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Charlie Munger's Brilliant Moment

Yes, we know, Warren Buffett had a lot of wise things to say at the Berkshire Hathaway  (NYSE: BRK-A  ) (NYSE: BRK-B  ) annual meeting. But lest we forget, he wasn't the only brilliant investor sitting up on stage in front of the Berkshire faithful.

Many investors aren't tuned into the wisdom of Berkshire Vice-Chairman Charlie Munger and are seriously missing out. To help remedy this unfortunate situation, I asked the team of Fools that attended this year's meeting to share their favorite Munger moment from the event.

Scott Phillips: Charlie Munger gets far less coverage than he deserves. He's irascible, doesn't suffer small-f fools, and has little time for making people feel comfortable. He's also whip-smart and supremely rational. He mightn't be everyone's idea of the perfect dinner companion, but he's perfect as Warren Buffett's right-hand man.

While Munger doesn't provide as many quotes as Buffett -- he tends to only speak when he's got something really worthwhile to say, and even then answers in as few words as possible -- the senior of the two (at 89, Munger is seven years older than Buffett) is a clear and deep thinker.

My favorite Munger moment of the Berkshire weekend was his comment on Greece. Munger suggested that letting Greece into the euro currency was like "using rat poison as whipping cream."

He added, "It's not a responsibly capitalistic country... a place where people don't pay taxes and committed fairly straight fraud to get into the EU."

Tell 'em what you really think, Charlie!

Brendan Mathews: Charlie Munger has several great qualities, including independence of thought, brutal honesty, and a sharp wit. All of those characteristics were on display during this year's annual meeting.

My favorite moment came during a discussion of corporate profits as a percent of GDP. Warren was asked about an article in 1999 that he wrote for Fortune magazine. Warren answered, then turned to Charlie, who ended up saying: "Just because Warren thought something years ago doesn't make it a law of nature."

I admire Warren greatly -- he's the world's greatest investor, highly ethical, humorous, and generous. But, he's only human. Amid all the Warren hero-worship and group-think of the "Woodstock of Capitalism," it's worth reminding people of that, and Charlie, by his nature, was willing to do it. Darn right!

John Divine: Pushing 90 years of age, Berkshire's iconic Vice-Chairman is still quick-witted, highly opinionated, and economical in his use of words. Although Buffett fielded and answered most of the questions at length, ol' Charlie Munger almost always added a few trenchant words of his own. Most of the time the two men agreed, though they definitely don't see eye-to-eye on everything

Asked whether he envisioned the online currency Bitcoin taking off and becoming a more legitimate, globally accepted currency, Munger didn't mince words. He had "no confidence whatsoever" in that ever happening.

But after Buffett said he thought the structure of the eurozone was doomed to failure, Munger took that as his cue to start calling out specific countries that weren't living up to their part of the bargain. Namely, Greece, which Munger said was "not a responsible capitalistic country," before adding that the country also "lied about their debt" in order to get into the eurozone in the first place.

Michael Olsen, CFA: "Obviously we're not going to immediately copy what every single competitor does, particularly when we have a model that's working so well."

The above quote from Charlie Munger came when responding to a challenge over whether GEICO should adopt a tool similar to Progressive's (NYSE: PGR  ) Snapshot -- a system that uses drivers' actual driving in setting their insurance rate.

This response may, on its own, seem somewhat trite. "Obviously," as Munger might say. But the great travesties of global finance, history, and economic disaster are often predicated upon mindless follower-ship: The credit crisis, Nifty Fifty, and Tech Bubble, to name a few.

Interestingly, Munger's response dismissed a change that -- in my view -- GEICO would probably benefit from adapting. But the wisdom remains. Independent thought, alongside appropriate doses of humility and open-mindedness, are precious commodities in this world. Amid the purported need for action, inertia, or desire to leave one's imprint, many-a-folk stupidly trod a path blazed by someone else... only to find it was a very stupid error.

Don't take my word. Just ask former Citigroup CEO Chuck Prince. In a now infamous remark of about Citi's credit crisis dealings, Prince quipped: "[A]s long as the music is playing, you've got to get up and dance. We're still dancing." I bet he wishes he'd imbibed one less drink and stopped dancing, because the hangover's sucked, and he wasn't such a great dancer to start with.

Sometimes, doing nothing is OK.

Is it too late to buy Berkshire?
Thanks to the savvy of Buffett (and Munger!), Berkshire Hathaway's book value per share has grown a mind-blowing 586,817% over the past 48 years. But with Buffett aging and Berkshire rapidly evolving, is this insurance conglomerate still a buy today? In The Motley Fool's premium report on the company, Berkshire expert Joe Magyer provides investors with key reasons to buy as well as important risks to watch out for. Click here now for instant access to Joe's take on Berkshire!

Read/Post Comments (5) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 10, 2013, at 10:19 AM, neocolonialist wrote:

    Great article, but I have to disagree with Mr. Olsen. I think Progressive's Snapshot product is one of the absolute worst ideas ever. I would switch insurance companies if I was with Progressive. Not a surprising nanny-state kind of a product when you consider Soros control Progressive. And of course the company is named "Progressive". I remember when I first saw the snapshot I was really worried more insurance companies were going to jump on that bandwagon, fortunately none have.

  • Report this Comment On May 10, 2013, at 2:45 PM, TMFAgewone wrote:

    neocolonialist, thanks for commenting. Your views on PGR's employment of data, and possible encroachments on civil liberties, are a valid observation--and I don't want to make this a political discussion. This is about business. I think it's smart that Progressive uses data regarding drivers' car use/driving habits to price policies. And if customers choose to share the data, it's their choice.

  • Report this Comment On May 10, 2013, at 8:51 PM, neocolonialist wrote:

    Well sure, they can choose whether or not to share that data today, but what about when all insurance companies start to use this data? Then need this data? Then can't be expected to compete without this data? This is a horrible business decision. Munger & company are right on not copying this stupidity.

  • Report this Comment On May 13, 2013, at 2:55 PM, stockdissector wrote:

    Well said, Matt.

  • Report this Comment On May 13, 2013, at 2:56 PM, stockdissector wrote:

    Well said Matt:"But the wisdom remains. Independent thought, alongside appropriate doses of humility and open-mindedness, are precious commodities in this world. Amid the purported need for action, inertia, or desire to leave one's imprint, many-a-folk stupidly trod a path blazed by someone else... only to find it was a very stupid error."

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