I’ve transcribed the entire Daily Journal 2020 annual meeting and published it here.
https://junto.investments/worldly-lessons/daily-journal-2020-transcript/
Enjoy!
Cheers, Oliver Sung
wow thanks
Dafuq is this malarkey infiltrating our beloved Water Cooler?
OP has been extremely helpful for once.
Not sure I get the infiltrating and for once comments. This is my second post in Water Cooler.
ignore Charlie work he is mildly autistic with a side of cuck.
good luck w that.
i was always curious if doign stuff like that drives traffic to your site. there is a youtube account that just posts all the interviews of heavy hitters. its called investors archive.
always nice to read a transcript. very different from listenining to the real thing. i dont know why that is. but usually when i listen to these things. im only half paying attention. i miss a lot of golden nuggets. anyways some of the stuff he says, he has said in other interviews.
I don’t like the bad stuff coming out of investment bankers these days. I don’t like when investment bankers talk about EBITDA, which I call bullshit earnings.
We sell stuff good for people versus tricking them. And I would choose to do this even if we made less. In fact it leads to us making more. Warren [Buffett] always said to take high road, because it’s less crowded.”
“You people come from all over world out of deep hunger. You are nerds. I was once one and know one when I see one. I am a fellow nerd who managed to succeed despite his defects, and you need a similar result.
It’s no good to pretend to be something you are not, because you eventually become what you pretend It works sometimes, but very rarely. Some no-good nicks became leading philanthropists to mislead people, and after while they became good people. Reagan shifted parties when his acting career failed, and he was hired by GE to give rightwing speeches. So of course he became a Republican.
all value is, is trying to get better prospects than what you’re paying for.
The strongest companies in the world are not in America. I think Chinese companies are stronger than ours and are growing faster, and I have investments in them,
A fisherman told me that fishing success is all about fishing where the fish (bargains) are. The hard stuff is for somebody else.”
“Those in the investment management industry should prepare for tougher times ahead. This indexing thing has run and run and run. And there are wretched excesses in well paid hedge funds and private equity that will result in troubles and give pain. Everywhere I see endowments wanting fewer and better managers, and the rest of people are indexing. Neither is good for managers. Want cheery news? If you think the way nerds think and go at it long enough, you will be alright. For others, if you go with that crowd, I think there is pain ahead.”
We need a stable currency. We created the reserve currency of world by accident. It’s a big responsibility when others are depending on you, think about them too.”
“The economists of the world thought they knew a lot more than they did. What happened in response to recession is countries printed money like crazy and did things no one would’ve recommended on this scale. Yet inflation is very low. Economists have a lot to be modest about. LBJ said giving a talk on economics is like pissing on your leg. It feels hot to you, but never to anyone else.”
“I am mildly optimistic about China. Nobody has ever taken a nation ahead as fast. They’ve done a lot right and have a big admirer in me. They were in a Malthusian trap and prevented 500,000 babies from being born using methods people didn’t like. But they did the world a favor, which is admirable. There’s no hostility. I admire what they’ve achieved in 25 years, and considering they started out as communists, the leaders are good. Imagine this communist country – they’ve seen enormous growth and prosperity and lifting 800 million people out of poverty. The United States ought to get along with China, and China ought to get along with the United States. Regarding the global situation, it is peculiar to have negative rates. I greatly admire one nation with 25 years of stasis. The Japanese have handled it with magnificent skill and philosophy. Japan is not going to hell, and the Japanese aren’t bitching and wailing and not acting the victim and taking it like men. Japan was an export powerhouse, and up came China and Korea. It’s not its fault and just happened. I’ve greatly admired them. The defect-free manufacturing ethos and all. The US has a lot to learn from Asians. Everything in Japan is clean, and no homeless are defecating in the street either. There’s a lot to be learned.”
I lived in the Great Depression, and Keynes was exactly right on how to fix it. We got out due to accidental Keynesianism, which came from the rise of Hitler and World War II.
“A man in Los Angeles named Howard Ahmanson says ‘never underestimate the man who overestimates himself.’
That leader [Deng Xiaoping] said he doesn’t care if a cat is black or white as long as it can catch mice.
You remember how the Chinese emperor got rid of opioid addiction when something like one male of eight in China was an opium addict? He didn’t have to kill very many people; he just said death penalty for users, no exceptions. And away went his addiction problem.
“The best thing is to be a good example. Preaching doesn’t work worth a damn.”
“I can’t comment on what Berkshire might do next and at what price. The Nifty Fifty [1970s bubble] – that’s a great question. At its height, a home sewing company was valued at fifty times earnings. The current stock market situation is not as crazy as the Nifty Fifty or the tech bubble of the late 1990s. These companies are actually valuable, some with too high of prices. But the sewing business was sure to fail. That was absolute dementia.”
Think of the basic intellectual dishonesty that comes when you start talking about adjusted EBITDA. You’re almost announcing you’re a flake, yet respectable people talk that way and charge fees for talking that way. It’s just ridiculous, wretched excess. They sell companies from one private equity firm to another just to take fees higher and higher. Finance by its nature goes to wretched excess.
“Solar will be more popular than hydrogen fuel cells will be. Taking the sun’s energy into electricity and into car is a good idea for the long pull, and the tech will work. Some is improving. And it’s all to the good.
I use an inversion process. When I was a meteorologist in World War II, I was told how to draw maps and predict the weather. But I was actually clearing pilots to take flights. Suppose I wanted to kill pilots. What would be the easiest way to do it? Planes flying into icing they couldn’t handle or not having enough fuel and being in a place where they couldn’t land. I made up my mind I was gonna stay miles away from killing pilots. So it was my job to help to avoid those situations. I just reversed the problem. If I want to to fix India, I would say ‘what could I do if I really wanted to hurt India,’ and figure out how to avoid those things.
Constantly invert. Don’t think of what you want, think what you want to avoid. When you think what you want to avoid, you also think of what you want. Peter Kaufman, who’s here today, he likes the idea that you want to know how the world looks from the top looking down, and you want to know what it looks like, from the bottom looking up. If you don’t have both points of view, your reality recognition is lousy. Peter’s right, and inversion is the same thing. It’s a simple trick looking how does this look above me and beneath me, and how can I hurt the people above and beneath me who I want to help.
“Things like complicated technology, I leave to others. I don’t do it. Think where one has the advantage over others and stay there. I won’t go into a pharma trying to guess the next new drug invented, I have no advantage. Others are wise, and I am stupid. Invert. It works better. I look for games where I’m wise and they’re stupid. Believe me, it works a lot better. God bless our stupid competitors. The knowledge of my own competence is important. You have to say ‘this is too tough for me, and I will never figure it out.’ I’m very good at knowing when I can’t handle something.
“The old proprietors of news – the networks and newspapers and magazine monopolies – they were pretty good, and the current bunch is deliberately lying, because it sells better. I liked the old ones better. These guys are so good at marshaling hatred. There was some constructive use, and now they’re overdoing it. It’s too intense and cabbaging up the minds - already broadcasters’ minds are cabbage, and now those of the people who watch, too.”
“Moats been breached time after time. Imagine Eastman Chemical going broke and department stores on the edge of extinction and monopoly news going down and strength of American auto industry now versus 1950. The old classical moats are disappearing rapidly. It’s probably a natural part of the modern economic system that the old moats stop working.
“So many of you want to be rich by being in finance. At multitude, you won’t all be rich. 99% will be the bottom 99%, and that’s the way it’s going to work. In my generation, finance nerds were patient and rational and eventually did well, and one day they saw opportunity and grabbed it.
My best advice, I think you would be happier if you reduced your expectations. Generally it’s a very good idea. It sounds silly but is so obvious. How many in here are content with moderate success? It’s worth knowing because that’s what most of us are gonna get.”
“It’s a long process to become rational. It’s something you get slowly and not some instant result, but it’s better than not having it. It’s hard to know how human civilization oughta be organized. You can see how awful it is for people who don’t have it. They get angry and are always sure they’re right.
I concluded that the social safety net came up enormously as the world got more prosperous. Republicans always opposed it were wrong, and Democrats pushed it too far ahead and were also wrong. What we have is about right, and we wouldn’t have gotten it from either party alone. It’s close to right today, and would not happen if either party was in control. Power does corrupt. The genius of the American system is no one person gets too much power. American civilization wouldn’t be where it is today without it. There’s ebb and flow.”
“Well, it’s obvious that deferred gratifiers do better over the long pull than these impulsive children that have to spend money on Rolex watches or other folly, and not that I’m picking Rolex as any worse than Patek Philip or something. But I think everybody who’s adult should save and not be stupid and spend and defer gratification to get more later, and all those good things that we were taught by Benjamin Franklin – thrift and so forth. And the odd thing about is that people are kind of born deferred gratifiers or not. They’ve done recent psychological work on that subject. Lots of luck if you’re an impulsive person that has to be gratified immediately. You’re probably not gonna have a very good life, and we can’t fix you. But if you have a slight tendency to defer gratification, and you can feed that tendency, you’re on the way to prosperity and happiness. Demand for immediate gratification is the way to ruin. It may also give you syphilis.
“Well, that’s like asking some ordinary klutz who is drunk if he can come up with something like Albert Einstein. It’s just too much Yew was the best nation builder that probably ever existed. What he accomplished in Singapore when you consider what he started with, is a miracle. And of course I don’t know how to create that everywhere. I’m not sure he could’ve done it if he didn’t have a bunch of Chinese there. I’m not sure that any other ethnic group would’ve done it. He had what looked like a terrible hand. By the way, there’s a very interesting story there. He needed an army when he first took over, and nobody would help him. Only one nation in the whole world would help him, and that was Israel. And he said ‘how can I accept? I’m surrounded by Muslims who hate me. How can I accept military advice from Israel? And he finally figured it out. He accepted the help, and he told everybody they were Mexicans. Well with that little joke, we’ll end the meeting.”