A Conversation with Distinguished Alumnus Charles T. Munger (CERT ’44, CAVU)

Join Caltech President Thomas F. Rosenbaum as we celebrate 2020 Distinguished Alumnus Charles T. Munger (CERT '44, CAVU) for his accomplished career as an investor, businessman, and attorney. Munger is director and vice chairman of Berkshire Hathaway, chairman of the Daily Journal Corporation, a director of Costco Wholesale Corporation, and former chairman of Wesco Financial Corporation.
Munger, known for mixing his wisdom with humor, will be in conversation with Jean-Laurent Rosenthal (PhD '88), Rea A. and Lela G. Axline Professor of Business Economics; Ronald and Maxine Linde Leadership Chair, Division of the Humanities and Social Sciences.
In a year that mixed dramatic social and worklife changes with record-breaking trends in the S&P and the Dow, has there ever been a better time to hear Munger's perspective?
For more about the Distinguished Alumni Award, please visit alumni.caltech.edu/daa.
©2020 California Institute of Technology

[@eddylauterback1312]

He was divorced, alone and watched his boy die day by day of leukemia. He would walk home crying. He learned a lot from that tragedy. He said you have to "soldier " on. Maintain cheerfulness, avoid envy and avoid leaving your circles of competence. And continue to learn EVERYDAY!

[@Corrander]

I could listen to Charlie Munger all day, every day.

[@kingojtv4623]

Yeet!

[@titurkiiii]

I agree 100%

[@8020]

Thank you for this valuable conversation. My notes are below: 06:00 - Choosing a career 07:34 - Advice for The Young 11:45 - Technology: 12:35 - Companies Are Similar to Biology: 13:51 - How Does One Learn To Deal With Change? 16:58 - Guarding Against Mental Biases in Decision Making 18:09 - The Most Important Thing If You Want To Avoid Stupid Errors 25:01 - Predicting Macroeconomic Change 27:00 - Mistakes 33:45 - Experts 34:37 - Academia 35:39 - Investment Returns Over The Next 10 Years 36:31 - Quantitative Easing 41:15 - China 42:00 - Being a Good Investor 47:41 - What helps Everyone: 51:43 - Liberal Arts 54:10 - Philanthropy 6:00 - Choosing a Career: +You aren’t going to do well in a career that’s tough. +Find a career that you enjoy and/or one where you have special advantages. 7:34 - Advice for The Young: +Underspend and keep investing. 11:45 - Technology: +Technology can kill your investment as well as be an opportunity. +It helps to have a position that can’t be taken away by technology 12:35 - Companies are similar to biology: +Over the long term, big companies behave more like biology. In biology all individuals die and so do all species, it’s just a question of time. 13:51 - How does one learn to deal with change? (1) Be on the cutting edge (2) Avoid big changes that is likely to hurt you. 16:58 - Guarding Against Mental Biases in Decision Making: +Rub your own nose in your own mistakes +Keep it simple and fundamental +Have a margin of safety +Avoid being stupid 18:09 - The Most Important Thing if You Want to Avoid Stupid Errors: +Know where you are competent and where you are not. +Know the edge of your own competency. This is hard to do because the human mind tries to make you think you are way smarter than you actually are. 25:01 - Predicting Macroeconomic Change: +I did not make my fortune by predicting macroeconomic changes better than others. What Buffet and I did was to buy things that were promising, and sometimes we had a tailwind from the economy, and we just kept swimming. 27:00 - Mistakes: +You can’t live a successful life without doing some difficult things that go wrong. 33:45 - Experts: +Don’t consonantly consult with experts. Know the big ideas in all the disciplines and use them routinely in your judgments. 34:37 - Academia: +Academia is not very good at the interdisciplinary stuff. 35:39 - Investment returns over the next 10 years: +Returns will be less because so many people are in it and the frenzy is so great and the management reward systems are so foolish. 36:31 - Quantitative Easing +No country has got by with the kind of money printing we’re doing now without some trouble. We are very near the edge, we’re playing with fire. 41:15 - China +I’ve had success with the leading companies in China and I think it is going to continue. +What China success shows is that politics doesn’t matter that much. +Who would have guessed that a bunch of communist Chinese (run by one party) would have the best economic record the world has ever seen. +We Americans would like to think that our free expression and allowing all kinds of opinions and criticism of the government is totally essential for the economy. +What the Chinese have proved is that you can have a successful economy with a fairly controlling government. 42:00 - Being a Good Investor: +Being a good investor is down to temperament, it’s deferred gratification, you need to be willing to wait. +Good investing requires a weird combination of patience and aggression. It requires self-awareness. +You need to know the edge of your own competency. 47:41 - What helps Everyone: +What helps everyone is to get into something that’s going up and it just carries you along without much talent or work. +So pick a really strong place like Costco and go to work there, be reliable and nice, and you are going to do fine in life. In elite education no one wants to work for Costco, despite it being the easiest place to get ahead. 51:43 - Liberal Arts +It’s harder to be smart in the liberal arts. +Many liberal arts professors are so leftist. +It’s hard to be pretty smart if you’re crazy leftist, you’re going to have the whole world wrong. 54:10 - Philanthropy: +For someone to be successful you ought to be reasonably generous. +You don’t get big merit points for philanthropy, but you get a lot of discredit if you aren’t.

[@mxtthompson]

Your notes are awesome. Friendly tip. If you write your time stamps with a colon people can click straight through to that part of the video. E.g. 12:35 companies are similar to biology

[@8020]

@@mxtthompson Thank you and Thank you for that amazing tip.

[@yehezkielr.s.2712]

Very useful. Thank you so much 👍

[@seanow8180]

Thank you. This helped me.

[@Suyess]

Incredible! Thanks for sharing these notes.

[@algreen1]

I love Charlie and value his wisdom, I miss him like a wise old relative.

[@Value-Investing]

I started making notes on this to make a quick video on it as I would listen to this anyway. However, this is so good that you can’t summarize it. All you need to know about investing! Main topics: innovation, the current economy/speculation, money printing, investing qualities, rationality and how to get ahead in life. Sit back and enjoy! Thanks to CalTech for the video - really amazing - thanks again.

[@KzLollapalooza]

Good day Sven!

[@KzLollapalooza]

@@rodrigoetoobe2536 making money with patience and wise aggressions.

[@petermoser2928]

Hy sven! You are all over the place ....

[@eminvesting]

Hello Sven , It's a pleasure to see you here :)

[@jonathanwallace9932]

Can't believe I missed this one till now

[@emmanuel6229]

It's such a bless to sit and listen to the elders passing on knowledge to us the children on how they did it.

[@Raysliquidity]

Such a fantastic look into Charlie's mind. And his energy at 96 years old is incredible. What a wise man. Every response he gave can be disected and studied to gain so much wisdom. As far as the interviewer: Horrible. Constant interruptions. Awkward. Also the restructuring of people's questions and Charlie's answers was not appreciated. Also disagreeing with an interviewee mid interview? The crown of unprofessionalism. He is there to facilitate and be impartial, not spread his own opinions. Good thing we are here for Charlie. Hilariously, when Mr Munger brought up people who thought they are smarter than they really are, he got super uncomfortable, and beat red. The irony.

[@DaviMourao]

To the interviewer's defense on some of the interuptions, it must be a nightmare to interview Charlie via online call, as he often starts answering a question before it's even finished and specially because he makes small pauses, which might seem like he is done with his argument, but he still has say something to say. Either way, like someone else mentioned, they should've asked Becky Quick to do this interview.

[@mariancoman354]

Thank you, Caltech. THANK YOU, MR. CHARLIE! God bless, wishing you all the health and happiness in the world!

[@zzqg56]

Thank you Charlie and Caltech........just brilliant!! You made me smile when you said you find out if you have the qualities to play poker by playing poker. Thank you for your sage words.

[@fleXcope]

Good job, CalTech.

[@Mishfamilyshair]

Listening to Charlie Munger is music to my ears. I am appreciative of this interview. 🤍

[@cristianbaranga7301]

Thank you for sharing this video!

[@mxtthompson]

Save yourself the long intro. Charlie starts talking at 4:30 and answers the question "what was Caltech like in 1944?"

[@NShoreSolutions]

Excellent interview. So many great nuggets!

[@birdmusic1206]

not only has me mastered investing, but he has also mastered the art of deadpan

[@anthonyriseley]

Can you please use time stamps to help viewers navigate key topics..

[@guharup]

unbelievable wisdom

[@manavgupta8484]

I love you Charlie. I speak about you to my children who are 11 and 9 yrs old. I try to tell them everything I have learned from you as best as I can. I wish we could sit by your feet and get a chance to listen to you without this screen in between. If I have Any shred of Goodness in me (don't ask my wife!) It's because I Listened to You over and over and over and over and over..

[@DaviMourao]

"Academia rewards a researcher who knows more and more about less and less", mic drop.

[@BaileyHorse]

And “it’s dangerous when you are outside of that little world “ ....

[@carbonicoyster5907]

That was my favourite insight too.

[@joofbing]

Same point emphasized by Nassim Taleb too. Well summarized.

[@jonsmith568]

u can see the professor/dean's facial expression he felt attacked LOL

[@WanderingLucy]

He keeps mentioning Thermodynamics. This was easy to dismiss until I found out later that 2nd law of thermodynamics (Entropy) was the most fundamental law of the universe and life. And that basically it means: work hard and keep working at it, otherwise the systems will naturally fall into disorder and chaos.

[@RAYRAYDAY]

There is a key difference in approaching physics from entropy versus newton's laws. One you look at the action of each individual portion whereas thermo is looking at how those individual portions will influence a system without looking at the individual contribution. For example, in developing the kinetic molecular theorem, rather than try to determine what goes on at each particle in terms of their momentum changes at each collision, you would look at the kinetic energy as the average of all molecules contributing. So, a factor of 3/2 is used in developing the energy relation.

[@zachlaprade2852]

i love this man

[@sandeepvk]

This conversation makes me want learn in Caltech. I might just take up a course just for the heck of being in this institution where Charlie munger studied. But then I think I can get the same wisdom from my home watching munger on youtube

[@harisadu8998]

"It's harder to be that smart in the liberal arts, partly because many liberal arts professors are so leftist. It's hard to be pretty smart if you're a crazy leftist. You're going to have the world a lot wrong." - Charlie Munger 51:57 onwards.

[@sucim]

Just stating the obvious, but it has another weight when it comes from someone with that amount of experience and knowledge

[@oneisnone7350]

That was amazing!

[@frankfei9130]

Great interview from Charlie munger

[@n8-sofresh]

Lol the left vs. The right split screen

[@SharingInvestingWisdom]

The wit and wisdom of Charlie Munger!

[@chocolatier9597]

Brilliant man

[@JosiahWartak]

Dear interviewer: Please stop talking and let Charlie talk.

[@Rethanos]

I think he did well

[@AbelardoLopezIII]

this professor is so simplistic and simple minded compared to Charlie munger

[@connectionerror2312]

I agree. In fact, his bratty attitude seemed disrespectful.

[@frankfei9130]

But I still learned a lot from this interview as Charlie munger was respectful of the interviewer and he answered every question to the best of his ability. Given how wise and forthright he is with his answers, I guess we can still learn something even if we have a monkey interview Charlie ( no offence to the interviewer) 😂

[@jonsmith568]

he seemed so disinterested in charlie's wisdom, kinda sad they couldnt find someone else to interview him???

[@seanmcquade6707]

National treasure

[@cookitketo3592]

The host is so impatient lol

[@connectionerror2312]

Note To CalTech Host: Nothing you will ever say will ever be near as important as what Mr. Munger had to say...FACT. You should have been quiet and not cut him off every time, schmuck!

[@AverageAngel]

Charlie Munger, as wise as ever

[@IfReborn]

Loved the interview thank you both. Excellent to have someone air the opinion you did on climate change. Maybe discourse and consenting views and data still have a place in American politics. With the above as consideration, the thoughts you expressed with regards to china society and humanity are chilling. Chinas miracle appears to be the direct result of slave labor and technological transfer plus favorable tax and tariffs. Pure exploitation and gutting of the capitalist west. The industrial world and its corporations have made the Faustian bargain. The CCP knows Marx better than some of us do and have used the industrial countries to spring board their development, wile keeping the development of bourgeoisie class to a small manageable and external (foreign investors) element that can be easily and painlessly culled. The implementation has been brilliant and probably aided by defectors to Germany and china from the USSR after the fall. Would be well worth looking more into Marx and pondering on this for a while. I know Ben Franklin would be troubled by these developments.

[@IfReborn]

The biggest gift of Philanthropy you and MR. Buffett could Give is taking your money and reindustrializing the USA and becoming Trillionaires many times over.

[@fonebook]

10:08 I'm not surprised that everyone and their mother is now in the stock market. People don't know where else to put their money anymore with 0% or even negative interest rates and inflation.

[@BaileyHorse]

And he says everyone is feeling smart and making lots of money

[@bregjejabra25]

Bitcoin. The end.

[@brainstormingsharing1309]

👍👍👍👍👍👍👍👍👍

[@mxtthompson]

42:03 "Who would have guessed that a bunch of communist Chinese run by one party would have the best economic record the world has ever seen"

[@justwatching1980]

How much of this growth is true? And how much is false numbers, bad products, and stolen intellectual property? I don't say this disparagingly, but because I don't know. The China Hustle (2017) documentary talks about fake companies and cooked books in China. Not all manufacturing companies have a high quality bar, or the government isn't as strict about it (www.quora.com/Why-are-products-manufactured-in-China-so-poorly-made). And I've seen headlines about China not respecting worldwide patents (www.cnbc.com/2019/02/28/1-in-5-companies-say-china-stole-their-ip-within-the-last-year-cnbc.html). Not to mention, a cheap workforce with lax union representation (clb.org.hk/content/workers%E2%80%99-rights-and-labour-relations-china). Eventually their growth has to stabilize. Or they have to suffer the consequences of taking shortcuts.

[@TheCambridgeStephen]

I don't think he's a curmudgeon, I think he's battled-scarred and very wise.

[@MohitSharma-dv9kd]

if interviewer could ask one more question about what he is drinking ? :D

[@livefreeordie5769]

I wanted to be an electrician so I'm an electrician.

[@edwardjia2009]

I wish Becky Quick be the host to better not interrupt Charlie’s talking ...

[@Stormdaklak]

I think mostly because of the network, and this is an online meeting. he is not intended to do so

[@esh8400]

@21:00 Its very likely that the worst of this will be very very behind us in a year ~ Charlie Munger

[@BaileyHorse]

I would say in 6 months

[@esh8400]

You're right

[@easternise]

Too much interrupting

[@hongyuzhang5631]

Hahaha, the interviewer obviously doesn’t know charlie well to know that he should wait a least five seconds for him to take a break

[@skipsassy1]

If you didn't know Munger's personality for decades - you'd know this was for more money please......9 months maybe a billion a month for Cal Tech......a good bet.

[@jeffreyrichardson]

interesting facts csx laid rail road tracks our own states pay backs

[@jeffreyrichardson]

tsetse fly sho fly holding stocks our future buy biird shirt table why

[@IsaacWendt]

The returns will be lower. In REAL terms the returns will be lower. Inflation here we come. @36min Only a lunatic would loan an European government money for 100 years at less than 1%

[@zzqg56]

I guess the question is what will drive wage inflation when profits are going to shareholders and the next person in line is willing to work for $1 less than you.

[@Fj8282haha]

Wish he is still around to spread awareness about “ just don’t b stupid…” 😢😢

[@happyuk06]

@21:17 Munger is wrong on vaccines being responsible for eradication of polio. The banning of DDT was responsible for that.

[@simonbatten3344]

I think the interviewer had a tough job here. Munger was not very forthcoming, was a bit grumpy and made for a not very good interview IMO. I've seen better but Charlie is Charlie - a bit of a curmudgeon

[@johanngross957]

The EU country is Australia (loaning at 0.88%)

[@michaelstern5357]

The symptomatic mice advantageously worry because begonia temporarily compete onto a cautious sentence. milky, vulgar range

[@edwildsau2642]

Terrible interviewer.

[@jonsmith568]

such a bad interviewer, seemed disinterested in Munger's wisdom

[@brewswillis7294]

Munger is a terrible portfolio manager. His returns are junk. You’d be better with a dart board.

[@eddierosario1537]

Lol you have to be on drugs