The Digest #101

Published on February 18, 2022

Daily Journal Annual Meeting

“We have a new bunch of emperors, and they’re the people who vote the shares in the index funds. I think the world of Larry Fink, but I’m not sure I want him to be my emperor.”

— Charlie Munger

Charlie Munger answered questions for nearly two hours at the Daily Journal annual meeting that took place in Los Angeles on February 16. The meeting was held virtually with CNBC’s Becky Quick selecting the questions that came in from shareholders as well as the general public. 

Mr. Munger made a number of controversial comments on subjects ranging from cryptocurrencies, meme stocks, and inflation to China and pandemic policy. Some might think that a 98 year old man has few constraints when it comes to courting controversy, but Charlie Munger has had an unfiltered speaking style for decades. 

As noted in the quote above, he also criticized the outsize role of index funds in corporate governance, a subject that I have mentioned in the past. As the Wall Street Journal reported, Mr. Munger objects to the idea of fiduciaries attempting to dictate the social and environmental policies of companies on behalf of millions of shareholders who no doubt have widely varying political views.

In the video below, the Q&A session begins at around the 25 minute mark. In addition, there’s a twenty minute interview that took place prior to the meeting.


Berkshire Hathaway Bought Bulk of Stake in Activision Blizzard in October by Sarah E. Needleman, February 15, 2022. I mentioned Berkshire’s Activision Blizzard investment in Tuesday’s newsletter. Since that time, the Wall Street Journal has reported specific information regarding the timing of the purchase based on “a person familiar with the matter.” The shares were purchased in October at an average price of ~$77 and the unnamed source confirmed that the stock was purchased by Todd Combs or Ted Weschler rather than Warren Buffett, as I suspected. There aren’t many people at Berkshire’s headquarters who could have known about this information and leaked it to the media. I suspect that Warren Buffett is not happy about the leak. (WSJ)

UPDATEThanks to a reader’s comment, I’m now aware of a letter that Warren Buffett sent to journalists at the New York Post on February 17. In the letter, Mr. Buffett reveals that he was the unnamed source in the Wall Street Journal’s February 15 article, linked to above! He was apparently trying to clarify the timing of Berkshire’s purchase of Activision to ensure that the public knows that it was made well before Microsoft’s announcement of the acquisition.

Billionaire Carl Icahn Says He Isn’t a Genius, Took Advantage of a Broken System by David Benoit, February 15, 2022. Oliver Stone has said that Carl Icahn was one of the inspirations behind the character development of Gordon Gekko, the famous villain of Wall Street, a movie released in 1987 that paradoxically inspired many young people to enter the investment field. HBO has released a new documentary of Mr. Icahn’s life and career. Not necessarily known for his humility, Mr. Icahn says, “I made this money because the system is so bad, not because I’m a genius.” (WSJ)

A History of Systematic Serendipity and Grand Slams by Neckar, February 17, 2022. This is a well written review of The Power Law, a new book by Sebastian Mallaby about the venture capital industry. “The distinguishing genius of the valley lies not in its capacity for invention, countercultural or otherwise,” Mallaby wrote. “No single geography dominates invention.” Rather, “when it came to turning ideas into blockbuster products, the valley was the place where the magic happened.” He makes the case that venture capitalists were often a key piece of that magic. (Neckar’s Insecurity Analysis)

Since the Fed Announced It Was “Tapering” Last November, Its Actually Added $332 Billion in Liquidity with New Debt Security Purchases by Pam Martens and Russ Martens, February 15, 2022. As it becomes painfully clear that inflation is not “transitory”, the media is full of stories about how the Fed will soon turn “hawkish”. Perhaps some major shift in policy is imminent, but there’s plenty of reason for skepticism. For one thing, the Fed has continued to make massive asset purchases in recent months, something that the mainstream media rarely covers. Asset purchases are supposedly ending prior to the March FOMC meeting. (Wall Street on Parade)

The Most Valuable Razors by Sahil Bloom, February 16, 2022. A “razor” is a mental heuristic that can be a useful shortcut for dealing with various situations. One of my favorites is Hanlon’s Razor, one of the heuristics covered in this article. Hanlon’s Razor simply says that we should not automatically attribute to malice what can be explained instead by stupidity. This is incredibly useful when it comes to interacting with people online, especially in the dystopian environment of Twitter. Several of the other nineteen razors are useful to internalize as well. (The Curiosity Chronicle)

How Do Investors Fail? by Nick Maggiulli, February 15, 2022. Charlie Munger often recommends that people should “invert” their thinking. In other words, figure out the steps needed to get to where you don’t want to go and simply avoid doing those things. In this mold, Nick Maggiulli describes what he believes are the five most common causes of investor failure and how to avoid them. (Of Dollars and Data)

How to Guarantee a Life of Misery by Charlie Munger, June 13, 1986. Speaking of inversion, this is a good roadmap for how to lead a miserable life. “Do not faithfully do what you have engaged to do. If you will only master this one habit you will more than counterbalance the combined effect of all your virtues, howsoever great. If you like being distrusted and excluded from the best human contribution and company, this prescription is for you. Master this one habit and you can always play the role of the hare in the fable, except that instead of being outrun by one fine turtle you will be outrun by hordes and hordes of mediocre turtles and even by some mediocre turtles on crutches.” (

Write to Give Yourself Advice by Lawrence Yeo, February 2022. “Writing is the act of giving yourself advice about the problems you care about most. The key is to embody both sides of the conversation at once: be the person that asks for advice, and also be the person that gives it. While the part about giving advice isn’t that difficult (we have opinions about everything), that part about asking for it may be tricky. It’s one thing to have me as a role-playing partner, but it’s another to do this entirely on your own.” (More to That)

George Washington’s Farewell Address, September 19, 1796. As we celebrate President’s Day, George Washington’s farewell address remains surprisingly timely. A passage on political parties, which were just gaining traction as he left office, seems just as relevant today: “One of the expedients of party to acquire influence within particular districts is to misrepresent the opinions and aims of other districts. You cannot shield yourselves too much against the jealousies and heart burnings which spring from these misrepresentations. They tend to render alien to each other those who ought to be bound together by fraternal affection.” It is risky to read too much into a document written over two centuries ago, of course, but it is worth noting that politics was messy business in the 1790s, and included financial scandals and bailouts. (United States Senate)

Story Retreat

Lawrence Yeo, the author of More to That, is presenting a four day summit on the art of storytelling. The virtual summit takes place on February 22 and 24, and March 1 and 3. Lawrence is joined by Nick Maggiulli on February 24 and Ali Abdaal on March 1. There is no cost to attend and I’m sure there will be many valuable insights.

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The Digest #101