Charlie Munger calls Elon Musk 'brilliant' and bitcoin 'stupid and immoral'

I'm here with Charlie Munger, vice president of Berkshire Hathaway, Charlie, it's a pleasure to see you, it's a pleasure to be here. I want to continue with some of the questions that people asked you at the annual meeting and start maybe with China, trade and tariffs. and you said that even Trump can be right about some of these things, well yeah, when people get angry enough with a politician, they think everything he says and does is wrong and that's never the case, what would I move on, continue, I'm sorry and All I said was that you don't want to be such an absolute purist about free trade.

I'm almost, but not quite, a purist, but I wouldn't want the entire steel industry or the United States to move overseas. Is there somewhere a line could be drawn without ruining the world, what should our trade policy be? So I mean, yes, China may be unfair, it is unfair, but how should we pursue this? I have an attitude that is completely different from that of our presidents. I'm glad we can. They had a large trade deficit with China that allowed them to quickly escape from poverty and obscurity. I welcome the Chinese to the group of advanced nations, which I think we have enabled considerably by our willingness to trade with them as they moved further and further forward in terms of enterprise complexity, so I like what happened.

I don't consider it unfair or bad. I'm not saying it would be unthinkable to have some tariffs somewhere, but basically I'm a free trader and I'm particularly free. trader in dealing with China and I like the fact that free trade with China has allowed it to expand so much and get out of poverty, they had hundreds of millions of people in rural poverty and they became huge in the entire history of the world. A great nation has advanced faster than China and this free trade helped them do so and I like it, but aren't they unfair to us for simply following intellectual practice?

I'm sure there are places where someone in China has some advantage over someone in the states that you and I may not like perfectly, but that will always happen, but basically the Chinese broke up the Berkshire Hathaway shoe business in Maine. , it disappeared basically because their shoes were so good and cheaper, I'm not mad at china or that and berkshire has prospered it's not so good for maine but we can't help it there's no way to make an advanced civilization never hurt anyone as they evolves there is a lot of talk about an elephant that Berkshire is on the hunt for a Big acquisition, could that elephant be in China?

If it was, could they even buy it? Given the relationship between the two countries right now, I don't think it's likely that we will buy any large Chinese companies. The Chinese are very proud of their companies are proud of what they have achieved, what I consider very likely is that they will invite us to buy part of some large Chinese company and simply because they like a good company and I think it is very likely that that happen at some point. time and we would appreciate it, we own minority positions in many companies, we own a minority position in byd, let me ask you then about byd and Chinese cars, when will Chinese cars be allowed in the United States and what is stopping you is the bureaucracy.

Well, the auto market is very competitive and very busy, and of course no one in America wants to lose our last two big domestic suppliers, automakers. Well, three if you want to count Ferrari Chrysler, so it's difficult for someone new to come in. The US market is large and China has such a large market of its own that I assume they will stay busy in their own part of the world for a long time, so that is not a priority for Byd. Well, Byd's biggest advantage is in the electricity sector. cars where they are so close to the cutting edge of battery technology, so it would be crazy not to emphasize hybrid in electric cars over gasoline ones, not that they are going to exit the gasoline market, but I think they will. they will be. biggest in hybrid and electric cars, speaking of electric vehicles, what do you think of Tesla?

Is that company the one that will become a major player? Well, it has already created more importance than anyone would have predicted and its founder is bold and

brilliant

and swings for the fences and Of course, people like that get remarkable results and sometimes they fail quickly and I have the slightest idea how Elon Musk will turn out, but I think he has a considerable probability of success and a considerable probability of failure that he seems to like. Along those lines, have you considered Elon Musk overnight getting into the candy businesses he suggested he could do on Twitter?

I didn't hear that sound like a smart answer. I can't fault anyone else for his cleverness. Let's talk about shifting gears. Talk a little. about the single payer health care system that you mentioned and I think you said that when the Democrats win, the Democrats will control both chambers and the presidency, oh it would have to be that all three are fine, but I really think that will be the case. happens well, I mean all the other advanced western nations have different types, no I don't think my prediction is that radical, so it could happen in two years, even then I mean let it start happening, pretty much everyone is disenchanted with the bureaucracy, the costs and the

stupid

results. our own culture, our own medical system, is a case where bureaucracy just took over an entire industry and entrenched interests were benefiting from this in the existing system in various ways.

I come from California, if only everyone in the nation had Kaiser health care like we do. Yes in California the net quality of medicine in the United States would increase greatly and Kaiser has never been able to have much success outside of California because entrenched vested interests trample on it due to its success in California. You're talking about a field. where entrenched interests are making a lot of money, they don't want the change that you wouldn't depend on or your livelihood and therefore of course it is very difficult to change our system, the reason why the Singapore system is much better than ours is they didn't have a lot of entrenched interests that were that powerful and they had a

brilliant

leader and he, the sampling system cost about a fifth of what ours cost and serves better is the health care effort that he's working on with jpmorgan the berkshires is working with jp morgan and amazon, could this be a model or evolve towards a single payer system?

No, I think the single payer system comes about because the government mandates it, so I think all they are trying to do is make the existing exist. Better system, you will remember that Johnny Rockefeller was the first by spending 50 million dollars decades ago, he completely revolutionized American healthcare. He removed all Charlottens from the medical profession by changing all state laws and made all medical schools imitate John. Hopkins, who had imitated Germany and when his 50 million dollars were spent, all of American medicine improved enormously, now he did it as a public service and not many people realize how much public service JD Rockefeller, the first, created and What Berkshire and its partners are. trying to do is a bit like Rockefeller did, oh, and none of them would do this just to make money, this is a public service activity, so it was kind of an inspiration, well, it's for me, I don't know, maybe maybe they have done it.

He had three different aspirations, but I have always admired what Rockefeller did and the man who convinced him, Simon Flexner, also created Einstein's house at the Advanced Institute in Princeton, but he was a huge Bill Gates, who is such an interesting man, everything you expect. What I can do someday is about half of what Rockefeller did. He knows what an achievement, that was the perfect moment. Let me ask you about Wells Fargo. It sounded like you and Warren were standing next to his bench right now, but I wonder if you know that. at what point is enough um and how do you decide when a company is doing well this is not going to change let's abandon ship here well I don't believe for a minute that Wells Fargo is rotten in any way Deep down they just had some programs of incentives that caused some bad behavior and then reacted badly to problems when they arose, so they made errors in judgment, but I think they will hate what happened so much that we will be less likely to make mistakes in the future, not more likely.

I actually think this is good for Wells Fargo in the very long term. It's agony to go through, but they will be better. Let me ask you about. Ted Wesler and Todd Combs and you and especially Warren talk to them and tell them what great managers they are and how smart they are and I guess the proof will be in the pudding at some point in the future. Do you agree with their Well, I don't even follow much of the investment philosophy, just because one of them buys some stock doesn't mean they start studying a lot, but I know them well, they contributed enormously because they talk to Warren all the time and like I said at the meeting, he's much better for it, so am I, we wouldn't have bought those Apple shares if one of the young investors hadn't guided us that way, so maybe Warren's conclusion in the end, but it was driven by one of the young people.

Men, you have been enormously constructive and helpful in many ways. Both think totally about the interest of shareholders. People who come from American equity investing backgrounds are always thinking about what's good for shareholders and are a wonderful influence to have around. two smart, young people from Berkshire with that extreme orientation and not only are they doing quite well with the money they are investing, but they are favorably influencing the investment there, they are not in charge of, for example, the investment in Apple, but in In other words, does Berkshire's investment philosophy change? So if Berkshire, Warren and you were known as value investors, that's no longer Berkshire Hathaway's core discipline or that doesn't even matter, you have to remember that, in our way of thinking, everyone.

Smart investing is value investing because why would you want to buy something that wasn't worth as much as you paid for it and who wouldn't want to buy something for less than it is worth? So the only difference when people talk about value invested in you. You are always a value investor, now there are several ways to look for value investments, just as there are several places to fish and the first rule of fishing is to fish where the fish are. The first rule of value investing is to find somewhere to look for value investments where there are many of them and of course in the United States it has become difficult to find easy value investments because the world is very competitive and that explains a lot of what which is seen in Berkshire, where we buy stocks like Apple.

We wouldn't have bought in the old days when we had more mundane things that served us very well, so we're just looking in different places, but we are value investors and so some people, when they say a value investor, they mean tosomeone. that emphasizes working capital or something that means they should fish that particular spot, but I think that's it. I think it is a misuse of language to think that there is a difference between value investments and other good investments. All good investments are value investments. By definition, they're just various places to fish for value investments, and of course, as the world gets tougher, you have to fish in places you didn't fish before, so the idea with Apple is that there's value there that is not recognized by the market a different type of value investing and one we are less familiar with, but we wouldn't have bothered if we didn't think it was a good investment, let me ask you about one of your favorite topics today, I think maybe it's

bitcoin

.

And I know you've had some nasty things to say about it, but is there something to this, Charlie? I mean, we should throw out the whole thing, well, Bitcoin like the computing behind Bitcoin is a big win. to the human mind, that's what captivates all these people. In fact, they have created a product that is difficult to create, but not impossible. It's very quirky, but they've managed to do it, which is why a lot of IT people love it. just because it is such an extreme achievement of computer science, of course I have no interest in that because it is not my topic and I see an artificial speculative medium that people are buying just because they think they can sell it to someone else at an even higher price although it inherently has no intrinsic value and that's why I consider the whole business as antisocial

stupid

immoral

immoral

yeah what is that?

Why would you negotiate? Suppose you could make a lot of money trading freshly harvested baby brains. Would you or would you? Say that's immoral, you wouldn't change them, would you? It's too horrible a concept. Well, for me, Bitcoin is almost as bad. It has no desirable social purpose. We have debit cards. It's not that we don't have a payment. system we have wechatin china incredibly efficient payment system china doesn't need

bitcoin

and if you have a wechat why would you do it in a medium where the value changes enormously no one is right mine would want a payment system where exactly what you were using went up and down at 20 of the day I now consider this a combination of insanity and immorality and I think the people who are pushing it are a disgrace, they must be some things that are beneath you, just don't do it and this is one where we didn't need a certified gold, I mean a gold substitute like this last year, when we talked to Charlie, you mentioned that DonaldTrump exhibited a form of illness.

I think that's how you characterize it. I think it was because you were characterizing his personality and his behavior. It's been another year since he took office and I wonder how you would rate him well. I calmed down because I consider it counterproductive to hate as much as both parties hate now and I have disciplined myself and now I consider all politicians higher than before. I did it out of self-preservation. The other thing I did to feel better about the situation. The current scene is that I reread the decline and fall of the Roman Empire and it goes on for hundreds of pages and that made me feel a lot better about the current political scene.

We are way ahead of the Romans at the end. That's a pretty low bar, well I didn't do it, it's very useful, I suggest you try it, you'll feel better about the world today if you watch that one and you said you elevated politicians, yes, to feel excited, it's counterproductive hate everyone so much. We on both sides are starting to hate too much and I've decided I'm going to back off on that, how do we fix it? We don't have to figure it out. Everyone passes. Remember the old saying. This too shall pass. everyone leaves I have a different rule about politicians they are never that bad you don't live to want them back there will come a time when those people who hate Trump will wish he would come back I don't think he will I live to see it but I confidently predict that will happen, that's interesting, well if you look at the whole analysis of human history and the people who led it, there are a lot of bad leaders, okay?

Why don't we leave it to that Charlie Munger? Vice President of Berkshire Hathaway. Thank you very much for taking the time.