On Friday, The Wall Street Journal’s Jason Zweig published some great excerpts from comments made by Warren Buffett’s right-hand man, Charlie Munger, at the Daily Journal Corporation annual meeting this week. Munger serves as Daily Journal’s chairman of the board.
Munger joined Buffett’s Berkshire Hathaway in 1965, leaving behind a career as a lawyer.
It worked out.
Zweig’s excerpts include comments from Munger on Benjamin Graham, often considered the godfather of value investing and Warren Buffett’s most important influence, who Munger said “had a lot to learn as an investor.”
I don’t love Ben Graham and his ideas the way Warren does. You have to understand, to Warren — who discovered him at such a young age and then went to work for him — Ben Graham’s insights changed his whole life, and he spent much of his early years worshiping the master at close range. But I have to say, Ben Graham had a lot to learn as an investor. His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay.”
Earlier this week, Munger had some choice words for Daily Journal’s auditor, Ernst & Young, saying that the firm’s audit of Daily Journal was like, ” the doctor who wanted to cure the nosebleed by fishing around in the groin.”
And in Zweig’s report, Munger’s take on accounting firms is more charitable, though just slightly.
“Accounting firms now have had to hire so many people that they have had to go way down in the bucket to get all these new employees. The government is asking accountants to be policemen, but the number of people smart enough to be qualified for policing is too low. We shouldn’t be expecting accountants to do the policing. Firms should have the ethical gumption to police themselves: Every company ought to have a long list of things that are beneath it even though they are perfectly legal.”
Munger also talks about why companies should streamline costs, how to stay within ones “circle of competence,” and the decline of newspapers. The whole piece is well-worth a read, and gives some great insight into the mind of one of the best investors of all time.
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