Charlie Munger: The Great Financial Scandal of 2003

Talk 8 of the eleven in Chapter Four of Poor Charlie’s Almanack. See The Eleven Talks of Poor Charlie’s Almanack for the full collection.

Highlights & Notes

Kyle’s reading layer from Poor Charlie’s Almanack, preserved verbatim. Munger’s text and pulled-in source quotes appear as bullets; Kyle’s own annotations appear as Kyle: callouts.

• A wiser board would then have bought in Quant Tech’s stock very aggressively, using up all cash on hand and also borrowing funds to use in the same way. However, such a decision was not in accord with conventional corporate wisdom in 1982.
• Incident to the recruitment of the new executives, it was made plain that Quant Tech’s directors wanted a higher market capitalization as soon as feasible. #Incentives

  Kyle: What are you optimizing for?

• “It is difficult to get a man to understand something when his salary depends on his not understanding it.” Upton Sinclair
• “We all agree that pessimism is a mark of superior intellect.” John Kenneth Galbraith
• “Meetings are indispensable when you don’t want to do anything.” John Kenneth Galbraith
• “More die in the United States of too much food than of too little.” John Kenneth Galbraith
• “In any great organization it is far, far safer to be wrong with the majority than to be right alone.” #Contrarian