Currently reading "Where are the customer's yachts?", a hilarious book by the wonderfully funny Fred Schwed Jr, a one time laid-back wall street trader who preferred to play golf instead of buzzing about keeping busy for its own sake. I don't remember when I have laughed so hard reading a book. T was quite amused to see me rolling senselessly on the floor.

Charles Munger Wonderful USC commencement speech

USC law school commencement sppech by Charles Munger

• The safest way to get what you want is to deserve what you want.
• I know looking at the people sitting behind the graduates (parents), are the people who really deserve the credit for these graduates today.
• There is no love so right as admiration based love.
• Since 5% of the big ideas in each discipline carry 95% of the freight, it wasn't difficult to pick up a lot of the big ideas in different disciplines. One has to practice the multi-disciplinary approach. I have followed it all my life and it has made my life more fun, more constructive and let me help others, and made me enormously rich. But there are dangers in it and one is that you will sit in front on an expert and you will know a lot more than him, you may cause a lot of offense, I never found a perfect way to counter that and say things without causing offense.
• I knew this young graduate of Harvard Law School and he was a brilliant lawyer, all set to conquer the world and his supervisor called him once and told him "Your duty under any circumstance is to make the client think that he is the smartest person in the room, and if you have any energy or spark left after this, then use it to make your senior partner look like the smartest guy in the room. And only after you have finished these two obligations do you want your light to shine at all." Well, that may be very good advice for rising in a large firm, but it wasn't what I did, I always followed the drift of my own nature and if other people didn't like it, well I didn't need to be adored by everybody.
• Be multi-disciplinary and really understand what you study instead of just spitting it out on the paper, if you incorporate your learning into your mental latticework of thinking then one day you will wake up and it will hit you that you are one of the most confident people in your age cohort, if you don't, then you will never feel confident.
• Many tough problems become easier if you invert. If you want to help India, turn around and ask what you can do not to help India.
• Avoid sloth and unreliability and extreme ideology because it turns your mind into cabbage. For instance preachers on TV, they have a lot of ideas on theology and a lot of their minds are made of cabbage.
• Self pity is very close to paranoia. You do not want to drift into that. Self-pity is not going to improve the situation, and when you avoid it, you'll be better off than practically everyone else.
• Get out of self-serving bias. The world does not revolve around you. A terribly inaccurate way to live. You also want to allow for self-serving bias of others.
• You really want to avoid working under someone you don't admire and don't particularly like. This takes a lot of talent and can be tricky but what I did was that I found people that I did admire and without criticizing anyone, I maneuvered myself to work under them. The outcome will be more satisfaction in life if you work under someone you admire, the alternative is not such a good idea.
• Maximize objectivity. Pay attention to dis-confirming evidence and also checklist routines. Checklist routines avoid a lot of errors.
• Also realized very early that non-legality would work very well in the parts of the world that I wanted to inhabit.
• I often tell the story of Plank and chauffeur. Chauffeur heard Planck's speech so often, one day he requested Planck to let him give the speech and he did. However, someone got up and asked some question and the chauffeur said "That is so elementary, I will let my chauffeur answer that", tossing the question back to Planck.
• In this word there are two kinds of knowledge. First there is the Planck kind of knowledge, people who've really paid their dues and have good understanding and then you have the chauffeur knowledge, who've just learned to prattle the talk and they make hell of an impression, but in the end they just have chauffeur knowledge. I think I've just described practically every politician in the United States. And your task should be to make sure that the control falls into the people with the Planck knowledge and away from the chauffeurs.
• Another thing is intense interest in a subject is indispensable if you are going to excel in a subject.I could force myself to be good in a lot of things. But I couldn't be really good in something unless I had an intense interest, so to some extent you're going to have to follow, ie. if at all possible you want to drift into something in which you have a natural interest. You will be good only if you're really interested in something.
• You also should try and maintain a lot of assiduity. Which means you have to sit on your ass and do it till you succeed. I had very good partners, partly because I deserved them, partly because I picked wisely and some luck. The only commitment we made was that when we were behind on some commitment, we pledged that we would work 14 hours a day both of us till we got the commitment honored. Needless to say, that partnership was very successful.
• Life will have horrible blows, unfair blows. Some people recover and some don't. Every mischance in life is an opportunity to behave well, to learn something, the duty here is not to indulge in self-pity. Famous epitaph : "Here lies Epictetus, a slave, maimed in body, of absolute poverty and favored by the gods."
• All my life I've gone through life anticipating trouble.
• Last thing I want to say to you as you go into the world to practice a profession that puts a lot of procedure , a lot of precautions and a lot of mumbo-jumbo into what it does, is that this is not the highest form that a civilization can reach. The highest form that civilization can reach is a seamless web of deserved trust. No precautions just wholly reliable people trusting each other to do the right thing.
• From Pilgrim's progress: My sword I leave to who can wear it.

Links on Wesco's annual meeting :
Munger Speaks on Berkshire's Success
Notes for Wesco Financial Annual Meeting

Quotes from these :

• Best way to gain wisdom was by "sitting on your (behind) and reading all day."
• It's hard to think of committees that have been successful.
• There is no substitute for a very intense interest.

Also speaks of maximization of objectivity. Had a related discussion on Friday evening with JS. Think that India's most significant hurdle may be getting over patriarchal or feudal mindset towards more objectivity.

Berkshire's 2007 annual meeting links here. From these :

• On Planned Parenthood : Buffett said he believes it is terrific. Says women have had bearing babies forced upon them for years. Men set the rules for years, and he thinks it wonderful that women can make reproductive choices. He said, "I hope you'll respect my opinion as I respect yours."
• On the Dow @13000 : Better get used to these big numbers, to get a 5% return, the Dow will have to be at a million by the end of this century.
• Warren Buffett's only tax advisor is George W. Bush. His annual tax rate last year was 20%. In comparison, he said his employees with income's of US$50k+, pay close to 37%. Forbes 400 richest Americans pay a lower tax rate than their receptionists.
• Still sticks with the 50% return claim for upto $10 million.
• "Read everything you can. By the time I was 10, I read every book in the library that had to do with investing, and many I read twice. You just have to fill up your mind with competing thoughts and then sort them out as to what makes sense over time. And once you've done that, you ought to jump in the water. The earlier you start the better in terms of reading. What I'm doing today at 76 is running things in the same thought pattern that I got from a book at 19. Read, and then on small scale do some of it yourself."
• Will 1973-74 opportunities happen again?When I closed my partnership, the prospective returns going forward I felt was the same as municipal bonds. Don't think that it is the same situation now. If I managed endowment funds, it would be 100% in stocks or long bonds or short bonds, no mix. If I have 20 years and a choice between index funds and 20 year bonds, I would rather buy stocks today.
• Silver : I bought too early, sold too early, and other than that it was a perfect trade.
• What advice do you have for people giving money 40 years from now? As long as you plan to give it back, there is nothing wrong with your time horizon. If you're compounding money at a rate greater than people generally do, you are an endowment for society. Endowments do that to get average returns. You can let someone else take care of the giving now.
• We were talking about an oil company where we read the report and couldn't find the exploration costs in the report. To the extent that it was touched on, was in a dishonest manner. It makes a difference. Annual reports tell you a lot about the honesty of the individual.
• If I were writing something now, I would say if I had to own long bonds or equities, I'd rather have equities, but I would not have high expectations, but above 4.75%

CM mentions Marcus Aurelius here, (a full transcript of the Q&A)

"What one does easily, one does well." -Andrew Carnegie

Just heard the very cool Vint Cerf speak on the future of the Internet. Am I glad to be in engineering :) Felt energized and quite excited again. Was reminded of naive excitement back in school. A cool quote by him was "Power corrupts, and powerpoint corrupts absolutely. So much effort goes into looking right, the content becomes secondary". Apparently, they have interplanetary protocols running now.

Also, ran into L in the parking lot, inspired me to think of switching jobs. I wasn't alone to think there is something wrong in current setup. He echoed a lot of concerns that have been having, received an invite to discuss further anytime.

NYSE short interest ratio is 7.4 apparently. Range is 3.5-7.5. Accordingly, the market rallies on relentlessly. Saw obscene upticks in CMG and MA. ($9 and $14+), both stocks I have owned previously and sold due to valuation considerations ;) Don't have any ideas so still 40% in cash. Iam wondering who these people are, the ones buying so much. Maybe it is smart money after all. Apparently, the last time the Dow declined in 2 of 21 trading days was in 1929.
Of course, I may be just feeling left out ;)

From James Stewart in SmartMoney :

Repeat after me : Markets do not go straight up. I've had to remind people of this in recent years with respect to real estate, oil, and now stocks. The average rally since 1979 has been 50%. But I never buy stocks when the market hits a new all-time high. I don't even like to buy on a day when the market rises. I like to buy into rampant pessimism. I've had to get a very firm grip and remind myself that there will be another correction, or at least a significant buying opportunity, as there was as recently as February. Patience is an underrated virtue in investing. Like most good things, this rally won't last forever.