Great piece with Munger where he goes into some depth on why China has some policies that make them wiser than we are. Munger isn’t covered nearly as much as his partner Buffett, but that shouldn’t make you shy away from appreciating how incredibly intelligent he is. In the interview he shares a few key insights that he feels makes him a better investor, such as the fact that he doesn’t want to or even try to predict macro economic changes. There are just too many variables that can never be accounted for in that sort of prediction.
Another interesting, yet maybe obvious insight is that Munger doesn’t like Front Running… e.g. HFT. Who the heck really does like it? I get that some people defend it because they make money at it, but it doesn’t benefit anyone except for the people doing it and has the potential to hurt a lot of people as I mentioned before.
What is interesting though is that Munger takes a stab at providing some insight into where the money is going. He sees insurance as a potential bubble as everyone pours back into the sector. Those insurers along with everyone else were doing great when they were hunting hundreds of thousands of rabbits in the forest. The problem is that the rabbits started firing back and that hurt a lot. Insurance stocks look like the first place where everyone went hunting again and there is no question that the people making the money during the housing bubble will find ways to make that kind of money again. The rest of us better look out when they do as it will be much more difficult curtailing them in the future.
On China, they do some things that are wiser than we are when it comes to these bubbles. They have no trouble taking the punch bowl away in the middle of the party… before things get really out of hand and the cops are called. We should look at their example as well as other examples from Asia (such as Singapore’s medical plan vs. the plan we are implementing now). As a western society we do an incredibly poor job at learning from eastern cultures.
Munger has plenty of other insights that I won’t try to muddy up with my commentary. Here is the full interview: