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Well, our relationship started in 2009, about 14 years ago. And it was Warren Buffett who introduced us. I met Warren in 2008, because I had participated in the charity food auction he organized every year. And I won that year. Andthen he invited us to have another meal with Charlie. I was just hoping we'd have that meal with him and then it would end there.
But the truth is that it ended up laying the foundation for a great friendship with Charlie. I became his card-playing partner . We used to play bridge every Friday at the Los Angeles Country Club. About 4 hours in the afternoon and we also had a one-hour lunch before that. And lots of jokes about all sorts of things.
And usually, every two or three months, Charlie would ask us to come to his house in Los Angeles for dinner. We had great nights with him. In fact, my last dinner with Charlie was exactly one month before he passed away. It was a great night. Good. Charlie, probably more than Warren, is able to read people really well and really fast.
And I think that, for whatever reason, I passed all their filters. And many times, when he described me to his friends, and I listened to all those comments, they were quite accurate in terms of how he saw me. So it was really surprising how quickly he was able to figure out a lot of things about me.
I would say that there are many things about Warren and Charlie that are in the public domain and we do n't need to know them to learn from them. There are a lot of things we can learn simply from posts, videos, and all that. But I would say that I learned a lot from Charlie , not from the things he told me, although we had interesting conversations, but I learned by observing him.
He had six children, a large extended family, grandchildren, and some great-grandchildren. I had a lot of interaction with his family and you know, his family were conservative, but there were a lot of different types of people in that group. Charlie had the tact to create a good relationship with all of them.
And some of them seemed a little weird or strange or something like that to me. And sometimes I would say that to Charlie and he would reply, "Yeah, I know, but you know, in life we have to deal with that." So I saw the way he created good relationships. And I saw how he was able to understand different business leaders.
He had a deep love for Costco, which we don't have in India yet, but they just entered China and at some point they will enter India. Probably at every dinner we had for at least 20 or 30 minutes there was some detail about Costco that came up in the conversation. It's a big business and Charlie was a director for many decades, so there was a lot to learn there.
In our last meeting we had a good conversation about some stocks, about some of the positions you have recently invested in in the United States. And he seemed very engaged in the conversation. In recent meetings, he always complained that Berkshire had all that cash, 157 billion, the largest amount in history, and that they were unable to find where to invest it.
And you know, the company is making 30 or 40 billion a year. And he was always complaining that they had all that money and couldn't find opportunities. I told him, "You know, Charlie? You guys always have that problem, but somehow, every few years you find a good opportunity, so something will come along." We had a lot of discussions about people, psychology, books, and sometimes I had personal problems and I would tell Charlie about them, and it was spectacular.
He was a great human being with a very broad base of knowledge and thought. Probably the smartest person I've ever met. But his high IQ was coupled with the fact that he read perhaps several hundred books a year for about six or seven decades. And their mental ability to interrelate different things.
For example, I once presented him with a problem concerning my charitable foundation, and although he has never been to India, he always had a way to solve the problem. That was how fast his mind worked. It was incredible to see. Warren and Charlie say they had disagreements many times during the last 60 or 70 years of their friendship, but they never had any arguments.
It was a very good relationship. And the big change that Charlie brought about in Warren was that Warren was a Benjamin Graham-type bargain hunter , trying to find cheap assets. Even if the quality wasn't very good, it was very focused on price. And Charlie convinced him that it was better to buy great businesses at a decent price than decent businesses at a big discount.
This great transformation was a big moment for Warren. And the first time it happened was in 1972, when they bought See's Candies. So they paid several times the book value for the company. But it was a great business. They paid 25 million and have since collected about 2.5 billion in dividends from the company.
And the purchase of See's led them to the purchase of Coca-Cola, which is a great position for them. And in the late 1980s, when they bought Coca-Cola, they put a quarter of the book value of all of Berkshire into Coca-Cola. And they have continued like this ever since, including the Apple acquisition now.
So this has been a big transition. But there have been many changes in Warren that wouldn't have happened without Charlie. If you take Charlie out of the drawing, Berkshire's market capitalization would have been 1% of what it is now. Not 700 billion, but less than 10 billion. So Warren would have been equally successful, but not as successful as he actually has been.
Charlie also convinced Warren that when they bought a business, they shouldn't sell it, because that would have an impact on future sellers. Those who sell their businesses to Berkshire know that when they sell, it's a permanent deal. That the business will not be resold to another investor. So that allows them to close deals that no one else can.
Well, when you see Charlie Munger at the Berkshire annual meetings or any other public appearance, you see a person who is something of a well of wisdom, with all his jokes and all that, but when I interacted with Charlie face to face, I saw that inside that cold exterior there was a very warm person, just like with Warren.
I think they both had that tough exterior because they had to protect themselves from the world and all that. But when you got through that exterior, there was a warm and kind soul, with a high degree of empathy. So he was extremely good as an investor and he was really good at understanding people.
He was extremely interested in people, to the point that he would ask me a lot of questions about the students in my foundation and their career paths. He was very committed on a human level. I traveled by bus almost until the end . Berkshire owns NetJets, they have private planes, but Charlie liked to travel in economy class.
And he did it because he said he didn't want to lose his common sense. I wanted to continue interacting with normal people. So sometimes I would go to a Costco board meeting on a low-cost Southwest Airlines flight, in a middle seat. And he was a big man, he was carrying a book and he didn't care, it was irrelevant.
He would even show affection for those who sat next to him. He was like a modern-day Ben Franklin. I think the person most similar to Charlie would have been Ben Franklin. And you know that the United States would not exist without Benjamin Franklin. They would not have existed. He was a very unusual man and had a great impact on the formation of the country.
And he had many similarities with Charlie. Basically, he was a big advocate of betting big when the odds are in your favor. He wanted few bets, and for them to be large and infrequent. So I really learned the value of investment concentration from Charlie. He always said that it was very rare to find great investment ideas.
Perhaps in life, if we're lucky, we'll find half a dozen really good investment ideas. Perhaps one every 5 or 10 years. And when we have one of those ideas and it hits us on the head, you basically have to go all in. And you know that investing is a business with a high degree of error. The best investors will be wrong half the time.
But you know, something that represents 10 or 15% of your portfolio can end up multiplying by 50 or 100. So it really doesn't matter what happens with the rest of the portfolio. Simply by keeping things good. And those were some of the important lessons. Basically, use the time to try to understand the business extremely well.
Make sure it's within your circle of competence. And then, don't be shy. I believe that if we are going to make an investment and we do it for the long term, we are not going to be looking at what happens next week, next month or next quarter. In these types of investments, we may not see results for several years.
Or maybe we'll get lucky and the rating will reflect the correct thing in 6 months or a year. But basically we can't be thinking about buying stocks. We have to think of it as buying a fraction of a business. And when we buy these businesses, the first question we should ask ourselves is, "How much can I buy the whole business for?" Sometimes people say, "Hey, Apple is $ 150.
Should I buy it?" And I ask that person, "What is Apple's market capitalization?" And they have no idea what it is. So the first question when you're trying to buy a business is, " How much would you pay for the entire company?" And the second question is if you are interested in buying the business, would you be willing to put a third of all your family's assets into buying the entire company?
If the answer is no, you shouldn't buy a single share. It's the long-term ownership mindset that I've really learned from Charlie. Ah!
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