How to pronounce “munge” in English

Interestingly, he has written one of those rare and special books, which has won claim from none other than Warren Buffett and CharlieMunger. The book is called "The Outsiders." And we are thrilled that the author, Mr. William Thorndike, is here with us, in person, todayto talk about "The Outsiders." Welcome.

So being aware of that, being rational.Charlie Munger says that he hasn't been successful because he's smart, he's been successful because he's rational.And another thing that is I think a very useful approach is to be fluent in the other side of the argument.

Another thing that-- I love this quote-- another thing that successful active managers don't payCharlie Munger, "You don't want to believe in luck.

And one of her public-spirited, altruistic handmaidens made a deposit of the equivalent of $100Charlie Munger says something that cannot go on forever has to come to an end.

A comment that's been attributed to him is he's sort of said your margin is my lunch.Charlie Munger once wrote about the difference between CBS and Capital Cities in the heyday of the TV station

A comment that's been attributed to him is he's sort of said your margin is my lunch.And Munger referred to CBS as of prosperity blinded indifference to costs and he contrasted that with-- so I think the issue for Google is, you guys are so incredibly

While the average business may well be overpriced at 25x, that doesn't mean that exceptional ones are also expensive at that market valuation.Charlie Munger's observation that "if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price,you'll end up with one hell of a result" is obviously applicable over here.

As a result, the products lose their distinct identity or autonomy." That's the most interesting part for me.Charlie Munger has said that, "in nature and in business, specialization is key.

How do you win?Charlie Munger-- the boys went to see Charlie Munger this week.

Anything Warren Buffett and Charlie Munger I'd consume it.Charlie Munger gave a talk where he talks about the 24 standard causes of human misjudgements.Anybody who hasn't listen to that talk, believe me: it's better time spent listening to that talk than listening to me.

So that's one of the important takeaways I took from the learnings from Buffettand Munger is that you don't really need to do extraordinary things to get extraordinary results.If you can double your money every three years, then a few doubles starts adding some significant numbers.

But he put $10 million, it became about $80 million in two or three years.on Charlie Munger, "Damn Right." So I know you said, don't go there, but "Dan Right" came out probably 17 years ago.

and 100y year bond issues okay and fixed income there are two ways to increasecredits Charlie Munger with you know opening his eyes to another way of you

Any rate or amount of return, however low, which the investor is willing to accept provided he acts with reasonable intelligence.patience with what Charlie Munger likes to call gumption-- you know, extreme determination at the right moment.

What drives the entrepreneur?Is he what Charlie Munger calls an intelligent fanatic?What struggles did he face in making this business a success?

We have a very, very special guest with us today.I remember reading Charlie Munger saying that he didn't know a smart man who didn't read all the time.And he has categorized Warren Buffett as a learning machine.

That grew out of a conference I organized where I first met Warren, Berkshire's chairman and CEO, who participated alongside his wife, Susan, and Berkshire's vicechairman Charlie Munger. Back then, Berkshire Hathaway looked like a mutual fund, primarily owning stocks.And Warren Buffett was most famous as a stock picker.

brought in house to-- bring the house into the modern age.If it can continue on another Charlie Munger-ism-- we learn more from our mistakes than our successes.FREDERICK "SHAD" ROWE: I oughta know a lot, then.

How do I make better decisions?How do I eradicate what Charlie Munger would call standard stupidities?How do we make good decisions in the face of a very uncertain future?

And the business continues to exist to this day as a geographic information system business in the US.He had this evolution after meeting Charlie Munger, and in 1963, he found American Express mired in a scandal.American Express is a financial company, and it had provided some warehouse receipts to Anthony "Tino" De Angeles, who

So as Warren Buffett's partner Charlie Munger says here in this quote, sometimes it's just really easy to see which horse is most likely to win a race,

and I fell in love with Warren Buffett and Charlie Munger.Anything Warren Buffett and Charlie Munger I'd consume it.Charlie Munger gave a talk where he talks about the 24 standard causes of human misjudgements.

And certainly, for most businesses, you don't even need the capital.Neither does Warren Buffett or Munger talk a lot about it.

and then take it from there?Like for example, Charlie Munger said that in 2002 heread "Barron's" for 50 years, so from the 1950s until 2002.

Buffett's 85, Munger's 92.

This is a key point that Buffett has made in his letters and which, in my view, is often not fully understoodby investors. Charlie Munger's observation that almost all good businesses engage in paying today, gain tomorrow activities alsomeans that after making the necessary adjustments, one would find that the multiple of their economic earnings-- the ones that really matter-- are sometimes

As a result, the products lose their distinct identity or autonomy." That's the most interesting part for me.Indeed, Buffett and Munger love the idea of investing in profitable niche businesses operating in industries with commodity characteristics.

But cumulatively, Charlie Munger always, somehow or another, lived on less than what he earned, so he was creating cash

And so, as part of my journey, I started in-- I ended up starting to investand I fell in love with Warren Buffett and Charlie Munger.Anything Warren Buffett and Charlie Munger I'd consume it.

It's a sum he calls a bargain.And in the same spirit as Warren Buffett and Charlie Munger, he has a very intuitive, very evocative, very emotionallyappealing way of distilling complex concepts into his form of connecting with the audience.

OK. So let's invert that a little bit.You know, like Carl Jacobi and Charlie Munger.So what are some things you want to avoid in a business?

At Stanford Law School, Charlie Munger was on the board of visitors.

And he says he and his sidekick, Charlie Munger, are going to continue to buy companies.

And if you think about his example-- we all know who Charlie Munger is now.

That goes to show you that one's thinking should still be alive and should still evolve.And I know that and some of the other fellows went to see Charlie Munger speak in Los Angeles this week at age 91.And I'm sure he's still evolving and getting younger.

And the other thing I would say is that in meeting him and meeting Charlie Munger,

ever met a person who is anywhere close to the brilliance of Charlie Munger.

And my response, thanks to my wife, was there's only one Warren Buffett.wrote the great book "Common Stocks And Uncommon Profits," and by Charlie Munger, Warren's partner since the '70s or '60s,

And my response, thanks to my wife, was there's only one Warren Buffett.So I've been a great devotee of that Graham Fisher Buffett Munger crowd.

And certainly, for most businesses, you don't even need the capital.It's absolutely critical. And Charlie Munger talks about that.

And I remember, a few years back, Charlie Munger said that-- I asked a question to Charlie about moats

And then they collect kind of all the different manager picks and that's what comprises the whole fund.And so a few years back, I was at a dinner at Charlie Munger's house and it's a small group.He posed a question to the group.

But he put $10 million, it became about $80 million in two or three years.And also, there's a lot of lessons about in many ways I think Charlie Munger got dealt a bad hand, if you will, a far worse hand than most of us

It's extraordinary. And I actually was talking to some people about this at the Munger meeting the other day,

Right? So I've organized this talk in a way that I ripped off from Charlie Munger, who ripped it off

But if you want to outperform, you actually have to be willing to go against the crowd.So I think this is one of the areas where you can apply this great line from Charlie Munger where Munger as we know says, he takes a line from algebra wherehe says, invert. Always invert.

of applying the crappy business label to them.Perhaps she dug deeper and found that both businesses had durable competitive advantages and were run by entrepreneurs whom Charlie Munger wouldcall intelligent fanatics. Perhaps she had reliable and persuasive evidence specific to those businesses which would go against the conclusion in the base rate

Finally, there will be overlaps in the sense that, sometimes, you will find multiple prejudices in a single situation.And when that happens, you can expect what Charlie Munger calls a lollapalooza outcome.My first prejudice is titled "Marshmallows." Here I want to talk about the tendency of investors to categorize stocks of businesses

And of course, if you were doing 31%, then you were going even faster.So basically, that is at the essence of the genius of Buffett and Munger,is they absolutely understand the power of compounding.