Otherforeign[Music]well it's a pleasure to be here with
Questionerwell it's a pleasure to be here with with you and I have to pinch myself with you and I have to pinch myself with you and I have to pinch myself sometimes about whether it's true that sometimes about whether it's true that sometimes about whether it's true that Charlie is a friend of mine I would say that most of the things I have learned that most of the things I have learned that most of the things I have learned from Charlie Munger and from Warren from Charlie Munger and from Warren from Charlie Munger and from Warren Buffett has been from what is in the Buffett has been from what is in the Buffett has been from what is in the public domain you know what they have public domain you know what they have public domain you know what they have written about and what they have spoken written about and what they have spoken written about and what they have spoken about there's a very rich amount of about there's a very rich amount of about there's a very rich amount of information that they have tried to information that they have tried to information that they have tried to share and educate investors around the share and educate investors around the share and educate investors around the world and not just how to invest but world and not just how to invest but world and not just how to invest but also how to lead a great life I think also how to lead a great life I think also how to lead a great life I think what I learned the most I learned from what I learned the most I learned from what I learned the most I learned from Charlie Munger was not so so much with Charlie Munger was not so so much with Charlie Munger was not so so much with what he was saying it was more by what he was saying it was more by what he was saying it was more by observing him you know kind of how is he observing him you know kind of how is he observing him you know kind of how is he interacting with his kids he has eight interacting with his kids he has eight interacting with his kids he has eight kids how is he interacting with the kids how is he interacting with the kids how is he interacting with the spouses of those kids how is he spouses of those kids how is he spouses of those kids how is he interacting with the grandchildren and interacting with the grandchildren and
Questionerinteracting with the grandchildren and now he even has great grandchildren and now he even has great grandchildren and now he even has great grandchildren and how does he interact with his friends how does he interact with his friends how does he interact with his friends with his business partners with his with his business partners with his with his business partners with his fishing buddy and and so on so I I when fishing buddy and and so on so I I when fishing buddy and and so on so I I when I observed Charlie and also in terms of I observed Charlie and also in terms of I observed Charlie and also in terms of how he spends his day how he spends his day how he spends his day and what he focuses on and so on I think and what he focuses on and so on I think and what he focuses on and so on I think those things taught me a lot it taught those things taught me a lot it taught those things taught me a lot it taught me a lot more than just I would say that me a lot more than just I would say that me a lot more than just I would say that most of the lessons that we can learn most of the lessons that we can learn most of the lessons that we can learn from Charlie Munger or Warren Buffett I from Charlie Munger or Warren Buffett I from Charlie Munger or Warren Buffett I think in books like poor Charlie's think in books like poor Charlie's think in books like poor Charlie's Almanac or the making of an American Almanac or the making of an American Almanac or the making of an American capitalist by Roger Lowenstein these capitalist by Roger Lowenstein these capitalist by Roger Lowenstein these books do a great job of explaining these books do a great job of explaining these books do a great job of explaining these men and what they're all about to us I men and what they're all about to us I men and what they're all about to us I got the kind of the human qualities more got the kind of the human qualities more got the kind of the human qualities more from just observing him and I think he from just observing him and I think he from just observing him and I think he is a while he comes across sometimes at is a while he comes across sometimes at is a while he comes across sometimes at the Berkshire meeting the Berkshire meeting the Berkshire meeting as being very blunt and maybe with a as being very blunt and maybe with a as being very blunt and maybe with a somewhat harsh exterior he has a somewhat harsh exterior he has a somewhat harsh exterior he has a
Questionersomewhat harsh exterior he has a beautiful heart he is a a very warm andbeautiful heart he is a a very warm andbeautiful heart he is a a very warm and loving person he is a very rationalloving person he is a very rationalloving person he is a very rational person he lives he lives a very simpleperson he lives he lives a very simpleperson he lives he lives a very simple life Warren Buffett lives in the samelife Warren Buffett lives in the samelife Warren Buffett lives in the same home he used to live in in 1954 so forhome he used to live in in 1954 so forhome he used to live in in 1954 so for 67 years he's in the same home in the67 years he's in the same home in the67 years he's in the same home in the case of Charlie Munger he's in the samecase of Charlie Munger he's in the samecase of Charlie Munger he's in the same home since the early 1960s maybe 64-65home since the early 1960s maybe 64-65home since the early 1960s maybe 64-65 like 58 almost 60 years in the same homelike 58 almost 60 years in the same homelike 58 almost 60 years in the same home and it's a home that he designed and alland it's a home that he designed and alland it's a home that he designed and all his children grew up in that home and sohis children grew up in that home and sohis children grew up in that home and so on so I think the the biggest lessons Ion so I think the the biggest lessons Ion so I think the the biggest lessons I have learned from Charlie have reallyhave learned from Charlie have reallyhave learned from Charlie have really not been what he has said to me thoughnot been what he has said to me thoughnot been what he has said to me though he has said many amazing things to me Ihe has said many amazing things to me Ihe has said many amazing things to me I think it's just observing how hethink it's just observing how hethink it's just observing how he interacts and goes about his life and Iinteracts and goes about his life and Iinteracts and goes about his life and I think that taught me foreignyeah I mean I I know that I know thatyeah I mean I I know that I know thatyeah I mean I I know that I know that Warren Buffett does that every year atWarren Buffett does that every year atWarren Buffett does that every year at uh at Christmas time it's not just touh at Christmas time it's not just touh at Christmas time it's not just to the children and grandchildren he givesthe children and grandchildren he gives
Questionerthe children and grandchildren he gives so you know U.S gifting laws allow you I think now to give about 17 000 a year to anyone with no tax consequence Warren actually includes I would say probably something like maybe 30 family members in that giving so cousins nephews nieces so it's a it's a large group of family members and he doesn't really try to judge you know whether he likes them or not he just you know gives it to them across the board I don't know whether Charlie does exactly the same thing but what Charlie did do a few years ago is that you know unfortunately his wife passed away a few years back she had always wanted that have their money which would basically her have to go to her children it just so happened that there was a a year or there was one only one year in the U.S tax code when there was no inheritance tax uh there was no estate tax and it
Questionertax uh there was no estate tax and it just so happened that his wife she had a accident you know she fell down the stairs she died the year in which there was no inheritance tax so what Charlie did last that particular year is he took half his Berkshire Hathaway shares and he divided them in eight because he has eight kids and he distributed it to those kids in that year I think at that time it would have been about 125 million dollars per kid which I think today would be probably about three or four times that amount if the children kept the money it would be maybe around 500 million or so per per kid approximately also what I have observed is that the children many of the children have set up their own Charities and Foundations and they are doing some amazing work even Warren Buffett's kids are doing some amazing work so for example Howard
Questionersome amazing work so for example Howard Buffett who is a Warren Buffett's son has been to Ukraine many times since the war started he goes nearly to the front line of the battlefield and he has given a lot of help to the Ukrainian people and especially to the Ukrainian Farmers because he's a farmer and the same thing in the case of I I have gotten to know many of Charlie's children they have become good friends of mine and they're wonderful human beings and again they have done a number of interesting things with the charitable giving that they're doing for the most part I would say a lot of the money that Charlie has given to his kids is going to end up being used to improve Society they do live well they all have a good they have good homes and good lifestyle and all of that but I think that they still Focus very heavily on helping helping humans which is great buffer
Questionerhelping humans which is great bufferhelping humans which is great buffer Thomasyeah I do know that in the past he gaveyeah I do know that in the past he gaveyeah I do know that in the past he gave Coke shares you know I think I thinkCoke shares you know I think I thinkCoke shares you know I think I think it's possible he's given Berkshireit's possible he's given Berkshireit's possible he's given Berkshire shares though I would think that'sshares though I would think that'sshares though I would think that's unlikely because I don't think he kindunlikely because I don't think he kindunlikely because I don't think he kind of likes to buy and sell the Berkshireof likes to buy and sell the Berkshireof likes to buy and sell the Berkshire shares I think every year the Gatesshares I think every year the Gatesshares I think every year the Gates Foundation and his three three childrenFoundation and his three three childrenFoundation and his three three children get a large number of Berkshire sharesget a large number of Berkshire sharesget a large number of Berkshire shares which he has pledged to give to all ofwhich he has pledged to give to all ofwhich he has pledged to give to all of them I don't think it is known how thatthem I don't think it is known how thatthem I don't think it is known how that or what shares are being given I wouldor what shares are being given I wouldor what shares are being given I would doubt that it will be byd shares I thinkdoubt that it will be byd shares I thinkdoubt that it will be byd shares I think that one of the reasons why I wouldthat one of the reasons why I wouldthat one of the reasons why I would doubt that is that you would need todoubt that is that you would need todoubt that is that you would need to either have the ADReither have the ADReither have the ADR or you would need to basically buy theor you would need to basically buy theor you would need to basically buy the shares in Hong Kong so a lot of peopleshares in Hong Kong so a lot of peopleshares in Hong Kong so a lot of people will need to have brokerage accounts inwill need to have brokerage accounts inwill need to have brokerage accounts in foreign countries and so on so my myforeign countries and so on so my myforeign countries and so on so my my guess is that he's many years maybeguess is that he's many years maybeguess is that he's many years maybe either given cash
Questionereither given cash or possibly some other stock which was like for example kind of uh taking it from there yeah
Questionerforeign yeah actually I saw that interview that you guys did in 99 I thought that was a great interview and I think you also had lilu there which was which was wonderful
OtherCharlie will be 100 years old on January 1st I met him in Omaha but before that I met him at his home in April uh for dinner he invited me to his birthday party on December 31st rolling into January 1st they're going to have a big celebration for Charlie's 100th birthday he had invited me for his 90th birthday then he invited me for his 95th birthday these were very big parties uh Warren Buffett flew in and a lot of different celebrities flew in in California I really enjoyed the 95th birthday and so I'm looking forward to attending his 100th birthday party it may be a lot
Questionerhis 100th birthday party it may be a lot bigger than the previous ones because that's a very big milestone uh all his family and close friends and everyone will be there yes so I think being rational is really important to Charlie I have actually not seen I obviously his he has physically declined over the years because of his age so for example he cannot play golf anymore he used to play bridge at the club he doesn't go to the club anymore so his Mobility is is limited but mentally he is very sharp I think he gets tired more easily now sometimes I I think he's gone to sleep you know like when we're talking he's gone to sleep and I'll say something and then he just responds like he's been listening you know but I don't I don't notice any cognitive decline in him and I think rationality is very very Central to what Charlie is all about and
Warrento what Charlie is all about and one one needs to be very rational one needs to be very rational one needs to be very rational in the business and investing work one in the business and investing work one in the business and investing work one should be less rational should be less rational should be less rational with the relationships that we have so with the relationships that we have so with the relationships that we have so relationships need more emotion until relationships need more emotion until relationships need more emotion until Charlie balances that really well I Charlie balances that really well I Charlie balances that really well I think he has a very strong rational side think he has a very strong rational side think he has a very strong rational side he can understand the situation but then he can understand the situation but then he can understand the situation but then he can overlay the right emotions so I he can overlay the right emotions so I he can overlay the right emotions so I see that he gets along see that he gets along see that he gets along with the wide range of people and very with the wide range of people and very with the wide range of people and very few things bother him you know I think few things bother him you know I think few things bother him you know I think he's for example when I go to dinner a he's for example when I go to dinner a he's for example when I go to dinner a his place whatever they put in front of his place whatever they put in front of his place whatever they put in front of him to eat he just eats him to eat he just eats him to eat he just eats he never really makes a demand I would he never really makes a demand I would he never really makes a demand I would like to have this kind of food or that like to have this kind of food or that like to have this kind of food or that kind of food he's very kind of easy kind of food he's very kind of easy kind of food he's very kind of easy going the family going the family going the family restricts restricts restricts how much Seas candy he eats so usually how much Seas candy he eats so usually how much Seas candy he eats so usually when I go to his place for dessert many when I go to his place for dessert many when I go to his place for dessert many times See's candy is a served for times See's candy is a served for times See's candy is a served for dessert and they tell me look we only
Warrendessert and they tell me look we only Bring Out The Seas candy like two three times a month even though maybe Charlie would like it more often but you see in the Berkshire meeting and the Daily Journal meeting he eats a lot of candy and the reason is because no one can control him then you know the candy sitting there No One's Gonna Come and tell him you can't eat Etc so they let him do whatever he wants at the Berkshire meeting with amount of candy he wants to eat yeah so I think rationality is a very important reason for Charlie's success it's really important for humans to understand that and get that from foreign
Questioneryeah I think one of the one of the things he says is that humans usually will become irrational when they have an opinion about something okay so for example if you ask some humans should Harvard University give preference to African Americans
Warrengive preference to African Americans to enter a little bit easier than everybody else okay so people will have different opinions some will say no please treat everyone the same others will say no these uh this population was discriminated against in the past and we need to make some changes to even the playing field so there are different arguments on both sides and the way Charlie would approach something like this he says that you are not entitled to have an opinion unless you can State the arguments for the other side as well as you can State the argument for your opinion so he he feels that you should know both sides okay so for example Russia has invaded Ukraine right now a lot of people will say that's terrible and it shouldn't have happened or whatever else you know but Charlie would say well also we should look at it from the Russian side you know we should
Otherfrom the Russian side you know we should understand what is going through their minds and why do they do it as as well as from the Ukrainian side so basically it is really difficult for humans to have both sides of the argument in their brain at the same time and be able to process it in a rational manner what what most humans will do is they will have an ideology like they will believe Harvard should only take People based on Merit and no other Factor should come in and they will not even consider the other side and I think this is one of Charlie's great strengths and and the place where it comes into play a lot is for example when we look at making an investment into a company there are lots and lots of factors that will affect the future outcome of that investment many factors that we may understand or not understand Charlie feels for example
Questionernot understand Charlie feels for example like and in fact both Warren and Charlie like and in fact both Warren and Charlie like and in fact both Warren and Charlie one of the tools they use to help them one of the tools they use to help them one of the tools they use to help them in the investing in the investing in the investing is let's say they're looking at a is let's say they're looking at a is let's say they're looking at a particular company particular company particular company let's say which makes certain auto parts let's say which makes certain auto parts let's say which makes certain auto parts for example for example for example and they they like the company whatever and they they like the company whatever and they they like the company whatever what they will what they will try to do what they will what they will try to do what they will what they will try to do is they will try to go talk to is they will try to go talk to is they will try to go talk to competitors of the company competitors of the company competitors of the company and they will ask the competitor and they will ask the competitor and they will ask the competitor which companies in your industry do you which companies in your industry do you which companies in your industry do you admire admire admire a lot a lot a lot and which companies do you think are and which companies do you think are and which companies do you think are really bad really bad really bad and he says that like Buffett says if and he says that like Buffett says if and he says that like Buffett says if you talk to five or six competitors you talk to five or six competitors you talk to five or six competitors about a particular company what will about a particular company what will about a particular company what will happen is you will get a very clear idea happen is you will get a very clear idea happen is you will get a very clear idea after that which company is the best after that which company is the best after that which company is the best company in that industry company in that industry company in that industry and which company is the worst company and which company is the worst company and which company is the worst company and these things may not be apparent in and these things may not be apparent in and these things may not be apparent in the numbers or they may actually explain the numbers or they may actually explain
Questionerthe numbers or they may actually explain why certain companies do a lot better than others over time one of the dangers in investing is we can fall in love with the company or an investment and when we fall in love with the company or an investment rationality goes away we are no longer thinking in a very rational pragmatic way we always have to kind of pull that back and one of the ways one of the one of the techniques both Warren and Charlie use to try to understand how the future will unfold is by really studying the past carefully so for example if you look at investment in byd which lilu was the first person who made the investment and in fact when he first invested in byd it was almost like a venture capital investment it was very very small it was a very small company but he already was able to see that the trajectory and chungfu Wang was
Warrenthat the trajectory and chungfu Wang was a very unusual very bright and verya very unusual very bright and verya very unusual very bright and very hard-working person when he laterhard-working person when he laterhard-working person when he later brought the company to Charlie'sbrought the company to Charlie'sbrought the company to Charlie's attentionattentionattention Charlie's went back and studied the veryCharlie's went back and studied the veryCharlie's went back and studied the very early history of Chang Fu Wang whenearly history of Chang Fu Wang whenearly history of Chang Fu Wang when there was no companythere was no companythere was no company and he was trying to start something andand he was trying to start something andand he was trying to start something and he had no money he had many siblingshe had no money he had many siblingshe had no money he had many siblings seven or eight siblings uh this is aseven or eight siblings uh this is aseven or eight siblings uh this is a large family one of his brothers andlarge family one of his brothers andlarge family one of his brothers and jungfu Wang was one of the youngestjungfu Wang was one of the youngestjungfu Wang was one of the youngest people in the family but the brother sawpeople in the family but the brother sawpeople in the family but the brother saw unusual traits in his brother and heunusual traits in his brother and heunusual traits in his brother and he helpedhelpedhelped give Chang Fu Wang the money to getgive Chang Fu Wang the money to getgive Chang Fu Wang the money to get startedstartedstarted and and then of course Jungkook Wangand and then of course Jungkook Wangand and then of course Jungkook Wang once he got a little bit of money heonce he got a little bit of money heonce he got a little bit of money he could get going he was a genius atcould get going he was a genius atcould get going he was a genius at chemistry and he could he works verychemistry and he could he works verychemistry and he could he works very long hours he could build that thatlong hours he could build that thatlong hours he could build that that business but really it was a frombusiness but really it was a frombusiness but really it was a from Charlie's perspective a confusion idealCharlie's perspective a confusion idealCharlie's perspective a confusion ideal kind of a confusion principle to helpkind of a confusion principle to help
Charliekind of a confusion principle to help the one who is most capable and so hethe one who is most capable and so hethe one who is most capable and so he studied in the case of byd he studiedstudied in the case of byd he studiedstudied in the case of byd he studied the very very early history of thethe very very early history of thethe very very early history of the company very carefully and then he alsocompany very carefully and then he alsocompany very carefully and then he also studied the trajectory so for example instudied the trajectory so for example instudied the trajectory so for example in the case of byde they were trying tothe case of byde they were trying tothe case of byde they were trying to manufacture these batteries whichmanufacture these batteries whichmanufacture these batteries which required clean rooms in in Japan theserequired clean rooms in in Japan theserequired clean rooms in in Japan these batteries were made in Japan and theybatteries were made in Japan and theybatteries were made in Japan and they were very large clean rooms which arewere very large clean rooms which arewere very large clean rooms which are very expensivevery expensivevery expensive and the one of the first innovationsand the one of the first innovationsand the one of the first innovations that byd made was that instead of makingthat byd made was that instead of makingthat byd made was that instead of making the room clean they made a small boxthe room clean they made a small boxthe room clean they made a small box clean and the women would put their handclean and the women would put their handclean and the women would put their hand in gloves through the box and work onin gloves through the box and work onin gloves through the box and work on those things so basically he was able tothose things so basically he was able tothose things so basically he was able to drop the cost a lot of manufacturing bydrop the cost a lot of manufacturing bydrop the cost a lot of manufacturing by rethinking how it was done andrethinking how it was done andrethinking how it was done and repeatedly they uh kind of excelledrepeatedly they uh kind of excelledrepeatedly they uh kind of excelled really in terms of the Innovation andreally in terms of the Innovation andreally in terms of the Innovation and the tenacity the other thing is thatthe tenacity the other thing is thatthe tenacity the other thing is that Chung Fu Wang lives with his workers
CharlieChung Fu Wang lives with his workers so you know they have the large residential blocks of Apartments here he lives in one of those blocks with with the workers and so that type of a culture means that your people will do anything for you you know because they and so I think he very carefully studied individual pieces about changfu Wang he was aware of people like Thomas Edison he was aware of people like Henry Ford he was aware of people like Bill Gates and he could make a connection with the way Chang Fu Wang was with the way some of these people were and in the end you know that led to the investment and it did really well so I think that's kind of a very he didn't he did not just accept that the byd investment should be made because lilu thinks it's great that's not the reason why he made the investment he did his own analysis
Questionerconcept of being in alignment being in alignment of being in alignment being in alignment of being in alignment being in alignment me ends that you are a very honest and me ends that you are a very honest and me ends that you are a very honest and candid person candid person candid person so if you feel something about a certain so if you feel something about a certain so if you feel something about a certain topic or some person you're very open topic or some person you're very open topic or some person you're very open and honest about it and so the alignment and honest about it and so the alignment and honest about it and so the alignment is a I would say alignment is almost a is a I would say alignment is almost a is a I would say alignment is almost a subset of being rational in general subset of being rational in general subset of being rational in general or most humans or most humans or most humans it is not easy to be always be it is not easy to be always be it is not easy to be always be open and candid and honest open and candid and honest open and candid and honest about the other people we interact with about the other people we interact with about the other people we interact with because sometimes we interact with because sometimes we interact with because sometimes we interact with people who may not be that good people who may not be that good people who may not be that good and if you tell them that to their face and if you tell them that to their face and if you tell them that to their face that's going to cause conflict and that's going to cause conflict and that's going to cause conflict and issues you know so one of the one of the issues you know so one of the one of the issues you know so one of the one of the important aspects of the alignment and important aspects of the alignment and important aspects of the alignment and being true to yourself being true to yourself being true to yourself is both Charlie and Warren try really is both Charlie and Warren try really is both Charlie and Warren try really hard hard hard to associate with very high quality to associate with very high quality to associate with very high quality people it is you know it seems obvious people it is you know it seems obvious people it is you know it seems obvious that we should that we should that we should interact and have friends interact and have friends interact and have friends who are very high quality but actually
Otherwho are very high quality but actually you know if if you just look at your friends today what you may find is some are they are Pleasant people nice people but not that high quality right they're kind of okay to be around but they're not high quality so one needs to be a harsh grader what that means is you need if you really want to have this being true to yourself and be aligned and have a great life and all of that you would need to get rid of those people from your life and getting rid of those people in your life is a not an easy thing to do for most humans the easy thing is just keep going along so I have I have tried to do this for a long time where you know if I meet someone for the first time for lunch or tea or something after I meet them I try to do some analysis of you know how did I feel what do I think and I try to set a high bar
Otherdo I think and I try to set a high bardo I think and I try to set a high bar where I say that unless it is somethingwhere I say that unless it is somethingwhere I say that unless it is something truly exceptional I don't really want totruly exceptional I don't really want totruly exceptional I don't really want to you know increase the interaction myyou know increase the interaction myyou know increase the interaction my father used to say that to lead a goodfather used to say that to lead a goodfather used to say that to lead a good lifelifelife you need to have one good wife and oneyou need to have one good wife and oneyou need to have one good wife and one good friend so we don't need largegood friend so we don't need largegood friend so we don't need large numbers of people less is more so Inumbers of people less is more so Inumbers of people less is more so I think both Charlie and Warren part ofthink both Charlie and Warren part ofthink both Charlie and Warren part of their rationality and part part of whattheir rationality and part part of whattheir rationality and part part of what they've done is they are really good atthey've done is they are really good atthey've done is they are really good at figuring out for example when I when Ifiguring out for example when I when Ifiguring out for example when I when I met Charlie's friendsmet Charlie's friendsmet Charlie's friends I was really surprisedI was really surprisedI was really surprised in terms of the qualityin terms of the qualityin terms of the quality these individuals were some of thethese individuals were some of thethese individuals were some of the highest quality people I have ever methighest quality people I have ever methighest quality people I have ever met they were just truly I mean I thinkthey were just truly I mean I thinkthey were just truly I mean I think Charlie spent a lifetime you knowCharlie spent a lifetime you knowCharlie spent a lifetime you know sifting through and so I made them mysifting through and so I made them mysifting through and so I made them my friends because it's I already knowfriends because it's I already knowfriends because it's I already know they're so high quality people andthey're so high quality people andthey're so high quality people and they're such wonderful people but thatthey're such wonderful people but thatthey're such wonderful people but that is not an easy thing to do where we
Warrenis not an easy thing to do where we already have relationships and so what you can start doing is spend more time with the people who are truly exceptional truly high quality I I met some friends of Charlie Munger who are poor people they are not rich like one time I met a friend of his who goes fishing with him in Minnesota every summer Charlie has a summer home in Minnesota he goes there for a month or fishing month a month and a half this person is just an ordinary person in Minnesota who's just Charlie's fishing buddy but I found he's a very high quality person I met him in Omaha at a dinner that Charlie Munger has before the meeting about 200 people come for that dinner so he came up to me I mean I was just you know I saw somebody I didn't know I said hello you know I said hello to him I said how do you know Charlie and he immediately says to me that I am
Questionerand he immediately says to me that I am not a person who understands business and I am not a person who understands investing and I am not a rich person he always he started out by telling me all the things that he is not what what you could tell right away is he was a very humble person right I mean he wasn't trying to say oh I'm a great guy because I'm friends with Charlie so I asked him I said how do you know Charlie he said oh Charlie and I have been fishing buddies for a long time in Minnesota when he comes to Minnesota we go fishing many times and so on and I could see that basically just in meeting him just for a brief amount of time that he was a simple down to earth honest aligned person didn't really have any agenda or anything else and it was just a nice person with some great qualities of like honesty and integrity and
Charlieof like honesty and integrity and humility and so I think those were things that appealed to Charlie and you could see that in 10 minutes of meeting
Questionerfirst of all I think China has really been through a Miraculous Journey in the last several decades I think that one of the best leaders ever any country in the world was Deng Xiaoping and I think he did a truly exceptional job and I think it was amazing that he was able to take a communist country it was everything was state-owned into a very capitalist Direction and lifted hundreds of millions of people from poverty so the Chinese people are natural entrepreneurs and they were trapped in a system which was the opposite of an entrepreneurial system so once we unleashed you know and made their them free to be their natural entrepreneurs that they were I think it worked spectacularly so I think it's it's the only time in the world where we've had
Warrenonly time in the world where we've had uh you know the largest country in the world left such a large portion of the population for very extreme poverty to significant affluence in a very short period of time so it's really miraculous I think when I look at China it's almost like it couldn't really happen anyplace else
WarrenCharlie also believes that the Chinese people genetically are superior to other races and this is a kind of a politically incorrect thing to say but he says it anywhere because he thinks it's true and I think he says that the IQ of the average person in China is higher than in other parts of the world mainly because of the cultivation of rice basically if you go back if you go back in history with a gradient society and it was very heavily a rice growing Society most people were engaged in agricultural growing rice growing rice
Questioneragricultural growing rice growing rice is very different from growing corn oris very different from growing corn oris very different from growing corn or soybean I want to grow corn I just throwsoybean I want to grow corn I just throwsoybean I want to grow corn I just throw the corn seed on the ground and I comethe corn seed on the ground and I comethe corn seed on the ground and I come back after a few months and the cornback after a few months and the cornback after a few months and the corn plant will be ready for me to harvestplant will be ready for me to harvestplant will be ready for me to harvest rice cultivation is very complicated yourice cultivation is very complicated yourice cultivation is very complicated you have to actually start and replant andhave to actually start and replant andhave to actually start and replant and make sure the water level there ismake sure the water level there ismake sure the water level there is actually quite a bit of math involvedactually quite a bit of math involvedactually quite a bit of math involved in being a good rice farmer so I thinkin being a good rice farmer so I thinkin being a good rice farmer so I think what Charlie was saying is that at thewhat Charlie was saying is that at thewhat Charlie was saying is that at the starting point in China the IQ level wasstarting point in China the IQ level wasstarting point in China the IQ level was the same as the rest of the worldthe same as the rest of the worldthe same as the rest of the world but what happened is that the lower IQbut what happened is that the lower IQbut what happened is that the lower IQ end of the populationend of the populationend of the population basically could not grow rice becausebasically could not grow rice becausebasically could not grow rice because they could not do the math and theythey could not do the math and theythey could not do the math and they ended up going extinctended up going extinctended up going extinct and so you end up with a population onand so you end up with a population onand so you end up with a population on average which is good at math now one ofaverage which is good at math now one ofaverage which is good at math now one of the negatives that Charlie Sees withthe negatives that Charlie Sees withthe negatives that Charlie Sees with excess math skills that most Chineseexcess math skills that most Chineseexcess math skills that most Chinese have is they have a higher propensity to
Charliehave is they have a higher propensity to gamble Macau is very popular and Vegas is very popular and chai and Charlie Sees that as a negative so one of the outlets the math ability finds is in gambling which is a negative and if it if it can be used in a positive way which it has been used a lot in a positive way by many Chinese so the the way I look at China is that you have a very very very hard-working population people are willing to work very hard it's a smart population now unfortunately we have negative population growth in China because people are not having enough kids so that is a negative it's not as bad as Korea Korea I think is in really bad shape in terms of the amount the population is going down in Japan is going down significantly so if China can figure out some way to arrest the decline in population that would be a positive otherwise it's going
Otherwould be a positive otherwise it's going to start becoming an aging Society like we've seen in Japan so I think when I look at China I see a country where if you come up with an interesting product or an interesting service which can have broad appeal it can have tremendous Tailwinds we have seen this repeatedly in companies tencent and ride hailing companies meet one and window and so on many companies which have come up with something which is a great innovation has been able to scale really fast so the the big Advantage China offers is that if someone were to come up with something which is amazing in Jamaica for example the country is too small to really have a lot of impact I think that having the 1.4 billion population if you can leverage something digital it can do really well I think for me for me personally I would say China would be a
Todd Combspersonally I would say China would be a difficult place for me to invest because there's many things about nuances and culture that I would not understand so usually I think if I'm looking to invest in China I will talk to my friend lilu and ask him you know what makes sense or doesn't make sense a few years back lilu had suggested I buy Mao Thai which I did and it it went up a lot it did really well even though I don't drink any alcohol and then a few years after that I visited Mao Thai's Factory in China with my daughter and my friend guy Speer that was amazing I think I think it's a it's an incredible company so I think that in in China we have many many great businesses and many great opportunities it may be easier for people in China to be able to sift through all that than someone like me but if I can get someone like lilu to help me then it can work
Otherlike lilu to help me then it can work out pretty well
Othera few years ago I had a conversation with Charlie Munger many many years ago when we were having dinner
Otherso he says to me monish you own maotai I said yes
Otherhe said you know that when you die you will still own Mao Thai
OtherI said yes so what was happening is God was telling me never sell Mao Thai okay
Otherthat's what you know God is also known as Charlie manga so God is telling me directly never sell Mountain
Otherso I said yes and I had no plans to ever sell it then a few years after that Limu called me and said
OtherI am selling my Mao Thai and I think you should sell your Mao Thai steak
Otherso I said but lilu God told me never to sell it so he said well so he was seeing some issues coming up in the distribution of maotai there maybe there was some corruption in the distribution which was bothering him some things on
Questionerwhich was bothering him some things on on that front he said well I think you should sell and move on so I thought about it I said I don't know anything about Mao Thai I don't even drink alcohol and lilu knows everything so I said I already made like five six times my money I think I should listen to him so at that point I sold the amount I shares that I had no plans to ever sell and then a couple of years later it was more than double the price I sold that it just kept going my daughter also had invested in Mao Thai and when I told her what lilu told me she disregarded so she kept her shares because she likes the company and she liked the visit and I was too stupid I sold it and I have not looked at Mao Thai recently and based on what you are saying I'm going to take another look at it but you know at the time when we were originally buying it the price was one tenth of the
Otherbuying it the price was one tenth of the current price it's it's really was a very different situation and now it is even now with the little bit of decline it is the most valuable liquor company in the world it's still the most valuable so it is a I think the boat of maotai is an indestructible it's just cannot be touched by any company and I noticed when I went to the factory the cost for them to make one bottle of Mao Thai and they have no automation of manufacturing it's just done with the same way it was made 50 years or 100 years ago there's no advances done in the way they make it I think the cost to make a bottle is less than five dollars including the packaging and everything and the selling price is much more than one thousand I mean there's almost no businesses in the world that would have those kind of Economics I do remind Lee new every time I meet
OtherI do remind Lee new every time I meet him that he's not always giving me the correct information so I tell them next time please don't tell me to sell when God has told me to never sell but this is the way life is you know so we have to you know do what happens and go along with it
Otheris I would say one of the greatest entrepreneurs ever to come about is truly exceptional person in the last hundred years in business I think he's a he's a very much an off the charts person in terms of what he has built and how he has executed and yeah so originally I had invested in Alibaba but when I subsequently studied tencent I found that my opinion was that that 10 cent was a superior company to Alibaba on a few different fronts I switched the investment now both both these Investments both Alibaba and tencent have not worked so far for me partially
Otherhave not worked so far for me partially because of probably mainly because there were a lot of changes that came about from government regulations and government directives some of that is hard to predict a lot of that is hard to predict but I would I would say this I would say that 10 cent it's kind of a very flexible company which can look at circumstances that are there in a number of different ways and can adjust its operations accordingly so for example when they were facing a number of restrictions in China they just increased their activity outside China and and they've done an extremely good job both in terms of internal r d and internal products that they have developed and how they have scaled those as well as the Investments that they have made and and how they have created great Partnerships so I would say that in China if I were to do anything 10
Todd Combsin China if I were to do anything 10 cent would be at the top of my list just in terms of the way the nature of their business and the nature of the entrepreneur and the team but I also I also have found because we can invest around the globe we found a lot of interesting opportunities in Turkey for example which we we did which which has worked well and also more recently in the United States basically because I am not limited to one particular geography one of the negatives that comes up with both Mao Thai and tencent is size so while both have very reasonable valuations and they are not overvalued the market caps of both companies make them amongst the largest businesses in the world and so what that means is that there are very few businesses that will get to a market cap of 2 trillion or 3 trillion or 4 trillion 4 trillion
Othertrillion or 4 trillion 4 trillion doesn't even exist today apple is hovering around 3 trillion but even a trillion is is a lot you know we used to have no businesses more than five six hundred billion I do have a concern about the law of large numbers one of the advantages and individual investor has is that if you have a small pool of capital you may be able to identify a company that can become 10 20 50 times larger than what it is but it is difficult for a company like tencent or Mao Thai to become 10 times larger in the next few years I think that would be almost impossible there is a counterbalance that comes up when you're looking at these very large Mega caps is how much further can they go because they're just carrying it's like a big aircraft carrier it's difficult to to move and navigate even though you have a lot of Might and so those are things to keep in
QuestionerMight and so those are things to keep in mind is sometimes a smaller business which may be which may not have the scale and size and mode of a multi or a 10 cent can be a better investment foreign
Questioneryeah I mean I I think that it was not a factor a few years ago and it is a significant factor today it definitely has a impact and probably a negative impact that did not exist a few years ago
Questionerthere's a book that came out a few years ago it's called give and take it's written by a guy named Adam Grant give and take and what Adam Grant says is there are three kinds of people in the world they are the givers you know people who always give a lot of things there are the takers which means they will take something from you but not to return it and they are the matchers which means if I do you a favor then you do me a similar fave you have givers you have takers you have matchers
Otherhave takers you have matchers have takers you have matchers we should never have any takers in our we should never have any takers in our we should never have any takers in our life so if you see someone in the taker life so if you see someone in the taker life so if you see someone in the taker wipe them out right away wipe them out right away wipe them out right away we should also never have any matchers we should also never have any matchers we should also never have any matchers in our life people who are doing in our life people who are doing in our life people who are doing mathematical calculation oh he bought me mathematical calculation oh he bought me mathematical calculation oh he bought me lunch last week I'm going to buy him lunch last week I'm going to buy him lunch last week I'm going to buy him lunch next week we don't want the lunch next week we don't want the lunch next week we don't want the matchers we only want the givers which matchers we only want the givers which matchers we only want the givers which means people who give selflessly without means people who give selflessly without means people who give selflessly without looking to get anything back and what looking to get anything back and what looking to get anything back and what the other thing we have to do if you the other thing we have to do if you the other thing we have to do if you want to play Infinite games is we have want to play Infinite games is we have want to play Infinite games is we have to be givers so we cannot think about to be givers so we cannot think about to be givers so we cannot think about doing some action with the idea that how doing some action with the idea that how doing some action with the idea that how will it benefit me so sometimes if I'm will it benefit me so sometimes if I'm will it benefit me so sometimes if I'm talking to somebody they have some talking to somebody they have some talking to somebody they have some problem if I'm a giver I just help the problem if I'm a giver I just help the problem if I'm a giver I just help the person I don't think about how is it person I don't think about how is it person I don't think about how is it going to help me to spend the time or going to help me to spend the time or going to help me to spend the time or whatever to play Infinite games we need whatever to play Infinite games we need whatever to play Infinite games we need to be givers a Berkshire Hathaway is a
Otherto be givers a Berkshire Hathaway is a good example a company together they have taught everybody a lot of things which they have no benefit from teaching but they did that and the second thing is so we need to be givers and we need to surround ourselves with givers we need to take out all the matters and the takers and only have a universe of gibrals and and that's what I noticed when I met Charlie's friends they are all givers 100 percent Charlie is a giver Warren is a giver I think that's playing infinite games is really powerful and I think this is the way you can play those games foreign
Otheris I have repeatedly sold very good businesses because they appeared to be overvalued and what I have learned after taking a lot of arrows in my back and making a lot of mistakes is when you find yourself in the happy position of owning a fraction of a great business
Questionerof owning a fraction of a great business pretty much never sell it unless it is just extreme egregious crazy price so if we look at a business like Ferrari today I think the price of the stock is more than 300.
Questionerin 2012 when I originally invested in a company that owned Ferrari the effective price was less than fifteen dollars so in the last 11 years the price of Ferrari has gone up more than 20 times one of my biggest regrets is the sale of Ferrari and the sale of Mount I for example because these are iconic one of the One of a Kind very unusual companies I made a lot of money on Ferrari I also made a lot of money on My Thai but the the best thing one can do is one when one finds oneself in the happy position of owning a truly terrific business is to never sell it
QuestionerI learned this from Warren Buffett which is to not put anything on the on the schedule keep the schedule which is why
Otherschedule keep the schedule which is why it took so long for us to talkit took so long for us to talkit took so long for us to talk because there's nothing on the schedulebecause there's nothing on the schedulebecause there's nothing on the schedule so I I try hard so for example todayso I I try hard so for example todayso I I try hard so for example today this talk is the only thing on mythis talk is the only thing on mythis talk is the only thing on my schedule there's nothing else on myschedule there's nothing else on myschedule there's nothing else on my schedule usually before the day startsschedule usually before the day startsschedule usually before the day starts I don't really have a good idea of howI don't really have a good idea of howI don't really have a good idea of how I'm going to spend it but I like to haveI'm going to spend it but I like to haveI'm going to spend it but I like to have time to thinktime to thinktime to think I like to have time to read and I likeI like to have time to read and I likeI like to have time to read and I like to have time to explore anything that Ito have time to explore anything that Ito have time to explore anything that I am exploring so last few months I wasam exploring so last few months I wasam exploring so last few months I was studying two companies because there'sstudying two companies because there'sstudying two companies because there's not much on my schedule I could do allnot much on my schedule I could do allnot much on my schedule I could do all kinds of things to understand thosekinds of things to understand thosekinds of things to understand those companies I talk to a lot of differentcompanies I talk to a lot of differentcompanies I talk to a lot of different people about it and I read a lot ofpeople about it and I read a lot ofpeople about it and I read a lot of different things and so on to eventuallydifferent things and so on to eventuallydifferent things and so on to eventually get a picture in my head of what itget a picture in my head of what itget a picture in my head of what it looks like I think the one of thelooks like I think the one of thelooks like I think the one of the biggest luxuries I learned from Warrenbiggest luxuries I learned from Warrenbiggest luxuries I learned from Warren and Charlie is to have the independenceand Charlie is to have the independenceand Charlie is to have the independence and to have the freedom of time and not
Otherand to have the freedom of time and not to be very minutely scheduled so I try to keep it very free and flexible so I can be open and I can think about what may be the way I want to spend the time
Otherwhat yeah okay yeah I mean I would I would say the one suggestion I would have for your listeners is that your readers like I said your listeners in the past like I said is high IQ and high math skills and generally what that leads to is a lot of gambling in the stock market which is a negative so a lot of Chinese investors are buying and selling too much and my suggestion to them would be that study the businesses find the great businesses buy them at reasonable prices and then never ever sell
Otherthat is well I enjoyed I enjoyed the session thank you very much I think the reason is because Charlie Munger is really popular in China is extremely popular and sometime when they read about
Warrenand sometime when they read about Charlie Banger they will be read about Charlie Banger they will be read about Charlie Banger they will be read about me and then they got a little bit me and then they got a little bit me and then they got a little bit interested in me so I think it's really interested in me so I think it's really interested in me so I think it's really Charlie Munger popularity that drives Charlie Munger popularity that drives Charlie Munger popularity that drives some of that but yeah no it's wonderful some of that but yeah no it's wonderful some of that but yeah no it's wonderful to have that and it's wonderful to have to have that and it's wonderful to have to have that and it's wonderful to have the Chinese readers and followers the Chinese readers and followers the Chinese readers and followers wonderful thank you
Otherforeign[Music]