Meeting notes from Wesco Annual Meeting May 9, 2007
By Nicholas Henderson
Charlie Munger was in fine form at the Wesco annual
meeting. Age may have slowed his body
but not his mind. Of aging, he had two
pithy, Mungerisms. Perhaps he is “like
the man jumping off the skyscraper, who says as he approaches the 5th
floor—the ride is good so far…[Anyway, he] wasn’t going to complain about
aging, because if [he] weren’t [aging], [he] would be dead.”
Like the Berkshire Hathaway meeting the previous weekend,
this was the required annual meeting for Wesco, the 80.1% owned subsidiary of
Berkshire Hathaway. After the required, pro forma election of the board of
directors, the “official” meeting was adjourned. Then came the real the reason why
I and over 800 people were there—to hear Charlie Munger dispense his wit and
wisdom. Or be, as he said, the
“assistant leader of a cult… people here who…want to leave a little wiser… [We]
created this club by accident.”
As always, Charlie Munger did not give stock recommendation,
other than implying that Wesco would not be a value purchase, “You people keep
bidding up Wesco shares and hope we find something [good to invest in].” Rather he gave valuable life recommendations.
This year, like last year, Charlie Munger started out with an
illustrative opening discourse, because “it is very hard just to listen to talk
[and absorb it, which is] why [the best] instruction is so vivid.” He quoted Mark Twain, “’a man who carries a cat by the tail learns something [that he can learn in no other way]’…but is
a terrible way to learn…it is hard to get lessons of life…but you should not
have to try it, in order not to pee on an electrified fence.”
In his opening statement, Munger explained the confluence of
factors that enabled Warren Buffett to “create Berkshire Hathaway” from
virtually nothing with the same shareholders and share count. This was something worth studying; it was a
“lollapalooza”, one of Munger’s favorite words.
So the factors, Munger cited were that Warren Buffett is
“seriously smart” “but [even Warren
Buffett] out achieved his aptitude, by
· Avoiding
the nuttiness—jealousy, envy, etc.
· Being
interested in his field, investing.
· Being
a voracious learner.
· Starting
early.
· Not
having a committee, make the investment decisions.
These things are simple, but they are really important and
generally not studied at business schools, frequent objects of Mr. Munger’s
derision Interestingly, Munger credits only Buffett
with creating Berkshire Hathaway in its present incarnation. Munger did
contribute to it; but Munger calls Berkshire,
Buffett’s creation.
One of the themes, this year was how to be mentally an
adult. How? Well avoid nuttiness. Avoid internally generated nuttiness, which
includes the feelings of jealousy, self pity and envy. If you do this, it will really help a great
deal in life. Citing Marcus Aurilius and
Alfred North Whitehead, CM said get rid of jealousy, revenge, the childish
feelings of “poor old little me”, otherwise known as self pity. Also, you need
to avoid the nuttiness of the supposed experts in your field. Add to this an ability to learn and you
should be able to best some of the incumbents in your chosen field. Munger was able to do quite well in fields
that were new to him—real estate development and investment management.
“Wisdom is what you want” you can only get it by “sitting on
your ass and reading…and avoiding nuttiness.”
Had Warren Buffett, who is a better investor today than he
was at 65, stopped learning, Berkshire Hathaway would be “a pale shadow of
itself today.” “Even in physics, people
cling to wrong ideas. If great
physicists do this, then what [will] the rest of us do.” One of the ideas that Munger and Buffett discarded,
was that railroads were lousy investments.
Bill Gates beat them to that investment idea, some months earlier. Munger quipped, “Perhaps he should be
investing our money.”
Munger went on to say one of the greatest sources of human
miscognition was self-serving bias.
People feel entitled. Bill
Clinton would probably “have had a better record” and Paul Wolfowitz would not
be in the trouble he is in, were it not for this kind of faulty thinking.
This year he recommended The
Martians of Science and Isaacson’s new biography of Einstein; as well he
mentioned Poor Charlie’s Almanack and
Bevelin’s book, Seeking Wisdom, both
of which were being sold outside the meeting.
In quintessential fashion, Charlie Munger closed the
meeting, 3 hours after it started by saying, “If you [Berkshire Hathaway
shareholders] get Warren Buffett, for 40 years and he dies on you, you have no
right to complain.”
