Warren Buffett’s annual salary has been $100,000 for 40 years. Here’s a look at the billionaire investor’s unique compensation.

warren buffett
Warren Buffett.

  • Warren Buffett’s annual salary has been $100,000 for the past 40 years.
  • Berkshire Hathaway spends triple that amount on his security each year.
  • Buffett owns about $100 billion of Berkshire stock and lives modestly.
  • See more stories on Insider’s business page.

Warren Buffett is a legendary investor, leads one of the world’s biggest companies, and has ranked among the world’s wealthiest people for decades. Yet he earns a modest annual salary of $100,000 – and hasn’t had a pay rise in 40 years, SEC filings show.

As Berkshire Hathaway’s CEO and chairman, Buffett recommends to his board of directors how much he should be paid, and decides the the rest of the executives’ compensation. The 90-year-old has received $100,000 a year since 1980 – a fraction of the $15 million average pay of S&P 500 CEOs in 2019.

Buffett doesn’t earn much from other sources either. He netted double his salary in annual directors’ fees in the 1990s and early 2000s, before he resigned as a director of The Washington Post Company and stepped down from other corporate boards.

The highest total compensation he’s ever received at Berkshire was $525,000 in 2010, comprising his $100,000 salary, $75,000 in directors’ fees, and $350,000 allocated to his security costs.

Berkshire spends far more on Buffett’s personal and home security than it pays him directly. Keeping the boss safe has cost the company an average of $339,000 a year since 2008, or $4.4 million in total.

Buffett isn’t in desperate need of a big salary. He owns roughly $100 billion of Berkshire stock – which he’s gradually giving away – and doesn’t spend much: he lives in a modest family home, drives a basic car, and eats breakfast at McDonald’s.

The investor also doesn’t use a company car, belong to any clubs where Berkshire pays his dues, or commandeer company-owned aircraft for his personal use.

Buffett shared his views on salaries at Berkshire’s annual shareholder meeting in 2017, when he was asked how much his successor would be paid. He expressed hope that the next CEO would already be rich, and wouldn’t be motivated to earn 10 or 100 times the money their family needs to live on.

“They might even wish to, perhaps, set an example by engaging for something far lower than, actually, what you can say their true market value is,” he continued, adding it would be “terrific” if that was the case.

Buffett is a firm believer that CEOs should be incentivized to deliver long-term success for their companies. He believes massive annual salaries, bonuses, and short-term stock options encourage short-term thinking.

Charlie Munger – Buffett’s right-hand-man and Berkshire’s vice-chairman – has followed Buffett’s example. He’s also received a salary of $100,000 a year for several decades now, SEC filings show.

In contrast, Ajit Jain and Greg Abel, who head up Berkshire’s insurance and non-insurance divisions respectively, are paid far more handsomely. Both men have earned a $16 million salary in each of the past of three years, plus total bonuses of $7 million each.

Finally, Berkshire’s finance chief, Marc Hamburg, has seen his salary grow from about $300,000 in 1996 to $3.3 million last year.

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Bitcoin has surged to a record $60,000 as stimulus hopes and big-name backers fuel demand

traders happy celebrate fist pound
The surge marked a 1,000% gain in the past year.

  • Bitcoin hit a record $60,000 on Saturday, marking a 1,000% gain in the past year.
  • The cryptocurrency has benefited from institutional support and fiscal stimulus.
  • Mark Cuban and Kevin O’Leary are fans, Warren Buffett and Michael Burry aren’t.
  • See more stories on Insider’s business page.

Bitcoin surged as high as $60,000 for the first time on Saturday, lifting its price increase over the past year to more than 1,000%.

The cryptocurrency, which boasts a market capitalization of more than $1.1 trillion, has been buoyed by investor optimism. President Joe Biden signed a $1.9 trillion pandemic-relief bill into law on Friday, which will lead to $1,400 stimulus checks being distributed to millions of Americans, fueling hopes that the market boom will continue.

Bitcoin has also benefited from major institutional endorsements this year. Elon Musk’s Tesla plowed $1.5 billion into the cryptocurrency, Mastercard said it would allow merchants to accept select cryptocurrencies, and BlackRock has started to “dabble” with it as clients clamor for bigger returns.

“Shark Tank” billionaire Mark Cuban said this week that money is flowing into crypto because rock-bottom interest rates have reduced the appeal of bonds and other assets. People are also bored at home during the pandemic and see owning crypto as a source of entertainment, he continued.

Cuban argued bitcoin’s utility has increased massively with the rise of decentralized finance (DeFi) platforms. However, he dismissed the idea that it could serve as a currency or hedge against inflation.

One of Cuban’s “Shark Tank” costars, Kevin O’Leary, has warmed up to bitcoin after previously calling it “garbage.” He cited inflation risks and the advent of bitcoin ETFs as reasons for his change of heart, and plans to give the digital coin a 3% allocation in his portfolio.

However, other high-profile investors remain deeply skeptical of bitcoin. Warren Buffett has blasted it as “rat poison squared” and a worthless delusion. He warned that cryptocurrencies would come to a bad end.

Buffett’s business partner, Charlie Munger, recently said it was too volatile to serve as a medium of exchange, and advised others to follow his lead and not buy it.

Michael Burry, the investor who anticipated the collapse of the US housing market in the mid-2000s and made a fortune betting on that outcome, has warned bitcoin is a “speculative bubble” and predicted a “dramatic and painful fall.”

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Billionaire investor Chris Sacca says he’s been invited to sit on SPAC boards and do nothing

Getty Images chris sacca donald trump shark tank
Chris Sacca.

  • Chris Sacca has been invited to sit on SPAC boards and do nothing.
  • The venture capitalist tweeted that many SPAC directors are “window dressing.”
  • Charlie Munger, Jeremy Grantham, and other top investors have criticized SPACs.
  • Visit the Business section of Insider for more stories.

Billionaire investor Chris Sacca tweeted on Tuesday that he’s been invited to sit on the boards of several special-purpose acquisition companies (SPACs) – with no expectation that he does any work.

“I’ve been offered a bunch of SPAC board seats,” the former “Shark Tank” star and Lowercase Capital founder said. “The pitch usually goes something like, ‘You’ll get [lots of shares] for just putting your name on it and doing nothing.'”

“While there are some board members actively helping, too many are just window dressing,” Sacca added. “Don’t get distracted.”

SPACs typically aim to secure a stock-market listing then acquire a private company, offering businesses an alternative way to go public than an initial public offering (IPO).

The number of SPACs has exploded in recent months as investors such as Bill Ackman and Chamath Palihapitiya, celebrities including Alex Rodriguez and Colin Kaepernick, and ex-politicians such as Paul Ryan and Gary Cohn have jumped on the trend.

Sacca – an early investor in Uber, Twitter, and Instagram – has shifted his focus towards tackling issues such as climate change and voter suppression in recent years. He isn’t the only high-profile investor to voice concerns about SPACs recently.

Warren Buffett’s business partner, Charlie Munger, dismissed them as “crazy speculation” and evidence of an “irritating bubble” in February.

Similarly, GMO cofounder Jeremy Grantham – who unintentionally made a fortune when one of his investments was acquired by a SPAC last year – slammed them as “a license to rip investors off” and suggested they should be banned.

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‘Big Short’ investor Michael Burry slams bitcoin as a ‘speculative bubble’ – and warns a crash is coming

Michael Burry
Michael Burry.

  • Michael Burry warned that bitcoin is a ‘speculative bubble.’
  • “The Big Short” investor grouped it with electric vehicles, SAAS, and meme stocks.
  • He compared the boom in those assets to the dot-com and housing bubbles.
  • Visit the Business section of Insider for more stories.

Bitcoin’s price has surged to unsustainable levels and buyers have taken on dangerous amounts of debt, Michael Burry cautioned in a recent tweet.

“$BTC is a speculative bubble that poses more risk than opportunity despite most of the proponents being correct in their arguments for why it is relevant at this point in history,” the investor wrote before deleting the tweet as usual.

“If you do not know how much leverage is involved in the run-up, you may not know enough to own it,” he added.

Burry is best known for his billion-dollar bet on a housing-market crash in the mid-2000s, chronicled in the book and movie “The Big Short.”

The Scion Asset Management chief compared the hype around bitcoin, electric vehicles, software-as-a-service companies, and “meme stocks” like GameStop and AMC to the housing and dot-com bubbles in a tweet on Saturday.

“Fads today (#BTC, #EV, SAAS #memestocks) are like housing in 2007 and fiber/.com/comm/routers in 1999,” he said.

The enormous buzz isn’t entirely unfounded, Burry said, but he doesn’t expect it to last.

“On the whole, not wrong, just driven by speculative fervor to insane heights from which the fall will be dramatic and painful,” he said. 

Burry doubled down on his bearish stance in other tweets last week.

“Those saying me and Munger and Singer are so out of touch are not considering that we have seen this all before, and not just once,” he said, referring to recent warnings about market speculation from Charlie Munger – Warren Buffett’s business partner – and hedge-fund billionaire Paul Singer.

“The market is dancing on a knife’s edge,” he said in another tweet.

Burry said in February he doesn’t “hate” bitcoin but has doubts about its long-term prospects. He expects authorities to squash threats to their currencies and launch their own digital notes and coins.

The Scion chief added that he isn’t short bitcoin, as “anything is possible” in the near future. He’s short Tesla as of December, and cashed out his GameStop shares last quarter after laying the groundwork for the spike in GameStop’s stock price in January.

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There are 2 kinds of people in the stock market right now: People who are in on the joke and people who aren’t

stock buy sign shopping
A woman passes a sign saying ‘All Stock Must Go’ in Croydon London

  • Wall Street has gone into hype beast mode selling SPACs, crypto, and the power of retail trading.
  • This is because, during bubbles, selling nonsense is a big part of the investing business.
  • Unfortunately we’ve got some newbies out there who may not know what that looks like.
  • This is an opinion column. The thoughts expressed are those of the author.
  • Visit the Business section of Insider for more stories.

On Wall Street, there is nothing like a reminder from the old timers that everything we’re doing has been done before. In times like this one – when the market is awash with cash, stocks go from kissing all times highs to careening downward, and retail traders have aggressively joined the fray – this reminder is often a warning that most hot new investment crazes are just old-timey bubbles in disguise.

And so it was last week, when billionaire Charlie Munger – the nonagenarian business partner to legendary investor Warren Buffett – took the mic at the Daily Journal annual meeting. He blasted Bitcoin as useless, calling it “the pursuit of the uneatable by the unspeakable.” He accused Robinhood of leading its users into “speculative orgies.” And said that Special Purpose Acquisition Vehicles (SPACs) – which allow investors to raise money to create a publicly traded entity in hopes that it will buy a private company within two years – are the indication of an “irritating bubble.”

I started a joke

To Munger all of these new fangled instruments designed to separate you from your money are part of the bull market joke. Some people are in on it, and some people are not. That’s what happens when things get silly in finance. All kinds of products can be dreamt up when there’s lots of money sloshing around, but not all of them can ultimately deliver. 

Or as Munger put it, “the investment banking profession will sell s–t for as long as s–t can be sold.”

And it’s not just the investment bankers telling stories now. Now it’s also corporate CEOs who’ve decided to become crypto influencers, anonymous people on Reddit, that guy from Barstool Sports, and anyone – from Colin Kaepernick to former Goldman Sachs COO and Trump administration official Gary Cohn – who knows someone at a hedge fund. 

All of these people are participating in the story that sells the bubble instruments Munger was complaining about. 

I promise you that most people on Wall Street are in on the joke. But they are trained to play whatever cards the market deals them. Sometimes that means the art of stock picking is complicated balance of numbers over time – like a job Danny Ocean would pull robbing a Las Vegas casino.

Other times, like now, trading stocks (and some other new stuff) is more of a smash and grab job – like Bonnie and Clyde running into a bank, grabbing the cash, and escaping into their still-running getaway car parked in front.

Consider all the hubbub over GameStop and the power of retail traders betting as one. Will Robinhood revolutionize trading for the masses and turn everyone into an investor? Probably not. Once the pandemic ends people will have other things to spend their money on like restaurants and travel. And I for one am waiting for all the stories about people getting fired for trading on Robinhood all day at work once we have to go back to the office.

But will every hedge fund worth its salt be checking the Wall Street Bets subreddit for as long as this retail trading trend goes on? You bet. They’ll be trading on the information they glean there and probably impart some wisdom of their own too. It’s all fun and games until somebody loses a savings.

Telling stories

Every joke is highly dependent on the setup story, and on Wall Street it’s no different. Before a bubble bursts, it has to be blown up. We are watching that hype machine in real time.

The market has already launched 175 SPACs this year, each of them being their own mini-story about the future. These vehicles raise money so that a public entity can merge with a private company, allowing that private company to circumvent the IPO process (you know, that pesky process through which we discovered the WeWork was WeWorthless).

Everyone has a SPAC now because you would be crazy not to. Research indicates that – mirroring the life cycle of any bubble – they are far more profitable in the fundraising-honeymoon-anything-is-possible beginning phase than they are when all is said and done. A Harvard study found that while most SPACs “issue shares for roughly $10…by the time of the merger the median SPAC holds cash of just $6.67 per share.”

Of course, usually the funds that raised the money have peaced out by then.

When it comes to Bitcoin, sometimes the story is that eventually we’ll all have some Bitcoin. Never mind that Treasury Secretary Janet Yellen explained why that doesn’t make sense at the DealBook conference last week. Mining Bitcoin leaves a massive carbon footprint and transactions are incredibly slow.

“It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer,” Yellen said.

Sometimes Bitcoin’s story is that, since governments can’t be trusted and the world is following apart, Bitcoin will eventually be a store of value like gold. This has some companies LARPing central banks and adding Bitcoin to their balance sheets. So far it has merely added more volatility for these companies’ stocks, worrying investors that companies like Tesla have hitched their wagons to a time bomb.

No matter, the CEO of MicroStrategy – another company that has bought into the craze – said he’s considering borrowing in order to buy more Bitcoin. 

Ultimately, though, what most people on Wall Street will tell you candidly is that Bitcoin is is a tool for speculation. Of course, the Wall Streeters who are speculating on Bitcoin and other currencies love all these tall tales about its future. The stories ensure that more people who are not in on the joke hand over their money, so they’ll keep telling them.

The only laugh that matters is the last one

Everything I’m saying is really annoying to everyone making money in this market. Fine. After hearing that Munger said that it’s “stupid” to have a culture that encourages as much gambling in stocks. Robinhood’s spokesperson Jacqueline Ortiz Ramsay called his view “disappointing and elitist.”

Then she went all in on the story Robinhood’s been selling. It’s a really good one, you may have heard it during the GameStop Congressional hearing earlier this month. She said that the platform is empowering a “new generation of investors” and people who don’t have access to “generational wealth.” Munger, she suggested, is behind a great “cultural shift” of our times. How can you argue with that?

You don’t. Munger’s basic response to all that was ‘look man I get it, we all gotta eat.’ 

When everyone is making money, it’s easy to laugh away a warning from an cranky billionaire who was of legal drinking age when the Allies bombed Dresden. Wall Street goes into hype beast mode about individual stocks all the time, it’s just that right now with everyone at home and logged into their trading accounts, and TikTok kids making sea shanties about doge coin this has all gotten out of hand. A lot of these new people are not in on the joke, and they will not be laughing when it’s all over.

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Warren Buffett admitted a ‘big’ mistake, touted Berkshire Hathaway’s past deals, and cautioned traders in his annual letter

Warren Buffett
Warren Buffett.

  • Warren Buffett published his annual letter to shareholders on Saturday.
  • The Berkshire Hathaway CEO made a “big” mistake in overpaying for Precision Castparts.
  • Buffett reminded stock traders that their transaction fees go straight to Wall Street.
  • Visit Business Insider’s homepage for more stories.

Warren Buffett owned up to a major mistake, trumpeted Berkshire Hathaway’s past successes, and drew a line between his long-term shareholders and the meme-stock crowd in his annual letter on Saturday.

The billionaire investor said Berkshire’s focus is boosting operating earnings and making large, high-quality acquisitions. His conglomerate “met neither goal” in 2020 as its operating earnings slumped 9% and it failed to close any major deals, he said.

Moreover, Buffett admitted to overpaying for Precision Castparts, the aerospace-parts manufacturer that Berkshire purchased for $37 billion in 2016. The price tag was a “big” error that fueled an “ugly” $11 billion writedown last year, he said.

Buffett dedicated most of his letter to reflecting on some of Berkshire’s most famous investments. See’s Candies, Geico, National Indemnity, Nebraska Furniture Mart, and Clayton Homes all received a mention.

The 90-year-old investor argued their US origins were a key factor in their success. “These builders needed America’s framework for prosperity,” he said. “Our unwavering conclusion: Never bet against America.”

Buffett didn’t miss the chance to highlight that Berkshire owns $154 billion in US-based assets such as factories and equipment – more than any other US company. AT&T is the runner-up with $127 billion worth, he said.

The Berkshire chief also discussed his shareholder base. He emphasized the “special kinship” he feels to the million-plus individual investors who trust him with their money and embrace Berkshire’s culture of partnership.

Buffett made a distinction between Berkshire’s long-term shareholders and people who buy into the hype around the likes of Tesla, GameStop, and Bitcoin. He reminded traders that the fees they pay to constantly tweak their portfolios flow straight into Wall Street’s pockets.

“The tens of millions of other investors and speculators in the United States and elsewhere have a wide variety of equity choices to fit their tastes,” Buffett wrote. “They will find CEOs and market gurus with enticing ideas.”

“If they want price targets, managed earnings and ‘stories,’ they will not lack suitors,” he continued. “‘Technicians’ will confidently instruct them as to what some wiggles on a chart portend for a stock’s next move. The calls for action will never stop.”

Finally, Buffett revealed that his 97-year-old business partner and Berkshire’s vice-chairman, Charlie Munger, will join him on stage at Berkshire’s shareholder meeting in May.

The event will be held in Munger’s home state of California, after he decided not to fly to its usual Nebraska location last year due to the pandemic.

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Warren Buffett’s right-hand man blasted Robinhood, slammed SPACs, dismissed bitcoin, and warned against speculating at the Daily Journal annual meeting. Here are the highlights.

charlie munger
Charlie Munger.

Warren Buffett’s right-hand man issued a warning to stock-market speculators, criticized the trading platforms enabling them, blasted SPACs, and downplayed the significance of bitcoin at the Daily Journal annual meeting on Wednesday.

Charlie Munger, the vice-chairman of Buffett’s Berkshire Hathaway, is also the chairman of Daily Journal, a newspaper publisher and software developer.

Here’s a roundup of the 97-year-old executive’s key comments during the meeting, lightly edited and condensed for clarity.

Market speculation

“These things do happen in a market economy, you get crazy booms. I’ve been around for a long time and my policy’s always been to just ride it out.”

“A lot of investors are buying stocks in a frenzy, frequently on credit, because they see them going up. That’s a very dangerous way to invest.”

“Shareholders should be more sensible and not crowd into stocks and just buy them just because they’re going up and they like to gamble.”

“I think it must end badly but I don’t know when.”

GameStop

“That’s the kind of thing that can happen when you get a whole lot of people who are using liquid stock markets to gamble the way they would bet on racehorses.”

“The frenzy is fed by people who are getting commissions and other revenues out of this new bunch of gamblers. When things get extreme you have things like that short squeeze.”

“It’s very dangerous and it’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors. Of course that is going to cause trouble, as it did.”

Robinhood and trading apps

“If you’re selling people gambling services where you make profits off the top like many of these new brokers who specialize in luring gamblers in, it’s a dirty way to make money and I think we’re crazy to allow it.”

“[Wretched excess in the financial system] is most egregious in the momentum trading by novice investors lured in by new types of brokerage operations like Robinhood. All of this activity is regrettable, civilization would do better without it.”

“Human greed and the aggression of the brokerage community creates these bubbles from time to time. Wise people just stay out of them.”

“When you pay for order flow, you’re probably charging your customers more in pretending to be free. It’s a very dishonorable, low-grade way to talk. Nobody should believe that Robinhood’s trades are free.”

Stock valuations when interest rates are low

“Everybody is willing to hold stocks at higher price-earnings multiples when interest rates are as low as they are now. I don’t think it’s necessarily crazy that good companies sell at way higher multiples than they used to.”

“On the other hand, I didn’t get rich by buying stocks at high price-earnings multiples in the midst of crazy, speculative booms, and I’m not going to change.”

SPACs

“The world would be better off without them. This kind of crazy speculation, in enterprises not even found or picked out yet, is a sign of an irritating bubble. The investment-banking profession will sell shit as long as shit can be sold.”

Bitcoin

“I don’t think bitcoin is going to end up the medium of exchange for the world. It’s too volatile to serve well as a medium of exchange.”

“It’s really kind of an artificial substitute for gold and since I never buy any gold, I never buy any bitcoin. I recommend that other people follow my practice.”

“[The Daily Journal] will not be following Tesla into bitcoin.”

Tesla and bitcoin

Munger was asked to choose which was more ridiculous, bitcoin trading at $50,000 or Tesla’s fully diluted enterprise value of $1 trillion.

He quoted author Samuel Johnson, who when presented with two choices, said, “I can’t decide the order of precedency between a flea and a louse.”

“I feel the same way about those choices,” Munger said. “I don’t know which is worse.”

Banks

“Banking, run intelligently, is a very good business. The kind of executives who have a Buffett-like mindset and never get in trouble are a minority group, not a majority group.”

“It’s hard to run a bank intelligently. There’s a lot of temptation to do dumb things which will make the earnings next quarter go up, but are bad for the long term.”

Wells Fargo

“There’s no question that Wells Fargo has disappointed long-term investors like Berkshire. The old management were not consciously malevolent or thieving, but they had terrible judgment in having a culture of cross-selling, with incentives on the poorly paid employees that were too great to sell stuff the customers didn’t really need.

“When the evidence came in that the system wasn’t working very well because some of the employees were cheating some of the customers, they came down hard on the employees instead of changing the system. That was a big error in judgment. It’s regrettable.”

“You can understand why Warren got disenchanted with Wells Fargo. I’m a little more lenient. I expect less out of bankers than he does.”

BYD

“BYD stock did nothing for the first five years we held it and last year it quintupled. What happened was that BYD is very well-positioned for the transfer of Chinese automobile production from gasoline-driven cars to electricity-driven cars.”

“It’s in a wonderful position and that excited the people in China – which has its share of crazy speculators – and so the stock went way up.”

Selling overvalued stocks

“I so rarely hold a company like BYD that goes to a nosebleed price, that I don’t think I’ve got a system yet. I’m just learning as I go along.”

Costco

“It’s been amazing that one little company, starting up not all that many decades ago, could become as big as Costco did, as fast as Costco did. Part of the reason for that was cultural. They have created a strong culture of fanaticism about cost and quality and efficiency and honor, all the good things, and it’s all worked.”

“People really trust Costco to deliver enormous values and that is why Costco presents some danger to Amazon. They’ve got a better reputation for providing value than practically anybody, including Amazon.”

Value investing

“Value investing, the way I conceive it, is always wanting to get more value than you pay for when you buy a stock. That approach will never go out of style.”

“All good investing is value investing. It’s just that some people look for value in strong companies and some people look for value in weak companies.”

Portfolio diversification

“In wealth management, a lot of people think that if they have 100 stocks, they’re investing more professionally than they are if they have four or five. I regard this as insanity, absolute insanity.”

“I’m way more comfortable owning two or three stocks which I think I know something about and where I think I have an advantage.”

Amazon founder Jeff Bezos

“I’m a great admirer of Jeff Bezos, whom I consider one of the smartest businessmen who ever lived.”

Alibaba founder Jack Ma

“Jack Ma was very arrogant to be telling the Chinese government how dumb they were and how stupid their policies were and so forth. Considering their system, that is not what he should have been doing.”

The pandemic enriching the wealthy

“We were trying to save the whole economy under terrible conditions. We made the rich richer not as a deliberate choice; it was an accidental byproduct of trying to save the whole civilization. It was probably wise that we acted exactly as we did.”

Modern monetary theory

“So far, the evidence would be that maybe the modern monetary theory is right. Put me down as skeptical.”

Inequality

“I’m way less afraid of inequality than most people who are bleating about it. Inequality is absolutely an inevitable consequence of having the policies that make a nation grow richer and richer and elevate the poor. I don’t mind a little inequality.”

Politics

Munger bemoaned the rising amount of “hatred and irrationality” in politics, but argued the country had been well-governed for the past century.

“The system of checks and balances and elections that our founders gave us, actually gave us pretty much the right policies during my lifetime, and I hope that will continue in the future.”

The evolution of business

“Long-term business success is a lot like biology. In biology, the individuals all die and eventually so do all the species. And capitalism is almost as brutal as that.”

“Think of what’s died in my lifetime. Who ever dreamed when I was young that Kodak and General Motors would go bankrupt? It’s incredible what’s happened in terms of the destruction.”

Lifelong learning

“I think I had the right temperament. When people gave me a good idea, I quickly mastered it and started using it and just used it for the rest of my life. It’s such a simple idea. Without the method of learning, you’re like a one-legged man in an ass-kicking contest.”

Psychology

“It’s one of the most ignorant professions in the world,” Munger said, highlighting that many psychologists fail to connect their theories and insights with other types of knowledge.

Adapting to technological change

“If you have a fixable disadvantage, remove it, and if it’s unfixable, learn to live without it. What else can you do?”

Challenging one’s beliefs

“I’m not really equipped to comment on a subject until I can state the arguments against my conclusion better than the people on the other side. If you’re looking for disconfirming evidence, that’s a good way to help remove ignorance.”

“When we shout our knowledge out, we’re really pounding it in, we’re not enlarging it.”

Early-stage investments

“Warren and I are better at buying mature industries than we are at backing startups. I would hate to compete with Sequoia in their field, they would run rings around me.”

“I got close to Sequoia when, with Li Lu, we bought into BYD. We were buying into a venture-capital-type investment, but in the public market. With that one exception, I’ve stayed out of Sequoia’s business because they’re so much better at it than I would be.”

The Queen’s Gambit and investing

“I have seen an episode or two. What I think is interesting about chess is to some extent, you can’t learn it unless you have a natural gift. And even if you have a natural gift, you can’t be good at it unless you start playing at a very young age and get huge experience.”

“Any intelligent person can get to be pretty good as an investor and avoid certain obvious traps, but I don’t think everybody can be a great investor or a great chess player.”

Do managers have a moral responsibility to have their shares trade as close to fair value as possible?

“I don’t think you can make that a moral responsibility because if you do that, I’m a moral leper. The Daily Journal stock sells way above the price I would pay if I were buying a new stock.”

“The management should tell it like it is as all times and not be a big promoter of its own stock.”

Oil and gas

“The oil-and-gas industry will be here for a long, long time even if we stop using many hydrocarbons in transportation. The hydrocarbons are also needed as chemical feedstocks. I’m not saying that oil and gas is going to be a wonderful business, but I don’t think it’s going away.”

Wealth and happiness

“Most people are born with a happy stat, and their happy stat has more to do with their [inherent] happiness than their outcomes in life,” Munger said. He argued that most people wouldn’t be significantly happier if they were richer or much more miserable if they were poorer.

Physics and investing

“I don’t use much physics in solving my investing problems. Occasionally some damn fool will suggest something that violates the laws of physics, and I will always turn off my mind the minute I realize the poor bastard doesn’t know any physics.”

Marriage

“A little wisdom in spouse selection is very desirable. You can hardly think of a decision that matters more to human felicity than who you marry.”

Creativity in old age

“I don’t have any wonderful new thoughts. To the extent that my thoughts have helped my life, I’ve pretty well run the course. I don’t think I’m likely to have any new thoughts that are going to work miracles either. But I find that the old ways of doing things still work. I’m kind of pleased that I’m still functioning at all. I’m not trying to move mountains.”

Secrets to a long, happy, and healthy life

“I’m alive because of a lucky genetic accident. I don’t have any secrets. I think I would have lived a long time if I’d lived a different life.”

“The first rule of a happy life is low expectations. If you have unrealistic expectations, you’re going to be miserable all your life. Also, when you get reverses, if you just suck it up and cope, that helps more than if you just fretfully stew yourself into a lot of misery.”

Rose Blumkin [of Nebraska Furniture Mart] had quite an effect on the Berkshire culture. Her mottos were, ‘Always tell the truth’ and ‘Never lie to anybody about anything.’ Those are pretty good rules and they’re pretty simple.”

Life after the pandemic

“When the pandemic is over, I don’t think we’re going back to just the way things were. We’re going to do a lot less travel and a lot more Zooming. The world is going to be quite different.”

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Warren Buffett’s right-hand man blasted Robinhood, slammed SPACs, questioned bitcoin, and warned against speculating at the Daily Journal annual meeting. Here are the highlights.

charlie munger
Charlie Munger.

Warren Buffett’s right-hand man issued a warning to stock-market speculators, criticized the trading platforms enabling them, blasted SPACs, and downplayed the significance of bitcoin at the Daily Journal annual meeting on Wednesday.

Charlie Munger, the vice-chairman of Buffett’s Berkshire Hathaway, is also the chairman of Daily Journal, a newspaper publisher and software developer.

Here’s a roundup of the 97-year-old executive’s key comments during the meeting, lightly edited and condensed for clarity.

Market speculation

“These things do happen in a market economy, you get crazy booms. I’ve been around for a long time and my policy’s always been to just ride it out.”

“A lot of investors crowd in to buying stocks on frenzy, frequently on credit, because they see them going up. And of course that’s a very dangerous way to invest.”

“Shareholders should be more sensible and not crowd into stocks and just buy them just because they’re going up and they like to gamble.”

“I think it must end badly but I don’t know when.”

GameStop

“That’s the kind of thing that can happen when you get a whole lot of people who are using liquid stock markets to gamble the way they would in betting on racehorses.”

“The frenzy is fed by people who are getting commissions and other revenues out of this new bunch of gamblers. When things get extreme you have things like that short squeeze.”

“It’s very dangerous and it’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors. Of course that is going to cause trouble as it did.”

Robinhood and trading apps

“If you’re selling people gambling services where you make profits off the top like many of these new brokers who specialize in luring gamblers in, it’s a dirty way to make money and I think we’re crazy to allow it.”

“[Wretched excess in the financial system] is most egregious in the momentum trading by novice investors lured in by new types of brokerage operations like Robinhood. All of this activity is regrettable, civilization would do better without it.”

“Human greed and the aggression of the brokerage community creates these bubbles from time to time. Wise people just stay out of them.”

“When you pay for order flow, you’re probably charging your customers more in pretending to be free. It’s a very dishonorable, low-grade way to talk. Nobody should believe that Robinhood’s trades are free.”

Stock valuations when interest rates are low

“Everybody is willing to hold stocks at higher price-earnings multiples when interest rates are as low as they are now. I don’t think it’s necessarily crazy that good companies sell at way higher multiples than they used to.”

“On the other hand, I didn’t get rich by buying stocks at high price-earnings multiples in the midst of crazy, speculative booms, and I’m not going to change.”

SPACs

“The world would be better off without them. This kind of crazy speculation, in enterprises not even found or picked out yet, is a sign of an irritating bubble. The investment-banking profession will sell shit as long as shit can be sold.”

Bitcoin

“I don’t think bitcoin is going to end up the medium of exchange for the world. It’s too volatile to serve well as a medium of exchange. It’s really kind of an artificial substitute for gold and since I never buy any gold, I never buy any bitcoin. I recommend that other people follow my practise.

“[The Daily Journal] will not be following Tesla into bitcoin.”

Tesla and bitcoin

Munger was asked to choose which was more ridiculous, bitcoin trading at $50,000 or Tesla’s fully diluted enterprise value of $1 trillion.

He quoted author Samuel Johnson, who when presented with two choices, said, “I can’t decide the order of precedency between a flea and a louse.”

“I feel the same way about those choices,” Munger saiud. “I don’t know which is worse.”

Banks

“Banking, run intelligently, is a very good business. The kind of executives who have a Buffett-like mindset and never get in trouble are a minority group, not a majority group.”

“It’s hard to run a bank intelligently. There’s a lot of temptation to do dumb things which will make the earnings next quarter go up, but are bad for the long term.”

Wells Fargo

“There’s no question that Wells Fargo has disappointed long-term investors like Berkshire. The old management were not consciously malevolent or thieving but they had terrible judgment in having a culture of cross-selling, with incentives on the poorly paid employees that were too great to sell stuff the customers didn’t really need.

“When the evidence came in that the system wasn’t working very well because some of the employees were cheating some of the customers, they came down hard on the employees instead of changing the system. That was a big error in judgment. It’s regrettable.”

“You can understand why Warren got disenchanted with Wells Fargo. I think I’m a little more lenient. I expect less out of bankers than he does.”

BYD

“BYD stock did nothing for the first five years we held it and last year it quintupled. What happened was that BYD is very well-positioned for the transfer of Chinese automobile production from gasoline-driven cars to electricity-driven cars. It’s in a wonderful position and that excited the people in China which has its share of crazy speculators and so the stock went way up.”

Selling overvalued stocks

“I so rarely hold a company like BYD that goes to a nosebleed price, that I don’t think I’ve got a system yet. I’m just learning as I go along.”

Costco

“People really trust Costco to be delivering enormous values and that is why Costco presents some danger to Amazon. They’ve got a better reputation for providing value than practically anybody, including Amazon.”

Value investing

“Value investing, the way I conceive it, is always wanting to get more value than you pay for when you buy a stock. That approach will never go out of style.

“All good investing is value investing. It’s just that some people look for value in strong companies and some people look for value in weak companies.”

Portfolio diversification

“In wealth management, a lot of people think that if they have 100 stocks, they’re investing more professionally than they are if they have four or five. I regard this as insanity, absolute insanity. I’m way more comfortable owning two or three stocks which I think I know something about and where I think I have an advantage.”

Amazon founder Jeff Bezos

“I’m a great admirer of Jeff Bezos, whom I consider one of the smartest businessmen who ever lived.”

Alibaba founder Jack Ma

“I think Jack Ma was very arrogant to be telling the Chinese government how dumb they are. Considering their system that is not what he should have been doing.”

The rich getting richer during the pandemic

“That’s a misplaced concern. Nobody’s was trying to make the rich richer, that was an accidental byproduct of trying to save the economy under terrible conditions. It was probably wise that we acted exactly as we did.”

Modern monetary theory

“Maybe the modern monetary theory is right. Put me down as skeptical.”

Inequality

“I don’t mind a little inequality,” Munger said, describing it as an “inevitable consequence” of a growing economy.

Wealth tax

“Any rich nation ought to have a social safety net that expands a little with its wealth.”

Politics

Munger bemoaned the rising amount of “hatred” in politics, but argued the country had been well governed for the past century.

“The system fo checks and balances and elections that our founders gave us actually gave us pretty much the right policies during my lifetime, and I hope that will continue.”

Haven

“I don’t know anything about Haven,” Munger said, referring to the joint healthcare initiative between Berkshire, JPMorgan, and Amazon that was dismantled recently.

The evolution of business

“Business success long term is a lot like biology. In biology, the individuals all die and eventually so do all the species. And capitalism is almost as brutal. Just look at what’s changed in my lifetime. Who ever dreamed when I was young that Kodak and General Motors would go bankrupt? It’s incredible what’s happened in terms of the destruction.”

Learning

“I think I had the right temperament. When people gave me a good idea I quickly mastered it and used it. It’s such a simple idea. Without the method of learning, you’re like a one-legged man in an ass-kicking contest.”

Psychology

“It’s one of the most ignorant professions in the world,” Munger said, highlighting that many psychologists can’t connect what they know with other types of knowledge.

Adapting to technological change

“If you have a fixable disadvantage, remove it, and if it’s unfixable, learn to live without it. What else can you do?”

Challenging one’s beliefs

“I think I’m not really equipped to comment on a subject until I can state the arguments against my position better than the other side. That’s a good way to help remove ignorance. When we shout our knowledge out, we’re really pounding it in, we’re not enlarging it.”

Zero-commission trading

“Commission-free trading is a very good candidate if you want to emphasize disgusting lies. Commission-free trading is not free.”

Sequoia Capital

“Warren and I are better at buying mature industries than we are at investing in startups. I would hate to compete with Sequoia in their field, they would run rings around me.”

“I got close to Sequoia when, with Li Lu, we bought into BYD. We were buying into a venture-capital-type investment on the public market. With that one exception, I’ve stayed out of Sequoia’s business because they’re so much better at it than I would be.”

The Queen’s Gambit and investing

“I have seen an episode or two. To some extent, you can’t be good at chess unless you have a natural gift, and even if you have a natural gift, you can’t become great at it unless you start playing at a very young age. Any intelligent person can get to be pretty good as an investor and avoid obvious traps, but I don’t think everybody can be a great investor or a great chess player.”

Managers owning their stock

“If you do that I’m a moral leper,” Munger said about the idea that managers have a moral responsibility to own their stock at as close to its fair value as possible.

“The Daily Journal stock sells way above the price I would pay if I was buying a new stock. The management should tell it like it is as all times and not be a big promoter of its own stock.”

Technology and company valuations

“I don’t know how permanent it will be but it’s certainly caused a change,” Munger said about the idea that technology has permanently altered how companies should be valued.

Wealth managers being too active

“The wealth-management industry has a crisis on its hands. They really need the world to stay the way it is. That isn’t necessarily right for its customers.”

Oil and gas

“The oil-and-gas industry will be here for a long, long time even if we stop using many hydrocarbons in transportation. The hydrocarbons are also needed as chemical feedstocks. I’m not saying that oil and gas is going to be a wonderful business, but I don’t think it’s going away.”

Bill Gates and climate change

“I kind of admire the way Bill takes on these very hard problems,” Munger said, adding that he avoids challenges he won’t be good at addressing.

Wealth and happiness

“Most people are born with a happy stat, and their happy stat has more to do with their hap pines than their outcomes in life,” Munger said, arguing that most people wouldn’t be significantly happier if they were richer or much more miserable if they were poorer.

Physics and investing

“I don’t use much physics in investing. Occasionally some damn fool will suggest something that violates the rules of physics, and I will always turn off my mind when I realize the poor bastard doesn’t know any physics.”

Ageing and innovation

“I’ve pretty well run the course. I don’t think I’m likely to have any new thoughts that are likely to work miracles. I’ve found that the old thoughts work well still. I’m kind of pleased that I’m still functioning at all. I’m not trying to move mountains.”

The secret to a long and happy and healthy life

“I don’t have any secrets. I’m alive because of a lucky genetic accident. I think I would have lived a long time if I’d lived a different life.”

“A happy life is very simple. The first rule of a happy life is low expectations. That’s one you can easily arrange. If you have unrealistic expectations, you’re going to be miserable all your life. When you get reverses, if you just suck it up and cope, that helps more than if you just fretfully stew yourself into a misery.”

Rose Blumkin [of Nebraska Furniture Mart] had quite an effect on the Berkshire culture. Her mottos were, ‘Always tell the truth’ and ‘Never lie to anyone about anything.'”

Lessons from the pandemic

“We can do with a lot less travel and a lot more Zooming,” Munger said. “A lot of things are going to change,” he continued, predicting a lot of people will work from home a couple days each week once the pandemic ends.

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Investing legend Charlie Munger blasts SPACs as indication of an ‘irritating bubble’ and says the ‘world would be better off’ without them

Charlie Munger

Berkshire Hathaway vice-chairman Charlie Munger blasted SPACs at the Daily Journal annual meeting on Wednesday, saying that the “world would be better off” without the investment vehicles. 

“Crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble,” Munger said. “The investment banking profession will sell sh-t as long as sh-t can be sold.”

Special purpose acquisition companies, or “blank check companies,” list on a stock exchange to raise money in the hope of finding and merging with a target company to take it public. The model can be extremely lucrative for the initial sponsors of the SPAC, who take a big stake for a small sum. But it also poses risks for investors who bet on the success of the SPAC before even knowing the business that will be acquired. 

Warren Buffett’s right-hand man also added that the SPAC craze “must end badly,” but he isn’t sure when that will happen. 

So far in 2021, over 133 SPACs have raised around $40 billion on the US stock markets. In 2020, it took until October to reach the 130 SPAC mark, according to data from investment firm Accelerate.

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Warren Buffett’s right-hand man discussed the ‘frenzy’ in stocks, technological shifts, and what makes a great investor in a recent interview. Here are Charlie Munger’s 22 best quotes.

Charlie Munger
  • Charlie Munger spoke about a “frenzy” in stocks, the dangers of excessive government spending and monetary easing, and the critical traits an investor needs during a remote interview conducted by the California Institute of Technology on Monday.
  • Warren Buffett’s business partner and Berkshire Hathaway’s vice-chairman also talked about weathering technological shifts, the importance of passion in any career, and his philanthropy.
  • Here are the 22 best quotes from the interview.
  • Visit Business Insider’s homepage for more stories.

Charlie Munger discussed the current “frenzy” in the stock market, the potential risks of unprecedented monetary and fiscal expansion, and the key skills needed to excel at investing during a virtual interview hosted by the California Institute of Technology on Monday.

The 96-year-old alumnus, who serves as Warren Buffett’s right-hand man and Berkshire Hathaway’s vice-chairman, also spoke about how to navigate technological change, praised Costco and Sequoia Capital, and downplayed his philanthropy.

Here are his 22 best quotes from the interview, lightly edited and condensed for clarity:

1. “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid instead of trying to be very intelligent.”

2. “It’s been a frenzy of activity in the investment field. Almost everybody smart is sucked into finance by the money. I don’t welcome it at all. I don’t think we want the whole world trying to get rich outsmarting the rest of the world in marketable securities.”

3. “Technology is a killer as well as an opportunity.”

Read More: JPMorgan unveils its 50 ‘most compelling’ stock picks to buy for 2021 – and details why each one will be a top performer

4. “Over the long term, the companies of America behave more like biology than they do anything else. In biology, all of the individuals die, so do all of the species. It’s just a question of time” – on businesses inevitably getting “clobbered.”

5. “Berkshire owns the Burlington Northern railroad. You can hardly think of a more old-fashioned business than a railroad business. Who in the hell’s gonna create another trunk railroad. We made that a success, not by conquering change but by avoiding it.”

6. “The most remarkable investment firm in America is probably Sequoia. That venture-capital firm absolutely fanatically stays right on the cutting edge of modern technology. They have made more money than anybody and they have the best investment record of anybody. It’s perfectly amazing what they have done” – praising Sequoia Capital, an early investor in Apple, Google, and most recently Airbnb.

7. “I rub my nose in my own mistakes. I try and keep things as simple and fundamental as I can. And I like the engineering concept of a margin of a safety. I’m a very blocking-and-tackling kind of a thinker. I just try and avoid being stupid” – describing his approach to investing.

8. “The single most important thing that you want to do is avoid stupid errors. Know the edge of your own competency. That’s very hard to do because the human mind naturally tries to make you think you’re way smarter than you are.”

9. “The last thing I would want to do in retail is compete with Costco.”

10. “What Buffett and I did is we bought things that were promising. Sometimes we had a tailwind from the economy and sometimes we had a headwind and either way we just kept swimming. That’s our system.”

Read More: Buy these 28 discounted stocks from an LGBT-inclusive index that’s crushed its global benchmark since 2010, says Credit Suisse

11. “You can’t live a successful life without doing some difficult things that go wrong. That’s just the nature of the game, and you wouldn’t be sufficiently courageous if you tried to avoid every single reverse.”

12. “So many people are in it and the frenzy is so great and the reward systems are so foolish. I think the returns will go down” – replying to a question about whether he expects stock-market returns to be lower over the next 10 years than the last 10.

13. “We’re in very uncharted waters. Nobody has gotten by with the kind of money printing now for a very extended period without some kind of trouble. We’re very near the edge of playing with fire” – highlighting the dangers of unprecedented monetary easing and aggressive fiscal spending in recent months.

14. “I can remember having a five-course filet mignon dinner in Omaha for 60 cents when I was a little boy. The world has really changed.”

15. “Nobody knows when bubbles are gonna blow up. But just because it’s Nasdaq doesn’t mean it’ll have another run like this one very quickly again. This has been unbelievable. There’s never been anything quite like it.”

16. “Think about what Apple is worth compared to John D Rockefeller’s empire. It’s been the most dramatic thing that’s almost ever happened in the entire world history of finance” – commenting on the surge in technology companies’ valuations in recent years.

17. “Who would have guessed that a bunch of communist Chinese run by one party would have the best economic record the world has ever seen.”

Read More: A fixed-income chief whose firm oversees $3 billion lays out his plausible scenario for a global markets crash that originates in US Treasuries – and warns China continues to pose a threat

18. “I don’t think Caltech can make great investors out of most people. I think great investors to some extent are like great chess players. They’re almost born to be investors.”

19. “You have to know a lot, but partly it’s temperament, partly it’s deferred gratification, you gotta be willing to wait. Good investing requires a weird combination of patience and aggression and not many people have it. It also requires a big amount of self-awareness about how much you know and what you don’t know. You have to know the edge of your own competency, and a lot of brilliant people think they’re way smarter than they are. And of course that’s dangerous and causes trouble” – describing what makes a good investor.

20. “What helps everyone is getting in somewhere that’s going up, and it just carries you along without much talent or work” – outlining the easiest route to success.

21. “If you pursue any career with enough fanaticism, that’s very likely to work better than not having the fanaticism. Look at Warren Buffett, he had this fanatic interest in making investments from an early age, and he kept making small investments, and he finally learned how to be very good at it.”

22. “I’m not that proud of my philanthropy. I regard it as an absolute minimum duty for somebody who’s reasonably successful to be reasonably generous. I don’t think you get big merit points for philanthropy you do.”

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