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Summary

  • Just sit by the sidelines if a good investment is not on the horizon.
  • If you are going to copy someone's life and ideas, Munger would be as good as any to copy.
  • Munger is a big advocate of multidisciplinary education and thinking, with a focus on psychology.

Author Update Mon, Apr. 6, 3:40 PM

Daily Journal (NASDAQ:DJCO) is up over 79% since this article was published.  The audio and notes from their recent annual meeting is available here.  Future updates on this topic and other value and event driven opportunities will be available to Exclusive Research members.  You can learn more here

Author Update Dec. 15, 2014, 5:25 AM

Shareholders of BRK.A/BRK.B, DJCO, and COST are much wealthier people as a group because of Charlie Munger. He remains a hugely positive influence into his nineties. Since this article was published, each of the securities that constitute his major investments outperformed the S&P 500. COST outperformed by a single basis point, +35.9%. BRK.A. and BRK.B are both up over 43%. DJCO is up over 96%. Anyone interested in hearing Munger speak at the Berkshire Hathaway annual meeting should make sure that they own at least one share and that they have reservations made for the trip before the New Year (extra value investor points for finding creative bargains). One strategy for investing in BRK.B is to write long-dated puts based on the view that the company’s willingness to buy back their shares at 120% of book value provides a reasonably likely floor to their value.

This note is one of a series about the books that have informed and inspired my life and work.

Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger

Conversation with Janet Lowe on Damn Right!.

Janet Lowe:

Among all the books I've written, Damn Right is probably my favorite. It's right up there with Benjamin Graham on Value Investing and Warren Buffett Speaks. Part of the reason I like it so much is that it added another view point to Graham's and Buffett's lives and ideas. It gave me a three dimensional picture of investment philosophy.

You may be interested to know that Damn Right and Charlie Munger are very popular in Asia. China, Taiwan and Korea all have sent public television crews to interview me and others about Munger, his life and his philosophy. They like his honesty and boldness.

Chris DeMuth Jr:

What has changed since you wrote this wonderful book on Mr. Munger?

Janet Lowe:

Of course Charlie has grown older and his beloved wife Nancy passed away. You always learn more about your subjects after the book is written, but some of these are minor details. Since the book was written Charlie continues to support intellectual exploration, such as books by Robert Cialdini. I might explore his intellectual interests a bit more.

Chris DeMuth Jr:

I am a great admirer of Robert Cialdini's books, such as Influence and Yes! What would you do differently as an investor as a result of your book?

Janet Lowe:

I understand that value investing principles are basic guidelines, not applied to stocks and other securities only. I have diversified my investments to well-chosen real estate. I am more content to just sit by the sidelines if a good investment is not on the horizon. Be patient. They will come.

Also, I recently bought more Berkshire Hathaway and am glad. Not related to these books, but in reaction to the volatility of current market, my investments are shorter term than usual and I use stop orders, puts, etc. more than I did in the past. I am more concerned with consolidating and protecting my gains.

What was most applicable for me?

My first takeaway was that shareholders of BRK.A/BRK.B, DJCO, and COST are much wealthier people as a group because of Charlie Munger. If you are going to shamelessly copy someone's life and plagiarize their ideas, Munger would be as good as any to so copy. There are a lot of investors worth copying in specific circumstances here or there, but with Charlie, one can just copy the whole thing. He would probably agree that this is a sensible strategy.

Secondly, Munger is a big advocate of multidisciplinary education and thinking, with a focus on psychology. He is particularly attuned to understanding incentives and the huge impact that incentives have on human behavior. In investing, particularly investing in M&A situations, Munger has taught me to make allowances for how much incentives will lead to the success or failure of companies and their deal making.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Chris DeMuth Jr. is a portfolio manager at Rangeley Capital. Rangeley invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our investors, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

Source: Damn Right: Behind The Scenes With Berkshire Hathaway Billionaire Charlie Munger