Dialogue Charles Munger-You don't need to invest much to become rich.

The Collection of Poor Charlie, a collection of Munger's major public speeches in recent 20 years, has attracted countless investors. When sitting with Mr. Charles Munger, Buffett's mentor and life partner, the greatest contemporary investment thinker and vice chairman of Berkshire Hathaway, his genius and wisdom flowed quietly in every sentence.

Mr. Munger is willing to open his heart, and he is more committed to opening up a whole new world for investors. He went on and on about how Berkshire used leverage. He admitted that he missed the investment opportunity of $5 billion. He encouraged investors to embrace the greatest companies in China and the United States. He hopes that investors can become rational people and live a meaningful life.

When talking, Mr. Munger never forgets to take a sip of iced coke. You know, by investing in Coca-Cola, Berkshire behind Mr. Munger got a return on investment of 13 12.78%.

(Note: The interview time was May 6th, 20 18 local time in Omaha, USA, and the first release time was August 4th, 20 18. )

Red Weekly's exclusive in-depth dialogue with Charles Munger (I)-Munger's three most successful investments

Red Weekly: First of all, I would like to thank Mr. Munger for accepting an exclusive interview with Red Weekly. This interview is not only the luck of Red Weekly, but also the luck of domestic investors! "Poor Charlie" collects Mr. Munger's speeches and is praised as the investment "Bible" by domestic value investors. From this perspective, domestic investors and you are not strangers although they are separated by a Pacific Ocean. As a master of value investment, your investment philosophy has influenced a large number of professional investors in China. I hope that through this interview, I can preach, teach and dispel doubts to domestic professional investors, so that domestic professional investors can go wider and further on the road of value investment.

Munger: I will try my best to help and answer your questions.

How can investors be patient?

Red Weekly: The first thing I want to communicate with you is how professional investors establish a correct investment concept. You have always stressed that investment should stand the time. In Chinese, it means "grinding a sword in ten years" At this year's Berkshire shareholders' meeting, you once again stressed that investment "should find good opportunities and stick to them for a long time". Many investors know this truth, but they can't bear the loneliness of time, and finally the investment is fruitless. How can we achieve the unity of knowledge and action?

Munger: If you regard investment as gambling in a casino, gambling will not have a good result. Because you will be very concerned about the current result and have no patience. People like casinos have different investment styles from mine. If he is not a believer, he can't do the unity of knowledge and action. There are many stupid gamblers in the capital market, and their performance is not as good as that of patient investors.

I advise investors in China to gamble less and invest more. Investment pursues a long-term result, not an immediate return like in a casino.

Red Weekly: It takes patience to gamble less and vote more. So patience is a natural thing. Some people are suitable for investing with patience, but they can't invest without patience?

Munger: Some things are born, but some things can be cultivated. Patience can be cultivated. There is a saying in the United States called "long attention duration", that is, the long attention duration depends on how long a person's attention lasts for a thing. In the culture of China, many people focus on one thing for a long time, and education has always emphasized the need to focus on one thing for a long time until it is completed. This is a very desirable feature, because if you can think deeply and hard about a question for a long time, you will be more likely to get the correct answer.

Although the culture of China has always emphasized that one thing should be completed wholeheartedly, there is a strange phenomenon in this educational culture, that is, there are still many people who are opportunistic and not single-minded, which is incompatible with culture. To achieve long-term results rather than short-term, many people in China will not pay attention to these, so they can't "find good opportunities and stick to them for a long time."

Why rationality is the most important in investment?

Red Weekly: Besides patience, Mr. Munger once said that the most important word for investors is: rationality! Why is rationality the most important? Not knowledge, intelligence, patience, etc? This is also the question that domestic professional investors want to ask you.

Munger: Absolutely, absolutely! Reason is the most important thing. What is rationality? Rationality is seeking truth from facts. Most people see the world because they see what they want to see. If so, it's like looking at the world with deformed glasses, and no amount of knowledge and patience will help. Because the world you see is out of touch, there is no rational attitude, and everything else is useless.

Red Weekly: But most people are irrational most of the time, so I want to ask Mr. Munger, how do investors get and stay rational?

Munger: You must be rational with your heart and efforts. You must value and care about rationality. If you don't care about yourself, you won't try to be rational. Then you may be irrational all your life, and there will be bad results.

Being a rational person is also a Confucian attitude. As Confucius said, this is a moral responsibility, not just to become a rational person for personal interests. I will go further than others.

Red Weekly: I want to be a rational person. How can we break through and make progress?

Munger: You need a lifetime of hard work and a lot of reading.

Red Weekly: Mr. Munger, you also said that investment is not easy, because most of what we see in this market is illusion, so how to understand that what investors see is illusion, and where is the truth? How do we get the truth?

When will China become a master of value investment?

Red Weekly: In China, many professional investors regard Mr. Munger and Mr. Buffett as idols. Please talk about Mr. Munger in connection with the American market. In China's capital market with a history of only 30 years, what conditions are needed and how long will it take to cultivate investment masters like you two?

Munger: The Chinese mainland market will produce many successful investors. Take a look at China and Hongkong market, and you will get the answer. Because the market in Hong Kong is longer than that in the Mainland, and the market economy and securities market are relatively developed, many mainlanders in China also participate in the market-oriented and well-ordered securities market in Hong Kong. In the next few decades, the mainland market in China will become more and more mature and complex, investors in the market will become more and more excellent and widely respected, and other experts will emerge.

The example of Hong Kong can well prove the future situation of China. Those who really make big money in the securities market are those who find that long-term investment goals can be sustained, not those who trade or gamble in the short term.

Munger invested in three companies in his life.

Red Weekly: Excuse me, Mr. Munger, what are the most satisfactory investments and the most unsatisfactory investments in your life?

Munger: The most successful investment is to buy shares in Berkshire Hathaway. I paid at the price of $65,438+06 per share, and now the price is almost $300,000 per share. Of course, this investment took a long time and was a long-term investment. I like Berkshire employees and culture, and I also like the people I invest with. I just sat there waiting for over 50 years. On the whole, the effect is very good. This is an investment that I am very satisfied with.

There are many such stories.

Lu Li and I have been investing in China for 15 years. We bought a lot of stocks and sold very little. This is also a very satisfactory investment.

Red Weekly: What is your most dissatisfied investment?

Munger: Well, I haven't made many bad investments, so I have to think about it for a long time (laughs). There are some small ones, but not many. I think I haven't thought of them for a long time. There is no bad investment in my investment.

I am 95 years old. I have invested in three companies in my life, one is Berkshire, the other is Costco, and the last one is a fund that cooperates with Lulu.

You don't need to invest much to become rich.

Why do Munger and Buffett like China people?

Red Weekly: Mr. Munger talked about the markets in China and China. This year, 1 10,000 people came from China, and 25% of the 50,000 people came from China.

Munger: I know. This is very, very special. When The New York Times interviewed me, he also asked me this question, that is, why are so many China people in China interested in Berkshire Hathaway, Munger and Buffett?

Munger: Maybe it's that book (poor Charlie's collection). But why do people in China like this book? I think the answer is: this book has a Confucian flavor. China has a profound Confucian spirit, which requires people to be modest no matter how rich or powerful they are. The spirit of Confucianism requires people to study, work, act with dignity and reason, and improve their achievements. These ideas are not found in other countries. It happens that Warren Buffett and I behave in a very similar way to those who believe in Confucianism very seriously.

I am popular with China people for another reason, because Warren and I really like China people. If you like me, I like you (laughs). Now you will ask, why do these two Omaha "boys" like China people so much (laughs)?

Red Weekly: Why?

Munger: There are some things that many people in China don't understand. If you look at China from the perspective of an American citizen, what you see is this: Americans first came here (the United States) 65,438+000 years ago to build a railway across North America, which will pass through a mountain pass with steep mountains. It is too difficult to build this. Many people died during the construction, and it was even impossible at that time. Later, for this matter, the United States imported about 15000 China coolies. At that time, these laborers actually worked like slaves, but they really built railways, which Americans could not build themselves. This incident certainly left a very good impression on Americans.

(Remarks: North American Railway: American Pacific Railway, with a total length of more than 3,000 kilometers, traverses the whole North American continent and is the first transcontinental railway in the world. This railway has made great contributions to the economic development of the United States. In a sense, it is this railway that has made modern America. The construction of this railway embodies the hard work and wisdom of many workers in China. When the railway 1863+0 started in June, it was planned to take at least 14 years to complete, but it only took 7 years. After four years' participation, South China University of Technology completed 95% of the West Section 1 100 km construction. After the train is opened, it only takes seven days from new york to San Francisco. French science fiction writer jules verne said in Around the World in 80 Days: "Without it, the dream of traveling around the world in 80 days will always be just a dream." )

As time goes by, immigrants who come to the United States are no longer coolies. These Asians, such as China, Japanese, Koreans and Vietnamese, are deeply influenced by Confucianism. After coming to the United States, they soon became doctors, lawyers, professors, businessmen and so on, and achieved great success in all walks of life. If we go to the new york Symphony Orchestra, we will see many faces of China people. There were no China people in the symphony orchestra before, but now many of the most difficult instruments are played by face of china.

These people are very popular with Americans. They won't get into big trouble, but they will continue to succeed. So naturally, we like China people. I don't think China people in Chinese mainland understand how well Chinese Americans are doing and how successful Chinese Americans are in their eyes.

There is one extreme thing in all things, which no one can predict in advance and no one has talked about. You can write it in a magazine.

Because China used to be poor and overpopulated, in the past, if an American couple had no children, they could go to China to adopt a girl from a very poor family. In every big city in the United States, people know that adopting abandoned China girls from remote rural areas in China is the best choice. Because on average, these adopted children may be better than their own children. Every American private school has many abandoned China girls from rural China. They always win prizes and have achieved remarkable success, despite their poor family background. They are all over America, which is a very dramatic phenomenon. There are many China girls in Minnesota who play those difficult instruments in the symphony orchestra. Therefore, every American who wants to adopt a child, the first consideration is not to adopt an American child, but to adopt a girl from China. Most people in China don't understand how extreme this phenomenon is.

This will make us leave a good impression on China people. You (as a media) should write this (laughs).

Confucianism and Investment Opportunities in China

Red Weekly: You just mentioned that Confucianism and poor Charlie's collection are interlinked in many places. You also mentioned Confucius. You and Buffett both behave like Confucian people. So what kind of positive role will Confucianism play in promoting investment?

Munger: If you were a better person, you might become a better investor. If you are a wise person, you may become a better investor. What don't you like what Confucius said? Although the world after Confucius has changed for 2500 years, Confucius doesn't know anything about today, but his basic attitude and understanding of life have nothing in common with modern civilization.

Red Weekly: Let's talk about China people and Confucianism first, and then talk about investment opportunities in China. At this year's Berkshire shareholders' meeting, you mentioned that China's future is bright, and it has been looking for prey in China. We are particularly interested in what stage China's capital market is at now. As you said, will it be a beautiful time when pigs can make money, like 1973, 1974 or 1982 in America?

Munger: For investors, having more value means that you have bought the best company in China or the best company in the United States. Comparing the Chinese and American stock markets, I think the best companies in China are now cheaper than the best companies in the United States. Therefore, China people don't have to go abroad to find good investments, and there are many opportunities in their own countries. There are some excellent companies in China, and the current prices are very reasonable. (Red Weekly interviewed Mr. Munger on May 6th, 2065438, Omaha time. )

Red Weekly: Who is the company you see with very reasonable price? Or in what direction?

Munger: Oh, we can't tell you (laughs). In short, China's market is becoming more and more open to foreign investors, more and more foreign investors are participating in it, and the market is getting healthier. These are all good, and will eventually push up the market price.

Charles Munger (episode), the exclusive in-depth dialogue of Red Weekly —— Why do value investors live a long life?

Berkshire's attitude towards technology stocks

Red Weekly: Berkshire's investment targets are mainly consumer goods and industrial products. 20 1 1 started to invest in IBM, and now it has become the second largest shareholder of Apple. In the first quarter, it also increased its holdings of 75 million shares of Apple. From consumer goods and industrial products to investment in technology stocks, is this change in investment an expansion of the new capability circle?

Munger: At present, it is difficult for Berkshire to find good and cheap investment products in the US market. We hardly found anything suitable. In short, you can also say that Apple is an electronic consumer goods company. Warren said that we may know more about consumer electronics than computer science, which is why Berkshire bought Apple shares.

I also want to emphasize another reason why we do this. If you want to be a good investor, you must keep learning. In the process of continuous learning, the situation is changing, the reality is changing, and our investment will also change. We will not rest on our laurels.

Munger: We don't know everything and we don't pretend to know. We only do what we know. The only company we have announced to invest in is Apple. I think what Warren is saying is that we know Apple better than other companies. We can't know everything, so we invest in those investment objects that we can find and seem to provide good value.

Look at our investment in airlines. For decades, we have been joking about investing in airlines. Warren had a lot of jokes about it and hacked the airlines for decades. (Remarks: Buffett once famously said, "Before the plane invented by the Wright brothers was successfully tested for the first time in Xiaoying Town, North Carolina, if a capitalist shot it down, investors all over the world might have a better investment situation." But all of a sudden, we bought the stock of every airline, because the stock price of airlines fell sharply, so it was cheap and had great potential. The situation has changed, and we are all willing to hold shares in airlines.

Like airlines, Warren and I didn't like railway stocks for decades. Decades later, we began to buy railway stocks, because the world changed and technology changed, and finally only four major railway companies were left. Finally, we bought the largest and most comprehensive four railway companies.

We have changed, because the world has changed. This is our investment logic. When the reality changes, shouldn't your mind change?

"Red Weekly": In the past 50 years, the US stock market has brought excess returns to investors, all of which are "eat and drink Lazar" stocks related to people's lives. Recently 10, Amazon, Apple and other technology companies began to make efforts. So, do you think China's capital market will copy the American way?

Munger: This has already happened. What happened in the United States also happened in China.

Work, life and study

Red Weekly: As an emotional and thoughtful existence between heaven and earth, how do you think a person's life is more meaningful?

Munger: It's actually quite simple. Just live well every day. If you want to be a good person, you must insist on being a good person every day, only once a day. Stick to it for enough days, and you will become a good person and live a good life. If I want to give up drinking, I will insist on not drinking every day for enough days. If you want to live a meaningful life, make every day meaningful. If you persist for enough days, life will become meaningful.

Red Weekly: Then tell me about your usual work and life. How often do you see Mr Warren? What kind of things will make you interact frequently and even need to meet and discuss?

Munger: I don't see Buffett very often, mainly by phone. We are in no particular hurry, everything is slow. For example, the net assets of our company increased by $65 billion last year. How many people were added to our company? None of them. The reason why we haven't seen each other for such a long time is because there is no bureaucracy and there are no things in between. We just talk about something, nothing.

Red Weekly: Mr. Munger, how many books do you read a year?

Munger: Oh, they know that I like books and gave me many books. I read twenty books a week. I have many books and read all kinds of books. I read a lot of biographies, some books on history, and hardly read novels.

Why do value investors live longer?

Red Weekly: In the investment field, value investment masters generally live long. You and Mr Buffett represent the longevity of value investment. You are 95 years old, and Mr Buffett is 88 years old. Is this accidental, or is it related to making value investment?

Then back to investment, value investors let the market serve us. If they are short-sighted traders who like gambling, the situation is the worst. They are under great pressure, want to make money every time, and most of them like smoking and drinking, so short-term traders "walk the fastest".

Charles Munger's exclusive in-depth dialogue with Red Weekly (II) —— How to use leverage reasonably

The mystery of price returning to value

Red Weekly: Mr. Munger, the next question I want to communicate with you is, is Mr. Dong Baozhen, the domestic professional investor and general manager of Ji Tai Fund, confused about his investment? For some unexpected reasons, he couldn't come to the scene to communicate with you. We asked questions for him and gave you this "15 Moutai" to show our gratitude.

Munger: The person who gave me "15 Maotai" is my person. If he has any questions, I'll be happy to answer them. Oh, I want to ask Lulu why the wine you gave me is so cheap! (Laughter).

Red Weekly: I will convey your original words to Dong Baozhen! His first question is about the return of price to value. An American congressman once asked Graham, "What is the power that makes the price finally return to value?" Graham said, "This is a mystery in our industry. It's as surprising to me as it is to others. But we know from experience that eventually the market will return the stock price to value. " Mr. Graham did not provide the answer to this question, which led to the loss of the most important pillar of the value investment theory building! Mr. Munger, can you give the answer to this question?

Munger: It's natural that when something becomes valuable, it will be considered valuable. For example, the cost of buying a 10 old car is only one third of that of a new car, but everyone knows that a new Chevrolet is more valuable than a 10 old car. Therefore, as time goes on, people will realize the value.

Although crazy stock traders will do crazy things in a short time, value will overcome time.

Think about it, we didn't do anything in Berkshire, but a lot of money was invested in our stock. We started with $654.38 million, and soon we will have 10 million. Now our stock is more valuable. It is natural that the value of stocks will eventually rise. What matters is time. Graham said that in the short run, the stock market is a gambling machine, but in the long run, it is a weighing machine. In the long run, the market will find out what the real value is.

So the most important thing in this market is time. With enough time, the value can be seen by more and more people. Especially when the value increases, it will be found. It's natural, nothing magical.

The importance of emotional games

Red Weekly: The conditions for Berkshire to choose a successor are: first, independent thinking; Second, emotional stability; Third, have a keen insight into human nature and the behavioral characteristics of institutions. Ask Mr. Munger, among these three conditions, we naturally get a kind of cognition. In Berkshire's view, the most important thing in investment is human nature game and emotional game, not valuation, not prejudging the future of the enterprise. Is this understanding correct?

Munger: Of course. In a huge bureaucracy, human nature will make bad decisions. It will be a very difficult task if you deal with a huge bureaucracy. The sooner you know how to deal with it, the better off you will be. You should do this in everything. Predict reality and adapt to reality.

The core idea is to know what the world is, not what you want to see.

The importance of using 25 kinds of misjudgment psychology

Red Weekly: Mr. Munger said, "Among the models that everyone should have mastered but didn't, perhaps the most important one comes from psychology ..." Teacher Munger gave us 25 psychological models of human misjudgment, which benefited domestic professional investors a lot. As a professional investor, how to avoid those misjudgments, keep yourself in a correct mental state, analyze information and make progress?

(Remarks: 25 misjudgments mentioned in poor Charlie's collection: 1. Reward and punishment overreaction tendency; 2. Liking/loving tendency; 3. Hate/hate tendency; 4. avoid suspicion; 5. Avoid the tendency of inconsistency; 6. Curious tendency; 7. Kant's fair tendency; 8. Envy/jealousy tendency; 9. Feedback tendency; 10. The tendency influenced by simple association; 1 1. Simple and painful psychological denial; 12. Overestimate your tendency; 13. Overoptimistic tendency; 14. Deprived of the tendency of overreaction; 15. Social identity tendency; 16. Contrast the tendency of wrong reaction; 17. Pressure influence trend; 18. The trend of measuring usability incorrectly; 19. Forget the tendency if you don't use it; 20. The tendency of chemical substances to influence mistakes; 2 1. aging error influence trend; 22. Authority error affects tendency; 23. nonsense tendency; 24. Pay attention to the tendency of reasons; 25.lollapalooza tendency-several psychological tendencies * * * work together to lead to extreme consequences. )

Munger: These contents come from introductory psychology courses in all universities. If you haven't studied, the university can teach you. But not everyone can understand and think about these problems. I tell you with my own example that I don't think about the consequences of these problems.

As I said in my book (poor Charlie's collection), I was given 300 shares of Bellich oil decades ago, and the US stock market was only $65,438 +0 15. I saw the company at that time and thought it was a good deal, so I bought it. A day later, I said there were still 1500 shares to buy. However, I have no cash at this time and need to sell some other shares. I could do it, but I didn't buy it because I thought it was more troublesome. Looking back now, I find that it was a wrong decision not to buy this 1500 stock, because it rose a lot later (note: poor Charlie set mentioned that less than two years after Munger bought 300 shares of Bellich oil, Shell bought Bellich oil at a price of about $3,700 per share. This part belongs to the fourteenth misjudgment among the 25 kinds of misjudgment psychology, that is, the tendency of being deprived of overreaction, which is often caused by making a mountain out of a molehill. ), today's mistakes and opportunity costs cost me about $5 billion, which is a stupid decision and one of the worst decisions in my life. This just complements what you just asked, what is my most failed investment?

There are two reasons for this. One is that buying 1500 shares is not so easy and troublesome. The other is that the president of this company drinks, which is also a misjudgment. The president drinks, but the oil of his oil company doesn't drink. Therefore, I made the wrong decision for two psychological reasons. I was fascinated by the man who drank so much wine. I thought too little about how good the oil field was, so I screwed up. But this should inspire you. When the important opportunity in life comes, you may not seize it, but you can still remedy it. Think of those people whose first marriage was bad but their second marriage was good. Many things can be redeemed.

Buying excellent companies is more advanced than cigarette butts theory.

Red Weekly: Your idea of buying excellent companies at reasonable prices strongly influenced Mr. Buffett. Mr. Buffett said that it turned him from a gorilla into a human being! Gorillas are obviously not as advanced as people. Is Graham's cigarette butt theory so different from your idea of buying excellent companies at reasonable prices? Why is the theory of buying excellent companies at reasonable prices more advanced?

Munger: Buffett is right. You can directly evolve into humans without going through the gorilla model.

Good companies keep working hard, and the final value will be bigger and bigger. You don't have to do anything (as an investor). Mediocre companies are not like this. These companies will bring you a lot of pain, but they will create little profit. If this is the case, sell it until you find another good company. Buy shares in a great company at the right time and at the right price, and then do nothing.

Why do Munger and Buffett hate leverage?

"Red Weekly": You have always hated leverage, so if there is a definite opportunity, do you think you can use leverage?

Munger: When it comes to leverage, we also use a little bit, because we use some tools such as insurance, mainly floating deposits for investment, and floating deposits are also a kind of leverage. However, the borrowing of floating deposits is not the same as ordinary loans. At that time, there was no fixed borrower to ask for the account, so I could make my own decisions. In this case, the lever is very safe. We don't need to use stocks to mortgage loans.

If you give me a chance of 100%, I will definitely use leverage. The problem is that there is nothing 100%.

If you have a rich uncle who has no children, he owns a huge enterprise and its value is increasing. He wants to pass this company on to you, which is equal to a certain probability of 100%. You have to go. Do you want to do something else? This is a very safe lever, and you have to double your bet at a certain opportunity.

Look at those people who have made money betting on horses in Hong Kong for many years. They earn 65.438 billion yuan a week. They have their own formula, but the stakes can't be too big. Too much will change the odds. That's what happened. They will bet more when they are sure and less when they are not sure. Obviously, it is.

Red Weekly: Thank you again for your interview with Red Weekly. My question is over. I hope to interview you again next time. Thank you very much.

Munger: You're welcome.

This article comes from Hongkan Finance.