A Goldmine Charlie Munger File

I get e-mails from people all the time looking for good reading material. Most of you have already red the basics like The Intelligent Investor, One Up On Wall Street, or all of Warren Buffett’s letters to Berkshire Hathaway shareholders. Beyond that, most recommendations hinge upon the specifics of the person asking. Some people think they want investment advice, but really what they need is a good estate planning book. Others need to read Dividends Don’t Lie to understand why some industries with high dividend payout ratios can have safer dividends than those with lower payout ratios. Other people are too focused on numbers and probably need to find something like The Speed of Trust.

Tonight, I stumbled upon a goldmine that is likely to provide some value to anyone reading it. I found a PDF that links to all of Charlie Munger’s letters to Wesco shareholders between 1983 and … Read the rest of this article!

A 1990s Bubble Stock Today

Marcus Lemonis, the host of CNBC’s popular show “The Profit”, recently lambasted a struggling business owner by saying, “You can’t spend the revenues, dummy.” Hey, we have to take our truths wherever we can find them. And almost eighty years ago, Benjamin Graham added some elegance to that notion when he stated that intelligent men often mistake a company’s rapid overall growth for the amount of profits that would actually be someday attributable to the shareholder.

Charlie Munger called high revenue/low profit businesses “good until reached for” because the money you saw reported on paper looked nice until you actually tried to convert it into cash that shows up in your bank account. Buffett, too, addressed this concept tangentially when he stated that his favorite businesses are the ones that permits the owners to extract ever-growing sums of cash each year without threatening the company’s competitive position or ability to … Read the rest of this article!

Charlie Munger’s Mental Models Out In The Wild

Right now, the Tampa Bay Lightning are playing the Chicago Blackhawks in Game 2 of the Stanley Cup playoffs on NBC. In the lead up to the game, however, the conversation has not been about Tampa Bay’s players. Instead, the media has been discussing the policies of Tampa Bay’s ownership regarding ticket sales.

For those of you that don’t follow this sort of thing, Tampa Bay bans the sale of playoff tickets to online purchasers unable to connect their ticket sale purchase to a Florida area code. Additionally, Tampa Bay bans the wearing of away team gear in the 1,400 seats that are up-close and likely to be featured on television.

Because Americans tend to favor the notion that sellers ought to lose all rights to their products after the point of sale, the media response to this policy has been excessively negative because the purchasers of goods and services … Read the rest of this article!