Munger: I invested in Costco, Berkshire, Li Lu's fund, and Avi Apartments

Integrating red and green.

Finding four excellent things is much easier than finding forty. If you only seize such opportunities a few times in your life, you are already very lucky. And you must be both very patient and quick to act. You must patiently wait, observe, investigate, search for opportunities, and occasionally make a move. You may only encounter four major opportunities in your lifetime, and that is already a very successful life.

The above is from a podcast by Charlie Munger at the end of 2022 at the age of 89. Charlie Munger (January 1, 1924 - November 28, 2023).

01 Navigating Difficult Cycles

John: We are facing an economic recession, potential stagflation. What advice do you have for those considering how to navigate this difficult period...

Charlie Munger: For all difficulties, I have a general piece of advice, which is to accept what comes, and then figure out how to deal with it. This is something anyone can do: accept what comes, and then figure out how to deal with difficulties. But to some extent, you have to learn to be smarter. One way to deal with difficulties is to try to become smarter. This is just my little trick. I must say, it has worked well for me. I think it will work well for others who use this method.

02 Challenges for Young People Buying Houses

Charlie Munger: I think young people today will find that it is much more difficult to obtain what my generation almost automatically had. We could buy a house in an excellent school district at a very cheap price, and then develop along with civilization. And all of this was within reach. But in today's big cities, I see (young people) having a very hard time buying a new house...

John: But isn't that very bad...

Charlie Munger: It's just a new house (that young people can't buy). It's sad, but aging and death are also sad. Perhaps there is always some sadness in civilization. They (young people) have to adapt to it, just like humans. Nothing is taken for granted. Everything in your life will be better than that of your parents or grandparents. I have gotten used to imperfection. So why should I expect my society to always progress? Even though it has been like that for a long time. I believe you just need to adapt to the development of society, and then do your best. This is something everyone can do, and it's what I want to do.

03 Companions on Life's Journey

John: You and Warren have been working together for decades. I have been working with Patrick for the first ten years, do you have any advice on developing a constructive partnership?

Charlie Munger: It is very fortunate to have an excellent life partner. Yes, I believe you are both talented, but it is much luckier to walk forward with a good partner than to walk alone. Of course, having someone to accompany you is better. Of course, this is a kind of blessing. Warren and I have not only successfully become rich or anything else (we have also gained each other's and the public's respect, and have enjoyed the journey of life together)

04 The Joyful Way

John: When you talk about having fun with Warren, besides the results, what kind of scene is it exactly? Is it staying up late watching fun YouTube videos together? Or...

Munger: No, no, no. The joy we enjoy is in practice and understanding (the world). We both enjoy learning new things, preferably something useful. We both pursue certain goals, preferably challenging ones that you can still achieve, which is of course a kind of fun.

05 About Success

Munger: I think in real life, to be successful, you must do two things. One is to have a certain level of confidence. The other is to know what you know and what you don't know. You must know the limits of your abilities.

I think my life positioning is very good. But except for a few exceptions, what have I invested in? I invested in Costco's stock, Berkshire's stock, Li Lu's Chinese fund, and Avi's apartment. So basically after about 60 years, I only have four investments—by the way, I think I am diversified enough. No one will teach you that this is diversified enough. And they are completely wrong.

The simple fact is, finding four excellent things is much easier than finding forty. It's not that easy. You have to find something that is almost certain to succeed, because you are looking for a gold mine in your backyard. Is it easy to find success? How many gold mines can you find in your backyard? You shouldn't expect too many obvious opportunities.

It will be very difficult, and if you only seize such opportunities a few times in your life, you are already very lucky. And you must be both very patient and quick to act. You have to patiently wait, observe, investigate, look for opportunities, and occasionally pounce. If you seize four major opportunities in your lifetime, that is already a very successful life.

06 The Secret of Berkshire's Culture

John: Is the secret of Berkshire's culture simply anti-bureaucracy? Can you summarize it...

Munger: Berkshire's culture is quite extreme. We are well aware that bureaucracy often forms a self-running mechanism within an organization, restraining each other, but no one changes anything, and no one wants to cause trouble. As a result, many bureaucratic organizations have made some very foolish decisions, and we strive to avoid this situation.

But we mainly achieve this by not having so many people (at headquarters) together. If there aren't so many people together, there won't be any bureaucracy. Our headquarters has very few people. So we can avoid bureaucracy. We just don't want people to fall into bureaucracy. In this respect, no one is as extreme as we are. This is a huge advantage for us.

Another thing is, we like very trustworthy people. I would rather make a deal with someone I trust verbally, rather than deal with a 40-page contract prepared by the best law firm hired by someone I don't trust. So we like to do business with trustworthy people, just need their verbal commitment John: Is this trust between Berkshire insiders or between Berkshire insiders and management?

Munger: Both. We hope that everyone within Berkshire trusts each other, and we also hope that customers trust us. We fully support trust. Trust is one of the greatest economic forces on Earth.

07 World Situation

John: In your opinion, what part of the world is getting worse?

Munger: I think we are facing what could be one of the most serious global issues in history. The world is on the brink of a nuclear war. There are many things we need to worry about. The world has never been a completely safe place, and it is not now.

John: This is somewhat like the social version of the framework for avoiding mistakes in "Poor Charlie's Almanack," where society needs to avoid major mistakes like individuals do, avoiding nuclear war.

Munger: Fortunately, we have managed to do that so far. But if enough lunatics get enough hydrogen bombs, there will eventually be enough hatred, and someday some form of nuclear war will happen. You can almost be certain of that. So you can say that for our generation, it is quite unlikely, but I think it is becoming more likely rather than less likely.

08 Final Words

Munger: I think we really enjoy this kind of preaching show that we do. We all enjoy it, and we really think it is beneficial. For me, our preaching is also a win-win. If people take in what we say, they will benefit from it, at least a little more successful