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한 줄 결론: 찰리 멍거는 재단들이 복잡하고 고비용인 투자 구조(펀드오브펀드·컨설턴트 계층)를 버리고, 버크셔 해서웨이처럼 소수의 우량 국내 기업에 장기 집중 투자하는 것이 낫다고 주장한다. 재단 투자 구조 비판: 대형 재단이 컨설턴트, 증권 애널리스트 등 여러 계층에 의존하면서 연간 총비용(수수료·매매비용 포함)이 순자산의 약 3%에 달할 수 있다고 지적한다. 이 비용은 회계에 잘 드러나지 않는다. 비용의 산술적 효과: 실질 총수익률이 5%라면 비용 3%와 기부금 5%를 빼면 연 3%씩 자산이 줄어든다. 투자자 전체의 성과는 비용만큼 불리해지고, 중간값 이하 성과를 내는 절반의 투자자가 생긴다. 과신 경고: 사람들은 자신을 평균 이상으로 여기는 과신 경향이 있다. GM의 4도어 설계 실패와 LTCM의 고레버리지 실패를 예로 들어, 과도한 전문성과 절차가 오히려 과신을 낳는다고 경고한다. 대안 세 가지: (1) 컨설턴트를 없애고 인덱스 투자로 전환, (2) 버크셔처럼 소수 우량주에 거의 무매매로 장기 보유(연 비용 0.1% 미만), (3) 벤처·LBO·차익거래 등 레버리지 펀드 추가. 멍거는 1번 인덱싱이 대부분의 재단에 현재 방식보다 낫다고 본다. LBO 펀드 비판: 기업 인수에 고레버리지와 이중 성과보수를 쓰므로 주식시장이 나쁘면 재앙이 될 수 있고, 경쟁 과열로 매력이 낮아졌다고 평가한다. 집중투자 옹호: 소수 기업에 대한 높은 집중(예: 한 종목 90%)도 합리적일 수 있으며, 벤저민 프랭클린의 유산 운용 방식이 그 예라고 말한다. 해외 투자는 코카콜라·질레트처럼 해외 사업을 하는 미국 기업을 통해 간접 참여하는 편을 선호한다. 사회적 비판: 금융 투자로 우수한 청년 인재가 쏠리는 것은 사회적으로 해롭다며, 가치를 더 많이 창출하는 직업 모델을 장려해야 한다고 주장한다. 예측: 재단이 버크셔식 투자 방식을 따른다면 장기적으로 후회할 일이 적을 것이라고 예상한다.
다듬은 글
foreign this is a reading of notes of a lecture by Charlie Munger to a meeting of the foundation Financial officers group at the Miramar Sheraton Hotel Los Angeles on October the 14th 1998 brought to you by IDP YouTube channel I am speaking here today because my friend John argue asked me and John well knew that I who unlike many other speakers on your agenda have nothing to sell any of you would be irreverent about much current investment practice in large institutions including charitable foundations therefore any hostility my talk will cause should be directed at John argue who comes from the legal profession and may even enjoy it it was long the norm at large charitable foundations to invest mostly in unleveraged marketable domestic Securities mostly equities the equities were selected by one or very few investment counseling organizations but in recent years there's been a drift towards more complexity some foundations following the lead of Institutions like Yale have tried to become much better versions of Bernie cornfeld's fund of funds this is an amazing development few would have predicted that long after cornfeld's fall into disgrace leading universities would be leading foundations into cornfeld system now in some foundations there are not a few but many investment counselors chosen by an additional layer of Consultants who are hired to decide which investment counselors are best help in allocating funds to various categories make sure that foreign Securities are not neglected in favor of domestic Securities check validity of claimed investment records ensure that claimed investment styles are scrupulously followed and help augment an already large diversification in a way that conforms to the latest Notions of corporate finance professors about volatility and beta but even with this amazingly active would-be polymathic new layer year of consultant choosing Consultants the individual investment counselors in picking Common Stocks still rely to a considerable extent on a third layer of Consultants the third layer consists of the security analysts employed by investment Banks be security analysts receive enormous salaries sometimes set in seven figures after bidding wars the hiring investment Banks recoup these salaries from two sources one commissions and trading spreads borne by security buyers some of which are rebated as soft dollars to money managers plus two Investment Banking charges paid by the corporations which appreciate the enthusiastic way their Securities are being recommended by the security analysts there is one thing sure about all this complexity including its touches of behavior lacking the full punctilo of Honor even when nothing but unleveraged stock picking is involved the total cost of all the investment management plus the frictional costs are fairly often getting in and out of many large investment positions can easily reach three percent of foundation net worth per annum if foundations urged on by Consultants add new activity year after year this full cost doesn't show up in conventional accounting but that is because accounting has limitations and not because the full cost isn't present next we come to time for a little arithmetic it is one thing each year to pay the croup years three percent starting wealth when the average Foundation is enjoying a real return say of 17 before the croup years take but it is not written in the stars that foundations will always gain 17 gross a common result in recent years and if the average annual gross real return from indexed investment in equities goes back say to five percent over some long future period and the croupier's take turns out to remain the waste it has always been even for the average intelligent player then the average intelligent foundation will be in a prolonged uncomfortable shrinking mode after all five percent minus three percent minus five percent in donations leaves an annual shrinkage of three percent all the equity investors in total will surely bear a performance disadvantage per annum equal to the total croupier's costs they have jointly elected to bear this is an unescapable fact of life and it is also unescapable that's exactly half of the investors will get a result below the median result after the cruciers take which median result May well be somewhere between unexciting and lousy human nature being what it is most people assume a way worries like those I raise after all five centuries before Christ the muffins noted that what a man wishes he will believe and in self-appraisals of prospects and talents it is the norm as demosis predicted for people to be ridiculously over optimistic for instance a careful survey in Sweden showed that ninety percent of automobile drivers consider themselves above average and people who are successfully selling something as investment counselors do make Swedish drivers sound like depressives virtually every investment expert's public assessment is that he is above average no matter what is the evidence to the country but you may think my Foundation at least will be above average it is well endowed high is the best and considers all the investment issues at length with objective professionalism and to this I respond that in excess of what seems like professionalism will often hurt you horribly precisely because the careful procedures themselves often lead to overconfidence in their outcome General Motors recently made such a mistake and it was a Lollapalooza using fantasy consumer surveys its excessive professionalism it concluded not to put a fourth door in a truck designed to serve also as the equivalent of a comfortable five-passenger car its competitors more basic had actually seen five people enter and exit cars moreover they'd noticed that people were used to four doors in a comfortable five-passenger car and that biological creatures ordinarily prefer effort minimalization in routine activities and don't like removals of long enjoyed benefits there are only two words that come instantly to mind in reviewing General Motors horrible decision which has blown up many hundreds of millions of dollars and one of those words is oops similarly the hedge fund known as long-term Capital Management recently collapsed through overconfidence in its highly leveraged methods despite IQs of its principles that must have averaged 160.
smart hard-working people aren't exempt from professional disasters from overconfidence often they just go around in the more difficult voyages they choose relying on their self-appraisals that they have Superior talents and methods it is of course irritating that extra caring thinking is not all good but also introduces extra error but most good things have undesired side effects and thinking is no exception the best defense is that of the best physicists who systematically criticize themselves to an extreme degree using a mindset described by Noble Laureate Richard Feynman as follows the first principle is that you must not fool yourself and you're the easiest person to fool but suppose that an abnormally realistic Foundation thinking like Feynman fears of poor future investment outcome because it is unwilling to assume that its unleveraged equities will outperform Equity indexes minus all the investment costs merely because the foundation has adopted the approach of becoming a fund of funds with much investment turnover and layers of Consultants that consider themselves above average what are these fearful foundation's options as it seeks improved prospects there are at least three modern choices one the foundation can both dispense with its consultants and reduce its investment turnover as it changes to indexed investment inequities number two the foundation can follow the example of Berkshire Hathaway and thus get total annual croupier costs below one tenth of one percent of principal per annum by investing with virtually total passivity in a very few much admired domestic corporations and there is no reason why some outside advice can't be used in this process all the fee payer has to do is subtly control the high talent in investment counseling organizations so that the servant becomes the useful tool of its Master instead of serving itself under the perverse incentives of a sort of Mad Hatter's Tea Party three the foundation can supplement unleveraged investment in marketable equities with the investment in limited Partnerships that do some combination of the following unleveraged investment in high-tech corporations in their infancy leveraged investments in corporate buyouts leveraged relative value trades and equities and leveraged convergence trades and other exotic trades in all kinds of Securities and derivatives for obvious reasons given by purveyors of indexed equities I think Choice One indexing is a wiser choice for the average Foundation than what it is now doing in unleveraged equity investment and particularly so as its present total croupier costs exceed one percent of principal per annum indexing can't work well forever if almost everybody turns to it but it will work all right for a long time choice three investment in fancy limited Partnerships is largely beyond the scope of this talk I will only say that the manga Foundation does not so invest and briefly mention two considerations bearing on lbo funds the first consideration bearing on lbo funds is that buying a hundred percent of Corporations with much financial leverage and two layers of promotional carry one for the management and one for the general Partners in the lbo fund is no sure thing to outperform equity indexes in the future if Equity indexes perform poorly in the future in substance our lbo fund is a better way of buying equivalents of marketable equities on margin and the debt could prove disastrous if future marketable Equity performance is bad and particularly so if the bad performance comes from generally Bad Business conditions the second consideration is increasing competition for lbo candidates for instance if the lbo candidates are good service corporations General Electric can now buy more than 10 billion worth per year in ge's Credit Corporation with 100 debt financing and an interest rate only slightly better than the US government is this sort of thing is not ordinary competition but super competition and there are now many lbo funds both large and small mostly are washing money and with General Partners highly incentivized to buy something in addition there is increased buying competition from corporations other than GE using some combination of debt and equity in short in the lbo field there is a very covariance with marketable equities toward disaster in generally Bad Business conditions and competition is now extreme given time limitation I can say no more about limited Partnerships one of which I once ran this leaves for extensive discussion of only foundation Choice 2.
more imitation of the investment practices of Berkshire Hathaway in maintaining marketable Equity portfolios with virtually zero turnover and with only very few stocks chosen this brings us to the question of how much investment diversification is desirable in foundations I have more than skepticism regarding the Orthodox view that huge diversification is a must for those wise enough so that indexation is not the logical mode for Equity investment I think the Orthodox view is grossly mistaken in the United States a person or institution with almost all the wealth invested long term in just three fine domestic corporations is securely rich and why should such an owner care if at any time most other investors are faring somewhat better or worse and particularly so when he rationally believes like Berkshire that his long-term results will be superior by reason of his lower costs required emphasis on long-term effects and concentration in his most preferred choices I go even further I think it can be a rational choice in some situations for a family or for a foundation to remain 90 percent concentrated in one Equity indeed I hope the mongers follow roughly this course and I note that the Woodruff foundations have so far proven extremely wise to retain and approximately 90 percent concentration in the founders Coca-Cola stock it would be interesting to calculate just how All American foundations would have fared if they had never sold a share of founders stock very many I think would now be much better off but you may say the diversifiers simply took out insurance against a catastrophe that didn't occur and I reply there are worse things than some foundations losing relative clout in the world and Rich institutions like Rich individuals should do a lot of self-insurance if they want to maximize long-term results furthermore all the good in the world is not done by Foundation donations much more good is done through the ordinary business operations of corporations in which the foundations invest and some corporations do much more good than others in a way that gives investors their in better than average long-term prospects and I don't consider it foolish stupid evil or illegal for a foundation to greatly concentrate investment in what it admires or even loves indeed Ben Franklin required just such an investment practice for the charitable endowment created by his will one other aspect of berkshire's equity investment practice deserves comparative mention so far there has been almost no direct foreign investment at Berkshire and much foreign investment at foundations regarding this Divergent history I wish to say that I agree with Peter Drucker that the culture and legal systems of the United States are especially favorable to shareholder interests compared to other interests and compared to most other countries indeed there are many other countries where any good going to the public shareholders has a very low priority and almost every other constituency stands higher in line This factor I think is underway Aid at many investment institutions probably because it does not easily lead to quantitative thinking using modern Financial technique but some important factor doesn't lose share of force just because some expert can better measure other types of force generally I tend to prefer over direct foreign investment butcher's practice of participating in foreign economies through the likes of Coca-Cola and Gillette to conclude I will make one controversial prediction and one controversial argument the controversial prediction is that if some of you make your investment style more like Berkshire Hathaways in a long-term retrospect you'll be unlikely to have cause for regret even if you can't get Warren Buffett to work for nothing instead Berkshire will have cause for regret as it faces more intelligent investment competition but Berkshire won't actually regret any disadvantage from your Enlightenment we only want what success we can get despite encouraging others to share our general views about reality my controversial argument is an additional consideration weighing against the complex high-cost investment modalities becoming ever more popular at foundations even if contrary to my suspicions such modalities should turn out to work pretty well most of the money making activity would contain profoundly anti-social effects this would be so because the activity would exacerbate the current harmful Trend in which ever more of the nation's ethical young brain power is attracted into lucrative money management and its attendant modern frictions as distinguished from work providing much more value to others money management does not create the right examples early Charlie Munger is a horrible career model for the young because not enough was delivered to civilization in return for what was rested from capitalism and other similar career models are even worse rather than encourage such models a more constructive choice at foundations is long-term investment concentration in a few domestic corporations that are wisely admired why not thus imitate Ben Franklin after all Ben was very effective in doing public good and he was a pretty good investor too better his model I think than Bernie cornfeld's the choice is plainly yours to make this audio is brought to you by IDP YouTube Channel please subscribe to not miss out on the best of Warren Buffett Charlie Munger and Ben Graham We would also highly recommend checking out our Channel's playlists
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