
two-hour presentation and
turn it over to a strategic planning group
and think that they are then the ones that should make that decision
as to whether to buy
multibillion-dollar businesses when they really don’t feel they’re qualified
to make $10,000 decisions with their own money.
And it’s extraordinary what you see in
corporate America and the acquisition activity.
It’s
It's a little like they say about making sausage and making laws,
it’s better unobserved.
Charlie, you have any further thoughts on that?
You’ve seen a lot of it with me.
(Laughs)
CHARLIE MUNGER: Well, I do think that the
present era has no
comparable precedent in the past history of capitalism.
I think we have a higher percentage of the
attention of our intelligent classes
into
buying little pieces of paper and
getting — trying to get rich doing it, and
in promotional activities with big profit sharing fees.
I can recall no past era
which had a similar concentration of this
type of activity. Can you, Warren?
WARREN BUFFETT: No, but I think you would say, probably, too,
that we’ve seen sort of baby versions of this,
something subsequently happened, that —
CHARLIE MUNGER: Oh, yes. If you want to talk about what are the future implications,
a lot that I see now kind of reminds me of Sodom and Gomorrah, and —
WARREN BUFFETT: We weren’t there,
incidentally. I mean — (Laughter)
CHARLIE MUNGER: No, but there’s a published account.
(Laughter)
And
I think when you get
as much sort of regrettable activity going on and sort of feeding on itself
in frenzies of envy and imitation,
that —
it has happened in the past that
there came bad consequences.