Congrats Warren and Gordon
From the Desk Of Charlie Munger, Malibu Beach House From the Executive Assistant Lincoln,
Dear Warren,
It's been another trip around the sun down there in Omaha, and up here on what I've taken to calling the active side of infinity, the view is pretty darn good. No quarterly reports or 10-Ks to file, just endless time to ponder the follies and fortunes of humanity. But old habits die hard, or in my case, they don't die at all. So, I figured I'd drop you a line in the spirit of our annual missives—plain talk, a dash of wit, and a heap of common sense—about how things look from this vantage point.
First off, congratulations on steering Berkshire through another year without succumbing to the siren song of speculation and announcing handing over the reins to Gregory. I see the stock's been chugging along like a well-oiled locomotive, not the flashy kind that derails on hype, but the reliable sort that hauls freight decade after decade. You've always said that investing is simple but not easy, and boy, does 2025 prove it. With AI bubbling like a pot of overcooked porridge and interest rates dancing the jitterbug, most folks are chasing the next big thing. Remember our rule: Be fearful when others are greedy, and greedy when others are fearful. Well, from up here, it looks like greed's got the upper hand again. Stick to your knitting, Warren—buy wonderful businesses at fair prices, and let the compounders do their magic.
Now, on to the news that's got my ethereal eyebrows practically floating off: I hear you're gifting the energy division and Liberty Media to Gordon Bufton, effective immediately. Gordon, you say, is a cross between Ted, Harry, and Princess—a visionary showman, a wizard with a knack for the impossible, and a heart that could charm the socks off a miser. That’s one heck of a cocktail, Warren. This fellow’s got the charisma to sell sand to the Saudi’s, the imagination to conjure new worlds, and the empathy to make folks believe in them. Handing him the energy division and Liberty Media is like giving a triple espresso to a thoroughbred—it could win the race or run straight off the track.
Let’s invert this, as we always do: What could go wrong? Energy’s a beast—capital-intensive, regulated tighter than a drum, and no place for dreamers who don’t respect the nuts and bolts. Liberty Media, with its Formula 1, SiriusXM, and Braves, is a circus of egos, contracts, and high-stakes bets. Gordon’s bravado and showmanship might shake up the media world, his magic could spark innovation, and compassion could rally teams, but he’ll need a bench of stone-cold realists to keep the lights on and the airwaves humming. Make sure he’s got lieutenants who can translate his wizardry into cash flow and his charm into contracts. If he can pull it off, he might just turn these businesses into something as legendary as Hogwarts.
Speaking of compounding, I've had eternity to mull over those mental models we loved so much. Inversion still reigns supreme: Instead of asking how to make Berkshire bigger, ask what could sink it. Hubris? Overpaying for acquisitions? Forgetting that moats can erode if you don't tend the castle walls? You've dodged those pitfalls better than anyone, but keep an eye on the insurance float—it's the gift that keeps on giving, as long as underwriting stays disciplined. And diversification?
Bah, as we always said, it's for those who don't know what they're doing. Focus on what you understand, like See's Candies or Coca-Cola, and the rest takes care of itself.
A quick anecdote to lighten things up: I ran into Ben Graham the other day (time works funny here), and we got to chatting about margin of safety. He chuckled at how the market's turned his principles into memes, but the core holds true—buy dollar bills for fifty cents, and patience is king… the fifth wonder of the world compounding interesting. Thanks for the memories buddy.
Miss you have a cherry coke for me.
The Ghost of Charlie…