Charlie Munger said he could have been a trillionaire, buying Alibaba for his family was his worst trade, and he doesn't regret his Diet Coke habit.
Lane Hickenbottom/Reuters
Charlie Munger tackled topics ranging from his teenage vices to the secrets of Berkshire Hathaway's success in his final TV interview, released in full this week.
Warren Buffett's late business partner and Berkshire's vice chairman, who died aged 99 last week, touched on everything from Alibaba and fishing to sports and psychology in his conversation with CNBC. He also suggested that he could have been a trillionaire if he'd worked harder and smarter.
1. "I bought the complete writings of Sigmund Freud from the area library. It was one big book. And I went through it very laboriously. And I realized he was a goddamn lunatic."
2. "I tried to learn to smoke so I could be a cool kid like the other kids in high school. I tried to ruin my life, but it nauseated me. And so I said, 'The hell with this.'"
3. "There were enough alcoholics and near-alcoholics in my own family that made me worry about liquor. I was always very cautious about drinking any liquor. Now, I did occasionally get drunk and throw up. That gave me the nausea which enabled me to give up liquor."
4. "I drink Diet Coke. I'm sure it shortens my life a little. But I don't give a damn about the last week of lying there unconscious; it's only the good part of life I want anyway. Diet Coke may be helping me skip it. But who knows? It's helping me skip the last month, not the first month."
5. "My game in life was always to avoid all standard ways of failing. You teach me the wrong way to play poker and I will avoid it. You teach me the wrong way to do something else, I will avoid it. I've avoided a lot because I'm so cautious."
6. "We got a little less crazy than most people, and a little less stupid than most people, and that really helped us. Then in addition, we were given this much longer time to run than most people, because something kept us alive into our 90s. Those are the two things that really happened." (Munger was asked about the secret to Berkshire's success.)
7. "The main trick that Berkshire shows is the power of what I call the Wooden effect. Wooden was the most famous basketball coach of a whole era. He concentrated about 90% of the playing time in seven players. That turned out to be a great system for winning at basketball; you learn by playing in a way you can never learn just by shooting practice baskets." (Munger was referring to Berkshire concentrating the vast majority of its funds in its very best bets like Coca-Cola and American Express.)
8. "We need something big to come along, and use up all our cash, and some borrowing. But who's more likely to find something than a guy who has $160 billion in cash, plus a long history of buying bargains?" (Munger was referring to Berkshire's current cash pile and its struggle to find compelling acquisitions in recent years.)
9. "My worst trade was buying a block for the Munger family in Alibaba, which is a pretty good company. But I think it got overhyped, and Jack Ma made mistakes in dealing with the Chinese government. Everybody has some bad ones. The greatest tennis player goes out there some days to the center court and has a bad day. It happens."
10. "I'm not all that pleased. I basically screwed up. I could have done a lot better if I had been a little smarter, a little quicker. I might have had multiple trillions instead of multiple billions. I do think about what I missed by being just not quite smart enough or hardworking enough."
11. "We both watched our friends who got rich build these really fancy houses. In practically every case, they made the person less happy, not happier. Having a really fancy house, it's good for entertaining 100 people at once. It's a very expensive thing to do. And it doesn't do you that much good. I decided not to live a life where I look like the Duke of Westchester or something. I didn't think it would be good for the children."
12. "I am very good at learning things from dead people." (Munger was a voracious reader who counted Benjamin Franklin among his role models.)
13. "Do not live your life in such a fashion that a bad day can kill you." (Munger meant that investors should never bet so heavily and take on so much leverage that they can lose it all if a trade goes wrong.)
14. "It's like a hitter at baseball who tries to hit a home run on every pitch. The great home runners do not remotely swing at every pitch. They wait for one that they can really handle. And that's what great stock traders do too."
15. "You only get a few trips to the pie counter. If you take out of Warren Buffett's life the 10 most important trips to the pie counter, his whole record would look like dung. We knew enough to take a good helping when we were offered a trip to the pie counter."
16. "Now, we did take way smaller a helping than we could've easily handled. Berkshire could easily be worth twice what it is now. And the extra risk we would've taken would've been practically nothing. All we had to do is just a little more leverage that was easily available. The reason we didn't is the idea of disappointing a lot of people who had trusted us." (Munger was referring to Berkshire's shareholders.)
17. "I am so old and weak compared to what I was when I was 96, that I no longer want to catch a 200-pound tuna. It's just too goddamn much work to get it in. It takes too much physical strength. So I would have paid any amount to catch a 200-pound tuna when I was younger; I never caught one. And now if given the opportunity, I would just decline going. I won't even go out after them. There are things you give up with time." (Munger was asked if there was anything he didn't tick off his bucket list.)
18. "I basically believe in the soldier on system. Lots of hardship will come and you've got to handle it well by soldiering through. A few rare opportunities will come. You've got to learn how to recognize them when they come, and not make too minor of a trip to the pie counter when the opportunity is available."
