Charlie Munger on Sin & Virtue, Market Agnosticism, and Rats in the Granary || Q&A Transcript (2012)
"Berkshire has a standard catechism," said Munger, "and it doesn't change much."
In 2012, Berkshire Hathaway vice chairman Charlie Munger sat down for an interview with CNBC’s Becky Quick on the eve of that year’s annual shareholders meeting. Enjoy!
Becky Quick: First of all, thank you very much for joining us today.
Charlie Munger: Delighted.
So what’s new?
Well, not much. Berkshire has a standard catechism — and it doesn’t change much.
Well, that’s good news. Kind of like when you said your flight was uneventful. We like to hear news like that.
Yes.
What’s different in the last couple of months is that Warren has come out with his news about the prostate cancer.1 What was your reaction when he told you?
I regard it as a total non-event. I would bet a lot of money that I have more than he does. I don’t even allow them to check for it.
Why?
I think it’s likely to cause them to do a dumb thing. So when my doctor puts down PSA test, I just cross it out.
One thing that it has brought to attention, though, is the succession plan. How do you feel about the succession plans that Berkshire has already laid out?
I’ve never been more comfortable about succession or duration of culture than I am right now. Our new investment people show enormous promise.
Todd and Ted?
Yes. It was good that we were provoked into doing that by Lou’s retirement.2 I have enormous confidence in the continuation of the culture.
You are 88 years old now and you’ve watched a lot of things that have taken place. I think our viewers can learn a lot from your perspective as an investor. You are one of the greatest investors of all time. Is there anything happening in the investing or business world right now that seems like deja vu to you?
Well, it’s always a little different. People are always quoting Mark Twain — perhaps the comment was apocryphal — that “history doesn’t repeat itself, but it rhymes”. So, sure, a lot is the same. The panic that came as a predecessor of the Great Recession had common themes that are always the same. The crazy greed, the crazy leverage, the crazy delusions. I think we were very lucky that the outcome wasn’t worse. If there were a just God, we deserved worse than we got.
Did you see that coming?
Well, of course, we knew it was coming. People would say, “What do you think about the crazy consumer credit or the crazy this, the crazy that? What’s going to happen?” And I always said it’s going to have a very bad result — but I can’t tell you when.
Is there anything you see happening right now that could have a bad result? One thing that comes to mind is what’s been happening with the very easy central bank policy with central banks around the globe.
I think that the central banks were sort of forced into that. What was wrong was not the central bank reaction — which I think was correct. They went to the whip. They don’t have an unlimited number of weapons. We would be in way worse shape if both political parties hadn’t backed huge central bank intervention.
The big mistake was made by allowing the boom to go so crazy — and so much evil and folly to run so rampant. [Alan] Greenspan, to his credit, has since recognized that he was wrong. He is the only one who has done that.
Everyone else has managed to look at this enormous denouement and leave the previous ideas intact. That’s a common human way of handling things. No matter how bad the evidence, you just keep your previous conclusions.