Charlie Munger held his “Morning with Charlie” this morning, in place of his usual Wesco meeting. If there are any good blog accounts on the meeting, please put a link in the comment section here. In the meantime, we’ll have to rely on media comments. Bloomberg’s headline is “Munger Hopes He Dies Before Seeing Dividend.” Compelling title, but basically he’s saying that paying a dividend means that Buffett and Munger are admitting defeat. They’ve maintained that they can invest better than their shareholders. Obviously that’s true, but Berkshire’s enormous size limits their gains.
Munger also took a swipe at Dick Fuld, former Lehman CEO, saying that Fuld probably does not feel “an ounce of contrition.” Remember, Fuld came to Buffett asking for a helping hand during the crisis, but Buffett declined to invest. One of many elements here was Fuld’s refusal to put up his personal money alongside Berkshire’s. Alan Greenspan wasn’t spared either as Munger said he overdosed on Ayn Rand.
On BYD, Munger is sticking with the investment despite the stock taking a major hit while they work through a variety of problems. Munger pointed out the difficulty of what they’re trying to do and preached patience with CEO Wang Chuan-Fu. Munger also announced that this would be his last solo meeting. In the future, we’ll have the Berkshire meeting only to extract more great Mungerisms.
Other news from today was the market’s continued winning streak. This past week was the best in a few years as the S&P 500 jumped another 1.44% today. This is quite a turnaround from the last few weeks. The Consumer Sentiment survey was better than expected, as was June’s ISM. This is all continued good news and, I think, shows that recent economic activity was more of a blip than the start of a downward trend. We may not be having a raging recovery, but we’re certainly not double-dipping. Funny how we didn’t hear from any of those commentators over the past week.
Here’s an oldie, but goodie that ended up in my inbox courtesy of David Kessler of Robotti & Company. It’s a 1995 article in Fortune magazine highlighting the success of value investors and debunking the efficient market theory. A host of value guys are noted including Walter Schloss, William Ruane, John Neff, Peter Lynch and, of course, Buffett and Munger. It’s a great article and I encourage you to take a look. My favorite quote is from Neff, “Efficient market? That's a bunch of junk, crazy stuff.”
Finally, there’s chatter today about Tim Geithner wanting to leave the Treasury. These leaks seem timed to make the president look bad in the middle (or the beginning, depending on how you look at it) of negotiations to raise the debt ceiling. There is some speculation that J.P. Morgan’s (JPM) Jamie Dimon could be the next treasury secretary. That would be a great choice, but would never happen. If you listen to what the president says about Wall Street, it would be hard to believe he would pick from one of them, even the politically astute Dimon. Or, perhaps you think they are just words with no meaning?
Disclosure: Long BRK.B