저자: 미상 · 한국인
요약 보기
찰리 멍거의 투자 철학과 삶의 지혜를 낭독하는 오디오북 영상. 빠른 부자 욕심과 빚투를 경계하고, 장기 보유와 인내를 강조. 결론: 단기 가격 예측 대신 좋은 기업을 싸게 사서 오래 보유하라는 장기 투자 메시지이며, 특정 종목의 방향 예측은 없음. 투자 철학: 단기 주가 방향에 베팅하는 것은 도박과 다르지 않으며 위험하다. 주가는 기업 본질과 무관한 사건으로도 크게 흔들린다. 레버리지: 대출로 투자하면 작은 변동이 큰 이익이 되지만 폭락 시 전부 잃을 수 있다(9/11 사례 언급). 멍거도 나이 들며 빚을 최대한 피했다. 능력 범위: 자신이 모르는 것을 아는 것이 천재가 되는 것보다 유용하다. 1990년대 후반 인터넷 버블 때 이해하지 못한 기업에 투자하지 않아 버블 붕괴 후 현명했음이 입증되었다. 가치투자 계보: 그레이엄은 장부가치 이하 종목을 선호했으나 보유 기간 개념이 부족했다. 멍거와 버핏은 코카콜라처럼 장기 경쟁력이 있는 기업을 낮은 PER에 사 장기 보유했다(1988년 13억 달러 투자가 약 170억 달러로 성장, 연평균 약 10% 언급). 시장 대응: 시장 패닉으로 좋은 기업이 싸질 때가 기회이며, 그때 크게 베팅하라. 시장 예측은 불가능하므로 현금을 보유하고 기다린다. 현금 10백만 달러 비축 조언. 세금·인내: 장기 보유 시 매매 세금을 줄여 연 1~3% 효과가 있다. 인내는 자산이다. 기타 교훈: LTCM 붕괴 사례로 똑똑한 사람과 과도한 레버리지의 결합 위험을 경고. 전문화, 검소함, 이념 경계, 지속적 독서를 강조. 출연자 전망: 특정 종목·자산에 대한 1~3개월 가격 방향 예측 발언은 없음.
다듬은 글
Hello, this is Book Mom My Imagination Library. Today, I would like to read aloud the words of Charlie Munger, a book filled with wisdom by Warren Buffett's lifelong companion and a master of investment philosophy. Charlie Munger was not merely a simple investor, but a figure who left behind deep insights into a wise mindset and attitude toward life.
His words can serve as a powerful tool that goes beyond simple stock investment methods to change our lives and ways of thinking. Today, let's take some time to read together and deeply feel the insights and lessons Charlie Munger conveys. Shall we begin? **Ilhak Cheonggeum** begin? **Ilhak Cheonggeum** begin?
**Ilhak Cheonggeum** The desire to become rich quickly is extremely dangerous. Trying to get rich quickly is risky because it is no different from gambling on the short-term price direction of any stock or other asset. There are many people engaging in the same gamble, but among them are those who possess much higher quality information than others.
Furthermore, the short-term price direction of any securities or derivative contract can undergo massive fluctuations due to events that have absolutely nothing to do with the fundamental business or the actual long-term value of the asset. Finally, regarding loan issues: People often use loans or debt as a way to quickly build fire, amplifying small price fluctuations into enormous profits.
If things go wrong, price fluctuations can be catastrophic. It can lead to losses. Let's say you took out a loan to buy stocks, believing things would go well. However, if a terrible event like 9/11 occurs and the market crashes, you could lose everything in an instant. Charlie had previously taken out massive loans for stock arbitrage, but as he grew older, he realized he was putting himself at great risk.
Therefore, he tried to avoid incurring debt at all costs. Instead, he invested in a company's long-term growth potential rather than short-term stock price fluctuations. The scope of one's capabilities. Knowing what you don't know is more useful than being a genius. What Charlie is trying to convey here is that we should become aware of what we don't know and, based on that realization, stay away from investing in businesses we do not properly understand.
In the late 1990s, when the bull market peaked in tech stocks, countless smart people fell into the temptation of investing in internet-related stocks. Because Charlie was well aware of the limits of his capabilities, he realized that he did not understand the new internet business. Therefore, he was able to prevent not only himself but also Berkshire Hathaway from investing in internet-related stocks.
Many people on Wall Street thought Charlie had lost his investment sense. However, when the bubble finally burst and the stock prices of internet-related companies... Stock prices plummeted. It was only after many lost large sums that they realized Charlie’s decision not to invest was wise. How not to be a fool: To become smart, people simply try not to be stupid.
However, that is harder than people think. Charlie’s investment philosophy is based on the theory that undervalued stocks arise because the stock market often fails to see a company’s long-term value and treats it with a shortsighted perspective. When Charlie discovered an undervalued stock, he would buy it and hold it for the long term, waiting for the economic conditions underlying the business to drive up the price.
Charlie says the only thing an investor must watch out for is not doing stupid things. In this context, stupidity generally refers to committing the sin of negligence. For instance, failing to act even after discovering a good investment opportunity, or buying too little of a stock even when it is clearly an opportunity.
However, avoiding this is actually more difficult than one might think. Easy fishing: If I had to catch fish in a fishbowl, I would drain the water from the tank first. The stock market is sometimes shortsighted, so it offers investment opportunities that are too obvious to refuse. This situation usually occurs when a panic breaks out in the stock market, causing investors to withdraw funds from everywhere.
Even in things that would bring profits in the long run, such a flight is like draining the water from a fishbowl. When stock prices fall, it becomes easier to discover fish—that is, undervalued, excellent businesses. Realization: By realizing that one could purchase goods cheaply based on the quantitative methodology that Graham had championed, one was able to think about better businesses.
Benjamin Graham was the elder of value investing and was Warren Buffett's teacher and mentor. For him, value investing meant buying stocks at a price lower than their intrinsic value. This meant he preferred stocks trading at about half their book value or those with very low price-to-earnings ratios.
Between 1933 and 1965, anyone could find such stocks if they worked hard enough. The problem with Graham's investment philosophy was that it required investors to sell their holdings when the stock reached its intrinsic value. It lacked the concept of holding a company for 20 years or longer, and that the fundamental nature of the business would grow the company and raise the stock price.
Charlie and Wallace realized that some businesses have the economic conditions in place, causing the intrinsic value of the business to increase over time. These excellent companies Common stock is like an equity-linked bond combined with interest at a rising rate. For example, when Berkshire Hathaway began buying Coca-Cola stock in 1908, the stock was generating a profit of $0.18 per share, and the earnings per share growth rate was recording about 16% annually.
Berkshire paid roughly $3.24 per share, which represents the price-to-earnings multiple, a figure that was considered too high from the perspective of someone like Graham. However, Charlie and Warren saw what Graham failed to see: Coca-Cola's long-term business competitiveness lowers the price-to-earnings multiple.
They viewed Coca-Cola's stock as similar to an equity-linked bond yielding an initial return of 5.55%, and this return continues to rise as earnings per share increase. Over time, the market would drive up the company's stock price in line with Coca-Cola's profit growth. So, what happened to the Berkshire cushion?
Berkshire invested $1.299 billion in Coca-Cola in 1988, and over the past 20 years or so, the initial investment It has reached a value of $17.0084 billion. This signifies an average annual growth rate of 10.04%, and this figure does not include dividends during that period. In 2015 alone, Coca-Cola paid Berkshire $528 million in dividends, which amounts to 40% of Berkshire's initial investment of $1.299 billion.
Over the next five years, Coca-Cola will pay Berkshire approximately $2.64 billion in dividends. The Coca-Cola business is doing exceptionally well, and so are Berkshire's assets. Graham's Error: Benjamin Graham had to learn a great deal after becoming an investor. All his ideas regarding corporate valuation were influenced by the Great Depression, a crash that nearly destroyed him.
The Great Depression left a terrifying aftermath for the rest of Graham's life, and all his methodologies were designed to prevent that fear. The stock market crash of October 29, 1929, was harsh on Graham. The subsequent events in 1932... The crash was a tremendous shock. Following the crash of 1929, stock prices began to rebound, reaching a 30% increase by 1931.
The crash in 1932 was completely unexpected; as the worst crash of the 20th century, the composite stock price fell by 89%. If you had invested $1,000 in the Dow Jones Index on September 3, 1929, that money would have shrunk to $109 by July 8, 1932. Subsequently, Graham developed the concept of a "margin of safety" to protect himself.
It was an idea borrowed from bond analysis to overcome the fear of bankruptcy, the essence of which is to take a numerical approach when evaluating value. Graham compared the price of a single share to its book value to find companies selling for less than their book value. He adopted an approach of purchasing entire businesses by using a method that compares the current stock price with the book value.
For example, assuming the total valuation of a company is $10 million, Graham investigates the company's claimed price in the stock market. If that company has 1 million shares If he issues stock at a price of $6 per share, he perceives that the stock market values the entire company at $6 million.
In this case, the intrinsic value of the company is $10 million, providing a margin of safety of $4 million. Therefore, he believes that even if the stock market crashes, the company's actual value of $10 million will eventually drive the stock price back up. A drawback of Graham's investment philosophy is that a stock must be liquidated once the price reaches its initially calculated intrinsic value.
There is no concept of holding Charlie and Walzer stocks for the long term, such as for 30 or 40 years. If Graham had purchased Berkshire Hathaway in 1974 when it was selling for half its book value, he likely would have liquidated it in 1980 when it surpassed the book value. Consequently, he would have missed the opportunity to sell Berkshire Hathaway stock for $210,000 per share in 2016.
Graham's investment philosophy is designed to ensure investors make money and avoid losses. However, conversely, this [represents] the complex effects generated by great businesses over periods of 10, 20, or more. Finding a mispriced gamble that prevents you from experiencing the benefits—that is investment.
The price of the gamble is mispriced. To know this, you must possess the necessary knowledge. That is value investing. When the stock price deviates from its future value, that stock is precisely a mispriced gamble. If the stock price is higher than its value, it means the stock is overvaluing the company's long-term prospects.
Conversely, if the stock price is lower than its value, it means the stock is undervaluing the company's long-term outlook. When the stock price starts to fall, it is priced low relative to the company's long-term prospects. At this point, the probability of winning is high, so you should buy the stock.
Why does this phenomenon occur? It is due to the short-sighted nature of institutional investors who lead the market. They are interested in where the stock price will head over the next six months. Charlie, on the other hand, is interested in which direction the business conditions underlying a company will head over the next ten years.
The opportunity for a mispriced gamble—that is, a buying opportunity—is created precisely from this difference. Adult dog, designation. I have never once predicted anything accurately. I do not make money through accurate predictions; I simply enter a good business and stay there. Charlie is good at weather, election results, the economy, the stock market, and especially the future of the stock market.
He could n't predict it. Charlie dismissed the talk in economic journals about what would happen in the stock market as nonsense. Charlie was simply looking for opportunities to buy good businesses at good prices. However, he foresaw one thing: that there are bound to be periods of dizzying booms and rapid stock price increases in the stock market, usually followed by severe depression and a disastrous crash.
So, could he accurately predict when such moments would occur? No, he could n't. However, knowing that such things happen, he simply had to wait with patience. The Importance of Cash: Keeping $10 million in your account in preparation for a good opportunity is the way to become rich. Charlie advises keeping $10 million in cash on hand.
Berkshire holds $ 7.2 billion in cash while waiting for a good opportunity. The poor returns from holding cash are offset by discovering excellent businesses later and generating high returns over a long period. This is the primary investment methodology. Patience: My secret to success is being able to pay attention for a long time.
For an investor, patience is a virtue and an asset. Most people think that patience is simply staying on a few investments forever and calmly waiting for their value to rise. In Charlie's view, patience is cash It involves accumulating shares and calmly waiting for the price of a great company to drop.
This also includes maintaining focus until you find a great company that sells at a reasonable price. The concentration skills required to become a lawyer or a doctor are equally necessary to become a great investor. If you invest by sitting on it, sit on it for a long time. You pay lower fees and listen to less nonsense from brokers.
You can also receive a tax benefit of 1 to 3% whenever your investment performs well. Charlie believes that it is better to purchase businesses with sound economic conditions and hold them for a long time than to endlessly buy and sell to predict market trends. If you buy and sell without actual activity, you must continue to pay taxes.
If you hold a stock for 20 years, you pay taxes just once, and Charlie says that has the effect of receiving a tax benefit of approximately 1 to 3% annually. A 3% difference may not seem like much, but your perspective will change if you actually do the calculations. If a $1 million investment yields a 4% return annually, it becomes $2,190,113 after 20 years.
Adding 3 percentage points, a $1 million investment generates a 7% return over 20 years, and after 20 years... It becomes $3,869,684. Charlie knows that for businesses with excellent capital environments, time is likely to be a good friend, while for ordinary businesses, time is likely to be a curse.
Remember that good investment ideas are rare at the moment of a big bet. If the odds of winning are really high, bet big. Even if there is a very good investment opportunity right in front of you, most investors only invest small amounts little by little. You cannot make big money that way. So when is the opportunity?
Charlie buys as much as possible when stock prices plummet due to macroeconomic events. Let's remember: in Charlie's world, if you invest in a company with long-term growth potential, the lower the stock price falls, the greater the opportunity. That is when Charlie says to bet big. "Evid" refers to profit before interest, taxes, depreciation, intangible assets, and triangular expenses.
Charlie considers interest, depreciation, and taxes to be very tangible expenses that must be paid. Interest and taxes must be paid in the relevant year, while triangular expenses are costs that must be paid later. For example, if a factory and equipment eventually need to be replaced, the costs incurred are depreciation, and the costs incurred for replacement are capital loss.
And Capital loss can ruin a business that appears outstanding in every other respect. In Charlie's view, using EBITDA to gauge a company's profits can lead to a miscalculation of its actual management status. Overconfidence: Even smart people can cause catastrophic accidents in their areas of expertise if they are overconfident.
In this context, the catastrophic accident is the collapse of Long-Term Capital Management, a hedge fund founded in the late 1990s by John Meriwether, a prominent Wall Street bookmaker. Meriwether assembled the smartest people from Wall Street and academia, including PhDs in mathematics and economics as well as Nobel Prize winners.
These geniuses formulated a strategy to invest in bonds and derivatives using massive leverage, which, if successful, would yield enormous returns to their investment partners. The problem was that the potential losses from this strategy were catastrophic. Meriwether believed that a trading strategy using bond spreads could serve as a decisive mechanism.
It was a strategy that measured historical spreads between very similar bonds, such as the spread of 2-year Treasury yields traded in January and March. If the international spread between January and March decreased or increased significantly compared to the historical average, the Long-Term Capital Management believed that at some point in the future, spreads would eventually find their proper balance, so they bought what fell and sold what rose.
Since these were essentially the same bonds, this was not such a wrong idea. Long-Term Capital Management's return per trade was typically 1% or less. While this may not seem like a large profit, 1% of the $124 billion Long-Term Capital Management managed amounted to $1.24 billion. Repeating this a few times a year resulted in a tremendous return on $4.7 billion in invested capital.
In the second year, Meriweather achieved a 43% return, and the following year, a 41% return. Everything seemed to be going well—until 1998, when Russia shocked the world by declaring a default on domestic bonds, drastically devaluing the ruble, and declaring a moratorium on foreign bonds. This plunged the bond market into panic, and Long-Term Capital Management's spreads all went in the wrong direction, causing massive losses.
Consequently, the banks that had lent a total of $120 billion to Long-Term Capital Management demanded more collateral or loans They demanded repayment, but nothing came of it. Literally, Long-Term Capital Management went bankrupt overnight. The Federal Reserve of New York organized several Wall Street banks to manage Long-Term Capital Management, and investors lost most of their money.
The lesson Charlie extracted from this incident is that when a very smart person meets massive leverage, it often ends in tragedy. To add to that, a stupid person and massive leverage also usually end in disaster. Waiting—waiting helps investors with words, but many people cannot endure waiting. Blaise Pascal, a 17th-century French mathematician, said that all of humanity's problems stem from the fact that people cannot sit quietly alone in a room.
Charlie agrees. One must wait for a great company with a solid comparative advantage to be sold at a good price. And the " good wait" Charlie speaks of is not just a month or two. Good investment may require years. After exiting the stock market in the late 1960s, Ler waited five years before regaining interest in buying stocks.
During the internet bubble of the late 1990s, Charlie and Warren... I gave up on finding stocks worth buying in the stock market and only started looking in 2003. However, waiting is not easy for most investors, and this applies equally to mutual fund and hedge fund managers. Because they are driven by quarterly performance targets, the option of waiting a few years to search for good stocks is practically non-existent for them.
There is nothing other than waiting while searching for stocks to invest in. Once you buy a stock, you must wait for the company's business model to grow the company and drive up the stock price. When Charlie and Warren said they intended to hold their investments forever, they meant it. Who else on Wall Street could make such a declaration?
This is why Charlie and Warren are not at all worried that someone will copy their investment style; it is because institutions or individuals possess the patience to wait as much as they do. A few truly rare exceptions to persistent problems are much easier to endure than an endless sea of misfortune.
Here, Charlie is discussing the difference between a great company and an average company. Here, a great company is one that experiences a few major problems over 20 years, while an average company is one where various problems follow one after another every year. The perfect example of a great company is Coca-Cola.
Over the past 50 years... Coca-Cola made two major mistakes: one was venturing into the film industry, and the other was revamping its flagship product and launching it as New Coke. These problems were resolved by shutting down the business. All airlines are included in the perfect example of an ordinary company constantly facing problems.
Airlines must overcome not only union issues and fuel price issues but also fierce price competition. This wisdom can be applied to one's personal life as well. It is much easier to endure extreme pain for a short while than to suffer ceaseless pain. Unexpected events and unexpected good things are easy to deal with.
The problem is unexpected bad things. You must prepare for the worst and hope for the best. Preparing for the worst is always wise. Benjamin Graham's margin of safety was designed to protect against the worst-case scenario. When it comes to stocks, Charlie considers the margin of safety in terms of price and value.
The margin of safety is higher the lower the price and the higher the business value. If the stock price rises, the margin of safety begins to evaporate. If business value decreases, the margin of safety also declines. If you purchase a high-value company at an appropriate price, the margin of safety will protect the investor from long-term losses, and if the business grows internally or acquires other businesses in the future, the high value of the business will not only become a profit.
It will bring about countless good things. Invest only when the odds of winning are in your favor. You must establish a principle of understanding the probability of winning and betting only when it is favorable. This goes slightly against common sense. To understand this advice, you need to know a little about Charlie's past.
In the late 1960s, both Charlie and Warren were running their own headphones. As the bull market of the late 60s continued to rage, everything became too expensive, and Wall, who had been following Graham's methodology until then, found it difficult to find cheap stocks worth buying. Consequently, instead of changing his investment strategy, Wall closed his hedge fund, returned the investment capital to his partners, and converted most of his own money into cash-like assets such as U.S.
Treasury bonds. Charlie continued investing and made significant profits until 1973, but lost nearly half of his partners' investment capital due to the stock market crash of 1973 and 1974. Charlie considers this period the worst moment of his life. In contrast, Wall, who had been sitting on cash when the stock market was overheated, saw dozens of excellent companies come onto the market at low prices when the market crashed.
Having sufficient cash on hand... In the month, he could have bought those companies in a double-digit fashion. Charlie could not do so because he lacked cash. As the stock market recovered, Charlie also recovered his and his partners' losses, but that experience dealt him a tremendous blow, leading him to cease managing the fund thereafter.
What did Charlie learn from this experience? He learned that the higher a stock price rises, the more disadvantageous it becomes for the investor. Conversely, he also learned that the lower the price falls, the higher the likelihood of it becoming advantageous for the investor. Furthermore, he realized that if you continue investing when the stock market is rising, you will run out of cash to invest when the market crashes.
The probability of winning does not matter; this is because if you do not have the cash to bet, you cannot earn a single penny. If you buy a few excellent companies solely because they are undervalued, you must consider selling when you judge that the price has reached its intrinsic value. That is a very difficult task.
However, if you buy the stocks of a few great companies, you simply have to sit on them. That is a good thing. Although this content has already been covered earlier, I intend to discuss it again because it is so important. Benjamin Graham's method of buying undervalued stocks dictates that an investor must evaluate the company's value and sell when the stock reaches that value.
This method applies not only to ordinary companies, but Even the stocks of excellent companies with enduring and strong competitive advantages are not advisable because they must be sold once they reach a predetermined fair price. Selling the stocks causes one to lose the opportunity to enjoy the profits derived from the increase in the company's intrinsic value over time.
According to Charlie and Warren's theory, companies with solid competitive advantages have a business foundation where their intrinsic value expands over time. The longer time passes, the more the company's value grows. Therefore, the wisest choice is to hold onto the stock for as long as possible once purchased.
This is because the longer a company's stock is held, the more its value grows, and the wealthier the investor becomes as the company's value grows. Berkshire Hathaway demonstrates this well. Looking back over the past 50 years, Berkshire stock traded below its book value in the early 1970s, but by the late 1990s, it was trading at nearly double its book value.
If one had bought Berkshire stock below book value and sold it at double the price, one would have made a lot of money. However, having done so, the value tripled between 2000 and 2016 You must have sighed watching Berkshire Hathaway's moves. If you have chosen the right company, the answer is to sit on it, as Charlie says.
Not becoming a fool. For people like us to become incredibly smart, we can gain a lot in the long run by constantly striving not to be one. The proverb "The good swimmer drowns" certainly contains valuable wisdom. A good swimmer swims far out, potentially putting themselves in danger. Those who cannot swim well stay near the safe shore.
High-accuracy mathematicians or financial market analysts put themselves in a difficult situation when investing by using very complex trading models. Charlie is not interested in the complex mathematical models and trading strategies that Wall Street PhDs use to exploit short-term fluctuations in the stock market.
Rather, he is interested in simple investment strategies that deliver superior results over the long term. And the foundation of this is trying not to do anything foolish. For Charlie, doing something foolish means investing more money in businesses that are overvalued compared to their actual value.
The difficulty of waiting. You must wait patiently and persistently until you seize an investment opportunity. That is contrary to human nature. I know work isn't easy. It's easy for us to do nothing and just wait all day, since we have plenty of other things to do. However, can you imagine an ordinary person sitting still and doing nothing for five years?
Since it does n't feel like activity and you don't feel like a useful person, you end up doing something foolish. I previously discussed Charlie's thoughts on patience. But seeing is believing, so I urge people to read what Charlie said at the 2014 Daily Journal biennial shareholders' meeting, as it explains one of the final mysteries of the Charlie Formula that generates massive fire.
And out of the 40,000 people attending Berkshire Hathaway's biennial shareholders' meeting, only a little over ten actually understand and put this formula into practice. Therefore, I will delve into the nuances of Charlie's words in detail. If there is only one thing to learn from this book, it is the importance of patience.
Most investors are impatient, and so most fail as soon as they start investing. This is because stocks almost always sell for much higher prices than their long-term, intrinsic value. That is the nature of the stock market. On the day you decide to invest your funds, there is almost no chance of finding an investment that meets Charlie's standards.
So you will settle for something less decent. If you had waited longer, much... You must have found a good target. Charlie says it is an easy task because waiting does not mean paying more money. While this goes against human nature, you must understand that this is precisely why it is a winning investment strategy.
One such strategy is contrarian investing, where you buy when others are selling. And not rushing means acting contrary to those who rush—that is, almost everyone in the world. You can think of it this way: Charlie is not searching for investment opportunities; he is waiting for the right long-term investment opportunity to appear at the right price.
He keeps his eyes wide open to spot opportunities, and that is why he reads so many books. If a good opportunity does not arise, he continues to read. Is that difficult? Imagine you visit an investment manager and are told that it might take five years to find a quick investment. Most people would get up and go find another manager.
The advantage Charlie has over ordinary investors is precisely his ability to wait. Because most people cannot wait five years like Charlie for a good long-term investment to appear at a good price, and because in most cases the stock is selling at a price higher than its intrinsic value, they usually pay excessive costs when buying stocks.
Let me ask you a question here: If you act impatiently and the excessive [value] of an investment stock Do you belong to the 99% of investors who pay the costs, or do you belong to Charlie's 1% club, who have the patience to wait five years for the right long-term investment opportunity to buy at the right price if necessary?
Successful investing requires an absurd combination of situational awareness and patience. And you must be prepared to turn black as soon as an opportunity appears, because opportunities are bound not to remain written for long. In March 2009, the economic crisis struck. It was a time when everyone thought the U.S.
government would have to reform all of America's major banks. At that time, Lee, through his company Daily Gauntlet, purchased 1.6 million shares of Wells Fargo stock at a price of approximately $88.58 per share. Today, Wells Fargo stock is trading around the $47 mark per share. Charlie was able to do this because, first, he was focused on finding good investment opportunities; second, he was accumulating cash while patiently waiting for opportunity to appear on its own; and finally, because he understood Wells Fargo well enough, he knew that the likelihood of the bank going bankrupt or becoming government-owned was very low.
This buying opportunity was only for a few weeks. It continued. Charlie had the ability to handle situations and seize good opportunities when they arose. Currency Issuance. I believe that democracy is vulnerable to inflation because it is the nature of politicians to spend. Politicians have the power to issue currency and will use money to win votes in elections.
Do not stop issuing currency. One of the reasons the U.S. does not fall into default is that it has the power to issue as much dollar as necessary. How is that possible? After issuing currency, the Federal Reserve purchases U.S. Treasury bonds or desired debt securities in the open market. For example, let's say the U.S.
Treasury needs $100 billion to repay U.S. government debt that is nearing maturity. Then the Treasury simply issues more bonds, and the Federal Reserve buys them in the open market. In principle, the Federal Reserve does not like this behavior. Rather, it prefers the U.S. government to borrow money from a country like China.
China currently holds U.S. government bonds worth $1.2 trillion. In other words, the U.S. government owes $1.2 trillion to China. However, from China's perspective, there is no need to worry about a U.S. default. This is because the Federal Reserve can issue an additional $1.2 trillion at any time, lend it to the U.S.
government, and [pay] the price of the bonds the government sold to China This is because they can be made to pay. The problem with Greece, Italy, and Spain is that as they accepted the euro as their currency, they transferred the power to issue more money to the European Central Bank. Unless the European Central Bank is willing to issue hundreds of billions of euros separately for them, there is a possibility that Greece, Italy, and Spain will declare default on their debts, which could lead to a systemic collapse of the global financial system.
Take one step at a time. Spend a day where you can become a little wiser than when you woke up in the morning. Fulfill your duties faithfully. Solve problems little by little every day. If you live long enough, most people eventually receive what they deserve. This is a gradual methodology for success.
It is similar to the race between the hare and the tortoise we heard as children—that very fable where the fast hare lost to the tortoise, who walked slowly but without resting, one step at a time toward the finish line. In his younger days as a lawyer, Charlie put the tortoise's behavior into practice.
He implemented a self-study plan to study real estate development and stock investment for one hour a day. Progress was slow at first, but after reading thousands of books over several years, he came to understand how knowledge from different fields interacts and how knowledge and money work in complex ways.
I came to understand, and I realized more about the human world. Charlie often says that he became a much better investor at age 90 than at age 50, and he attributes this to the complex effects of knowledge. Career: Three rules of a career: 1. Do not sell what you would not buy. 2. Do not work under someone you do not respect or admire.
3. Work only with people you like. Charlie's career advice is like a gift. Why shouldn't you sell something you wouldn't buy yourself? Because any book written about selling states that if you do not like the product, find it difficult to understand, or believe in it, selling it will be a disaster. Great salespeople believe in their products; that is one of the secrets to success.
Why shouldn't you work with someone you don't admire? Because he has nothing to teach you and cannot help your intellect or your life move forward. Why should n't you work with someone you don't like? Because work is life. One of the intentions of a rich life is to love your work and love the people you spend time with.
If you feel miserable while working, no matter how much money you earn, it is a truly unfortunate life. Making mistakes: It is impossible to live a good life without making mistakes. One of the secrets of life is the ability to handle mistakes. It is about acquiring it. If you cannot fix your denial of reality, hearing that it is okay to make mistakes provides comfort.
Charlie was able to become a better investor today because he rode the boom for too long and was crushed by the crash of 1973 and 1974. Furthermore, Berkshire became a better investor today thanks to the problems it faced after acquiring Dexter Shue. We must not forget the nightmare of Salomon Brothers, where Berkshire lost almost its entire $700 million investment.
There is also the Baltimore department store Hawkes-Child Korn and the previously discussed US Airways failure. These were all massive business judgment errors that incurred enormous costs. However, these mistakes also laid the foundation for advanced investment strategies that later yielded billions of dollars in returns.
Specialization. Extreme specialization is the path to success. For most people, it is much better to strive for specialization than to try to understand the world. Specialization is the key to survival for all species and the key to all business success. Specialization protects us from competition. The more difficult specialization is, the higher the barrier to entry.
If you do what everyone else does, you have to compete with everyone. However, by cultivating expertise and Strengthening oneself differentiates oneself from the masses. You don't leave a Porsche at a cheap neighborhood repair shop; you entrust the car to a shop that specializes in handling Porsches.
Even if a Porsche specialist charges double the labor costs of other general repair shops, that price is justified because they are experts. And this applies equally to medicine, law, plumbing, and even cornworks. It is the experts who make big money; the rest cannot. Frugality. A good way to overcome inflation is to reduce foolish desires.
If you reduce the amount of material goods you need, foolish desires decrease. Charlie and Wallace lived in upper-middle-class housing for most of their lives and drove old cars. Why did they do that? It was to save cash for investment by cutting down on living expenses. How does this protect the two of them from inflation?
If you don't need something, you do n't buy it. So, what does it matter if the price of goods goes up? Did Charlie ever lose sleep even once because of the ever-rising price of a new Ferrari? Ideology. You must be careful not to fall into an excessive ideology. Powerful ideologies terribly distort the human mind.
Charlie I believe that young people are easily influenced by ideology and often become so captivated that they cannot think of anything else or see the various aspects of an opponent's argument. Passion paralyzes the rational thought process. From an investor's perspective, it was purely thanks to Charlie's help that Walrae was able to break the chains of his habits and ideology and break away from Graham's investment methodology.
Walrae began investing in great companies at reasonable prices and holding those stocks for a long time. Older people, like passionate young people, can also be steeped in ideology and fail to see better ways. This is why it is good to have someone like Charlie Mungur as a friend and business partner.
Reading: I have never seen a wise person who does not read constantly. You would be surprised to know how many books Warren reads. Charlie was always an avid reader. As a child, he practically lived at the public library in downtown Omaha, where he explored piles of books and met the intellects of the past and present.
And around the age of seven, Thomas Jefferson and Benjamin Franklin took up permanent spots on Charlie's head shelf. It was reading that put Charlie ahead of others. A learning machine. I have often seen people succeed who are not particularly smart and, at times, haven't quit smoking. However, such a person is a learning machine.
By the time he goes to bed, he is a little wiser than he was that morning. This is a great help to those who have a long way to go. Constantly learning and constantly improving oneself is very important. Let's think of it as building intelligence. The more effort you put in, the richer your intellect becomes.
And one of the peculiarities of investing is that the older you get and the more you learn, the better investor you become. The field of investing is unique. Charlie was a surgeon. There will eventually come a time when men lack the stamina to endure 15 hours on the operating table. It is the same for those in the profession of laying bricks.
The physical qualities required of an investor are eyesight, a clear mind, and the skill to turn the pages of an e-book. Having lived through retirement, I have learned something: if you think constantly and read constantly, you do not need to work. Let's keep thinking and keep reading, because in Charlie's view, that is the entirety of the investment game.
You must think a lot and read a lot. Charlie says he reads up to about 600 pages a day. This includes the details of the newspaper he reads every day and a few books he typically reads on a week. Of course, sometimes he goes to the Los Angeles Country Club for a club sandwich and Charlie also enjoys cola.
He is someone who knows how to take a break while reading books diligently. So far, we have read through the words of Charlie Monger together. Charlie Monger says that one should be wise rather than smart. He means that thinking and judging correctly is more important than simply knowing a lot of information.
I hope his words have given you a new perspective and inspiration. If today's story was helpful, please subscribe, like, and turn on notifications. I will be back with another great book next time. This has been Book Mom's My Imagination Material. Thank you.
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