Buffett & Munger: A Wealth of Wisdom || Q&A Transcript (2021)
"You want to have certain people in life that you don’t want to disappoint," said Buffett. "You want to have people who make you a better person than you otherwise would be."
On June 29, 2021, CNBC celebrated Warren Buffett and Charlie Munger’s remarkable business partnership with an hour-long televised special. The centerpiece was a joint Buffett-Munger interview hosted by Becky Quick — with topics ranging from recent headline-making financial scandals to memories of early days at Berkshire Hathaway.
CNBC published an unofficial transcript of this interview — but I think such an important conversation deserves a more polished and readable record for posterity.
Becky Quick: Warren Buffett and Charlie Munger — friends for more than six decades [and] business partners for more than five — together sitting atop one of the country’s biggest companies, Berkshire Hathaway.
Buffett, the chairman and CEO, known as the Oracle of Omaha, amassed a more than $100 billion fortune running the conglomerate, acquiring stocks and companies from his office in Omaha, Nebraska — and vice chairman Munger, who grew up less than a mile from Buffett, a lawyer by training but an investor by practice. They met as adults after Munger had moved to his current home, Los Angeles.
From 1,500 miles apart, the duo built Berkshire Hathaway from a single textile mill to a $650 billion powerhouse — running companies from railroad operator Burlington Northern Santa Fe and insurance company GEICO to Fruit of the Loom, Dairy Queen, and Clayton Homes and managing a portfolio of $300 billion in shares of companies like Apple, Bank of America, and Coca Cola.
Tonight, we bring you the story of perhaps their greatest accomplishment — sixty years of friendship — and the lessons they’ve learned from each other along the way in business and life. 90-year-old Buffett, a man of many words, and 97-year-old Munger, a man of fewer, but his are more pointed.1
Buffett and Munger’s outspoken nature and their refusal to chase hot market fads that stray from fundamental market analysis don’t always win them friends — like their take on Bitcoin.2
And while the pair delivered market-beating performances with the Berkshire portfolio for four-and-a half-decades, they have lagged the S&P 500 for the last five and ten years — leading some to question whether they’ve lost their touch. They’re not concerned.
We asked Munger and Buffett their thoughts on some of the latest headlines in the business world. Those that could have a lasting impact on how markets operate — beginning with Credit Suisse’s $5.5 billion dollar loss stemming from its business with Archegos Capital Management.
Charlie Munger: Think of how massively stupid that was. And, of course, it was the lure of the really easy money that the idiot was paying you [to] be the prime broker for a jerk. He was a convicted insider trader that came out of the craziest part of the hedge fund industry. They were getting unusual profits by extending unusual credit. I mean, the world was shouting at them, “Crook! Fool!” And they didn’t listen. They thought, “This is where the easy money is. Crooks and fools.” We don’t like either of [those].
Warren Buffett: One rule that we learned a long time ago is that you can’t make a good deal with a bad person. Just forget it. If you think you can draw up a contract that is going to work against a bad person, they’re going to win. For one thing, they probably enjoy litigation. Berkshire Hathaway as an entity — or me personally — we don’t want to spend our life doing that sort of thing. And, besides, the bad guys win. They know more games. They may lose eventually in the [end], but it’s no way to spend your life.
Quick: Charlie, it wasn’t just Credit Suisse that got pulled in by that. There were a lot of firms that were doing business with Archegos.
Munger: Yes, yes, they were all foolish — but Credit Suisse has managed to be the biggest fool of all.3 [But] there’s a lot of competition for that honor.
Buffett: If you look back — after the great crash — in 1932 and ’33, they held these hearings and they decided that unusual amounts of leverage were one cause of the problem in 1929 and that it could pose dangers even to the economy. So they gave the Federal Reserve Board the right to establish how much people could borrow against stocks. Margin requirements.
Munger: Which was a very good idea.
Buffett: It was a terrific idea.
Munger: Totally sound.
Buffett: The Federal Reserve, between 1934 and 1973, used that power I think 23 or 24 times. They even raised margins to 100%. They were the regulators of determining whether excess leverage might have systemic problems associated with it. The rule in 1973 or ’74 was 50%. The rule today is 50%. In the last forty-some years, it had 23 changes. It went to 100%. It went down to 20%. It had all kinds [of changes]. It was the signal to the economy and all kinds of things. And, essentially, Wall Street figured out how to get around that.
Munger: They lobbied through changes in the law —
Buffett: Yeah.
Munger: — so they could have unlimited leverage and keep the transactions off the books and subject to murky accounting.
Quick: The banks would say, “We made it through this. We absorbed all the problems ourselves and many of us won’t even take a substantial hit on the balance sheet for it.”
Munger: There’s an old story about all of these banks that think they’ve done so well. These two guys are fighting with razors. One takes a big swipe and the other guy says, “You missed me!” and the [first] guy says, “Wait until you shake your head.”
Quick: So what would you tell regulators today?