Charlie Munger on How honesty leads to a better life and wealth? | [C:C.M Ep.33]

In this episode, Charlie Munger shared on how some people just seek out the weaknesses of people and take advantage and how by being honest leads to a better life and wealth?

In this episode, you’ll learn:
– The misleading in the modern world.
– How private equity mislead the buyers?
– Why an honest way of living leads to a better life?
(https://www.yapss.com/post/collection-charlie-munger-33-deceptive-modern-world)

#CharlieMunger #DailyJournal

[Transcript]
CHARLIE MUNGER 00:08
If you take the modern world where people are trying to teach you how to come in and trade actively in stocks. Well I regard that as roughly equivalent to trying to induce a bunch of young people to start off on heroin. It is really stupid.

And when you’re already rich to make your money by encouraging people to get rich by trading? And then there are people on the TV, another wonderful place, and they say, “I have this book that will teach you how to make 300 percent a year. All you have to do is pay for shipping and I will mail it to you!” (Laughter)

How likely is it that a person who suddenly found a way to make 300 percent a year would be trying to sell books on the internet to you! (Laughter) It’s ridiculous. And yet I’ve described modern commerce. And the people who do this all day think they’re useful citizens.

The advertising agents who invent the lingo. In insurance they say, “Well” they say, “the two people who shifted from GEICO to the Glotz insurance company save four hundred dollars each.” But what they don’t tell is that there are only two such people in the whole United States and they were both nuts. But they mislead you on purpose. I get tired of it and I don’t think it’s right that we deliberately mislead people as much as we do.

Let me tell you another story that I think is an interesting one about the modern life, but this goes back to a different time. This man has this wonderful horse. And it’s just a marvellous horse. It’s got an easy gait, good looking, and everything. It just works wonderfully. But also occasionally it just gets so he’s dangerous and vicious and causes enormous damage and trouble and breaks arms and legs for his rider and so on. And he goes to vet and says, “What can I do about this horse?” And the vet says, “That’s a very easy problem and I’m glad to help you.” And he says, “What should I do?” And the man says, “The next time your horse is behaving well, sell it.” (Laughter)

Well, think about it immoral that is. And haven’t I just described what private equity has to do? (laughter) When private equity has to sell something that’s really troublesome, they hire an investment banker. And what does investment banker do? He makes a projection! I have never seen such expertise in my whole life, as is created in making projections in investment banking. There is no business so lousy that it can’t get a wonderful projection. But is that a great way to make a living to have phony projections and use it to make money out of people you look right into their eyes of? I would say no.

By and large Warren and I, we never tried to make money out – stupidity of our dumb buyers. We tried to make money by buying, and if we were selling horseshit we didn’t want to pretend it was a cure for arthritis. And I think it’s better to go through life our way instead of theirs.

I think it’s always been this way, I think there’s always been chicanery. Think of the carnivals, the carny operator. Think of how much trickery there is in a carny operation. People just seek out the weaknesses of their fellow man and take advantage. And you have to get wise enough so you avoid them all. And you can’t avoid them if they’re in your family. I have no solution to that one. (Laughter) But where you have a fair choice, there are just so many people that should be avoided.

My father had this best friend and client and he also had this other client who is a big blowhard and he was always working for the big blowhard and he wasn’t ever working for his wonderful client whom I admired. And I said, “Why do you do this?” And he said, “Charlie you idiot…” He says, “the big blowhard is an endless source of legal troubles. He’s always in trouble. Overreaching and misbehaving and so forth. Whereas Grant McFadden treats everybody right. The employees, the customers, everything. And if he gets involved with some psychotic he walks over there and makes a graceful exit immediately. A man like that doesn’t need a lawyer.”

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