Charlie Munger At The 2016 Daily Journal Corporation Meeting [FULL NOTES]

Charlie Munger At The 2016 Daily Journal Corporation Meeting [FULL NOTES]

Whitney Tilson’s latest email to investors covers a lot of topics. Below is an excerpt followed by notes from Charlie Munger at the 2016 Daily Journal Corporation Meeting  as we promised readers. Big H/T to Whitney for sending them. Readers can find the text from Whitney followed by the full notes  from the 2016 Daily Journal Corporation Meeting below.

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Charlie Munger

1) A very smart friend commented that everyone seems to be taking down exposure on both the long and short sides – but if you do that steadily in a decline then, by definition, you have the minimum exposure right at the bottom.


That doesn’t sound very smart to me.


I’ve been steadily putting money to work on the long side, going from roughly 33% cash to 17% in the past few weeks, and just added my first new short in quite a while today…


2) In response to a friend who’s trying to figure out whether China is going to have a hard landing, with a big devaluation, etc., I wrote:


Keep in mind that Bill Miller’s statement is usually right: If it’s in the headlines, it’s in the stock(s).


Except in very rare circumstances, when I: 1) develop high confidence in a macro theme; and 2) it’s different from the consensus view (the only two examples in my 17+ years were the internet bubble in early 2000 and the housing crash being in the 2nd inning, not the 7th inning in early 2008), I completely ignore the macro stuff and don’t waste time on it.


How many people have confidently predicted calamity for Japan in the past 20 years, or a disorderly exit by Greece from the euro a few years ago?


I know for sure that I will be the LAST person on earth to develop a proprietary insight on anything about China.


3) It’s good to see my long-time friend, Zeke Ashton, knocking the cover off the ball with the Centaur Total Return Fund (originally the Tilson Dividend Fund), which he’s been managing since its inception on 3/16/05 (full disclosure: I own a very small piece of Zeke’s management company).


This kind of market, like 2008, is when his conservative value investing approach really shines – as you can see on the Morningstar page (, the fund, through yesterday, was in the top 1% (of 447 funds) in its category year-to-date, in the top 4% over the past year, and the top 3% over the past decade, compounding at 7.6%.


And he didn’t generate this excellent performance (earning it a “High Return vs. Category” rating from Morningstar) by taking a lot of risk – in fact, the fund is also rated “Low Risk vs. Category” – the perfect combo! – which is why, other than my fund, this is the only other fund in which I’ve invested my parents’ retirement savings.


He was quoted in a Barron’s article in December, The Safest Concentrated Funds:


Conservative funds often get overlooked—until a crash. “Our strategy is designed for risk-averse investors who can’t live on bond income,” says manager Zeke Ashton of the $30 million Centaur Total Return (TILDX), which holds 27 stocks. Valuation-conscious Ashton has a 19% cash position and wants stocks with healthy dividends. He also writes call options for extra income and risk control.


4) Pershing Sq. just released a very powerful new 13-min video:

The American Dream Denied: Herbalife Victims Speak Out

Herbalife claims it cleaned up its act after we exposed its fraudulent business model.  The former Herbalife distributors we spoke with ? all of whom recently pursued the Herbalife business opportunity in their communities throughout the U.S. ?  tell a different story.  Each of these distributors, who are among the 2 million others who drop out of HLF every year, left the business after realizing that what they had been promised was a lie.

Of course, one must be careful: the plural of anecdote isn’t data. But the data, if anything, is more damning than these heartbreaking stories: 90% of Herbalife’s distributors drop out in the first year, in total, 2 million drop out of Herbalife every year, and 89% don’t make a single dollar from the company. But hey, they’re just all happy consumers who lost weight, made friends, and no longer needed Herbalife, right? If you believe that, please contact me, as I have a bridge in Brooklyn to sell you.


5) Yesterday I did a day trip to LA (I was on the ground for a mere four hours – a record!) to attend the2016 Daily Journal Corporation Meeting, which is chaired by Charlie Munger. Just like at the old Wesco meetings, a few hundred hard-core Buffett/Munger groupies come to hear Munger’s wisdom. He dispensed with the formalities of the meeting in the first few minutes and then took questions for 93 minutes.

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Warren Buffett


There were no real zingers like his spot-on critique on Valeant at last year’s meeting, but he had lots of interesting things to say. This was my favorite, when he was asked about what he said the previous year about Valeant:


“It’s caused me nothing but trouble…it probably wasn’t wise for me to inject myself into this. I have no dog in that hunt. I have no interest in the pharmaceutical business. I have no interest in Valeant. It’s just that you people have come so far [laughter], I feel obligated to tell you a few good stories and make comments about current affairs. Valeant was such an extreme example of misbehavior and crazy greed and what have you that I couldn’t resist calling attention to it. And it ended up with one of Valeant’s largest shareholders saying that Warren Buffett was a sinner because he owned Coca-Cola [laughter]. I drew retaliation to Warren. By the way, that’s a good place. If any of you are mad at me today, why get mad at Warren [laughter]. He can handle it. He’s a very philosophical man.


It is true that these crazy false values and crazy excess is bad morals and is bad policy. It’s bad for the nation. It’s just bad, bad, bad. And there’s a lot of it. Now of course a lot of it is in American finance. And there’s no question about the fact that my judgement that American finance…the truth of the matter is that...Elizabeth Warren doesn’t agree with me on many subjects and I wouldn’t agree with her on many subjects, but she is basically right when she says that American finance is out of control and has been [unintelligible] and that it isn’t good for the rest of us. Both Elizabeth Warren and Bernie Sanders are not two of my favorite people on earth, but they are absolutely right [unintelligible]. You all see it [unintelligible] hucksters trying to cheat other people. You all see what goes on in finance – the craziness, the promotions, the fuzzy accounting, the crazy trading cultures… It’s very bad for all of us that we have this huge overdevelopment of finance. And yet it’s very hard to do anything about it.”


Attached are extensive notes by Adam Blum, below are 2016 Daily Journal Corporation Meeting notes from Munger’s opening remarks, taken by Chris DeMuth’s uncle, and at the

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